Decision Analysis Project

Consultancy Report on Data Survey by Oasis Int.

2012-01-0006 11/28/2010 Page 1 of 17

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Executive Summary

An analysis of the survey data of households across 7 cities in Pakistan reveals that LUX is the market leader in terms of weighted brand usage with a share of 35% followed by Lifebuoy and Safeguard with a share of 27% and 20% respectively. In comparison with previous year (2002), LUX and Safeguard have improved their share by 1% while Lifebuoy has gone down by a single percentage point. A model for Weighted Brand Usage having ten explanatory factors was created for both LUX and LifeBuoy. The LUX model helps explain 12%, while LifeBuoy model explains 16% of Weighted Brand usage when all the ten factors are taken together. The results of analysis point toward a very interesting fact that both the top performers in terms of Brand usage preference have a totally different set of attribute in terms of image that contributes to their success. The preference of LUX is mainly due to its beauty soap image while that of LifeBuoy is of an antibacterial soap. Moreover in terms of demographics both soaps have almost the same factors explaining their brand usage preference, both soaps are used middle and lower middle class people whose chief earners are generally illiterate or have a maximum education level of Middle School (class 5-9). Moreover LifeBuoy does have a seasonal preference both in the cities of Lahore and Faisalabad but it is not that much prominent, while LUX shows a seasonal effect in Lahore only. A comparison of Weighted brand preference in two of the cities (Lahore & Faisalabad) shows that the trend for both LUX and LifeBuoy is increasing except in case of Faisalabad where LifeBuoy shows somewhat decreasing trend (see exhibit1). In the report I will discuss in detail all the aspects of my summary presented above followed by a set of recommendations in terms of marketing mix to increase the Brand usage of LUX leading to an increase in portion of market captured.

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The Soap Market in Pakistan There are a few players in the toilet soap industry of Pakistan, with Unilever and Procter & Gamble being the biggest manufacturers. We at Oasis International collected data for toilet soap market on monthly basis for three years (2001-2003) and on basis of these data sets we found the Weighted Brand usage preference market share across seven cities. Lux is a market leader with a share of 35.41% in 2003 as compared to 34.42% in 2002, followed by LifeBuoy with 27.98% in 2003 as compared to 26.91% share of previous year. Market share of major industry players for 2002 and 2003 is presented in exhibit1. Marketing activities and their impact on Brand Preference In 2002 all of the brands except Rexona launched a new product focusing on attributes of Hygiene and skin care, and this may be the reason behind such a drastic fall of 2% brand usage market of Rexona from the previous year. On the other as an example if we take Dettol the launch of a new SKU Dettol Extra in February caused the current usage preference to rise up and a price reduction of Re1 later on in July caused the brand usage figures to peak further but this the trend was short lived (see exhibit 2) and that may be due to the fact that other competitors such as Capri launched Capri Sensitive and Dettol introduced a new SKU. The variation in brand preference for Dettol relative to its marketing activities can be viewed in exhibit 2. All the above cited examples prove that the soap market is highly sensitive to any marketing activity that is related to brand launch or a price reduction. Trends and Seasonal/Cyclical factors The trends for Currently Using Brand for the market leaders i.e. Lux and LifeBuoy are shown in exhibit3 along with Average of Weights for the cities of Lahore and Faisalabad. It can be easily seen that except for Lux Usage in Lahore no other graph shows seasonality. To determine whether seasonality exists or not seasonality index was determined, the index came ot to be around 100% (in the range 90% -110%) indicating a very little amount of seasonality factor is present in the data. In addition to the previously mentioned method Crystal Ball software was also used which further endorsed that except in brand usage of LUX in Lahore no significant seasonality factor is present. The forecasted values for brand usage of Lux and LifeBuoy for Lahore and Faisalabad along with the graphs are presented in exhibit 4. The forecasted values
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and he historical value graphs of the brand usage clearly suggest that soap usage is a daily phenomenon and seasons do not change the preference of brands used. The scatter plots as shown in exhibit5 indicate that an upward trend for both Lux and LifeBuoy exists in Lahore while in Faisalabad the news for LifeBuoy is not good the trend is on the decreasing side though not a steep one but a decreasing trend is present on the other hand Lux is doing pretty much fine in this region. Though I shall analyze the product positioning of LUX and LifeBuoy in detail in the forthcoming section of the report but the trend shown in exhibit 6 suggests that the increased brand preference of one is on the expense of the other. For instance a look at the brand preference in the first three quarters of 2002 clearly indicates that as Preference for LUX increases that for LifeBuoy decreases and vice versa, moreover the trend is more prominent from 2002 onwards the reason may be the repositioning of LUX as both a beauty and germ killing soap. Attributes contributing to Brand Preference: A software tool SPSS16 was used based on the given data to find the attributes contributing to the success of Lux and LifeBuoy as the market leader in terms of brand Preference. The method followed and criteria adopted for the analysis is discussed briefly in exhibit 7. A detailed discussion on results found for both brands is presented below Key Attributes for LUX Success: The model derived by us on the basis of survey consisting of top ten attributes explains 12% of Brand Usage Preference. The key attributes explaining its success being Image Attributes

The brand preference of Lux is due to its image as a beauty soap that produces excess lather, does not make the skin dry and is intended for daily use. A view of these factors clearly indicates that key factors behind the preference of LUX is its perception in the customers mind as a soap which is good for skin, the soap has a more of a cosmetic image and is basically a face wash soap.
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Demographic Attributes

The model suggests that the brand preference is more and significant amongst households whose occupational heads are illiterate or at most educate to middle school level (class 5-9). Two other factors that explain the same phenomenon are that the occupational head are usually workers (skilled & unskilled), which relates to the previous stated factor as usually illiterate and people with lower education level are usually workers. Medium and small businessmen usually do not have brand preference for LUX. Lux is perceived as a brand which is for beauty and skin conscious people and the market segment is usually less educated people with lower levels of income. Key Attributes for LifeBuoy Success: The lifebuoy model explains 16% of weighted brand usage preference, most of the demographics attributes linked to LifeBuoy is same as that for Lux but the image perception is entirely different. Image Attributes

Lifebuoy is being perceived in the minds of users as a soap that has antibacterial capabilities, survey respondents usually preferred it due to its image of a soap that is a solution to sweat odor. It is a brand which has preference for daily use and most importantly respondents preferred it by indicating that it is their brand this implies that Lifebuoy enjoys brand loyalty from its consumers. Lifebuoy is not seen as soap for use on natural skin. In short what I conclude from the results of LifeBuoy is that its role in the life of people is of a soap used for hand washing and bathing purposes as compared to Lux which is more of a face wash soap. Demographic Attributes

The demographics are same as that for Lux the lower income strata seems to be the one usually preferring the brand and households whose chief earner is worker mostly seem to be the one using the brand.
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Conclusion The soap market of Lux in two of the large cities of Pakistan i.e. Lahore and Faisalabad is unseasonal but a trend growth is observable for the past three years. Lux is mostly preferred in the lower income strata of the population and is perceived as beauty soap. On the other hand Lifebuoy has an image of an antibacterial soap mostly used for hand washing and bathing purposes. Lifebuoy also enjoys a brand loyalty by its consumer as a chunk of preference of it depends on the fact that people prefer it as it is their Brand. The perception map for LUX and LifeBuoy is shown in exhibit8. Recommendations Having carried out a thorough analysis on the data set, I would like to make a set of recommendations to the Brand manager of Lux that in my view will enhance the Brand Usage preference figures and hence the sales. Lux should concentrate more on the aspects of beauty and cosmetics in its advertisement campaigns. The advertisement should focus on the skin care and daily usage aspects of the soap. In order to be more precise the Positioning statement of the Brand should be

For Middle and Lower Middle Class population who want to look Beautiful, LUX is soap in
the cosmetic category that maintains moisture in the skin makes it look healthy and beautiful and gives a feeling of freshness, unlike all other beauty soaps available in the market

Moreover a closer look into the de-seasoned historical trends show that the brand preference is highly sensitive to marketing campaigns both by the brand itself and its competitors. So it is highly recommended to ensure that marketing campaigns or customer promotions are introduced each quarter to get sustainable results.

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Karachi and Lahore are the region where brand preference of LUX is more as compared to other cities (see exhibit 8 for model explaining brand preference), so promotional offers initiated in this area could help increase brand preference and hence sales. Consumer promotions should also be introduced in Peshawar and Quetta region to bring an improvement in the Brand Preference in these regions.

Preference of LUX is usually in the lower income strata people so advertisements casting famous local models and film stars should be made as this segment of people is the one who are major followers of local showbiz industry and get attracted to and try to imitate the actors. This will help increase the brand preference among the target folks.

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Exhibit 1
Pakistan Wide Results Weighted Brand Usage 3,745,575 4,236,478 21,558,915 12,071,036 3,577,716 17,401,041 51,133 62,641,894

2002
Market Share 5.98% 6.76% 34.42% 19.27% 5.71% 27.78% 0.08% 100.00%

2003
Weighted Brand Usage 3,420,484 4,915,758 22,003,125 12,558,055 2,393,533 16,721,401 131,853 62,144,209 Market Share 5.50% 7.91% 35.41% 20.21% 3.85% 26.91% 0.21% 100.00%

Dettol Capri Lux Safeguard Rexona Lifebuoy None Total Brand Usage

None 0% Lifebuoy 28%

2002

Dettol 6% Capri 7%

Lux 34% Rexona 6% Safeguard 19%

None 0% Lifebuoy 27%

2003

Dettol 6% Capri 8%

Rexona 4%

Safeguard 20%

Lux 35%

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Exhibit 2 Increase in Brand Usage Preference of LifeBuoy and Dettol due to Launching of new SKU and advertisement.

160 140 120 100 80 60 40 20 0

Current Brad Usage

Year 2002

Current usage LifeBuoy

Dettol 2002
Current brand Usage Dettol 60 50 40 30 20 10 0

Janua Febru Marc April ry ary h 15 8 6 18

May 37

June 40

July 41

Augus Septe Octob Nove Dece t mber er mber mber 56 48 29 27 21

Current usage

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20

40

60

Exhibit4

30 25 20 15 10 5 0 0 Jan-01 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 May-02 Jul-02 Sep-02 Nov-02 Jan-03 Mar-01 May-01 Jul-01 Sep-01 Sep-01 Nov-01 Jan-02 Mar-02 May-02 Jul-02 Sep-02 Nov-02 Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Nov-01 Jan-02 Mar-02 May-02 Jul-02 Sep-02 Nov-02 Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Jul-01 Mar-01 Jan-01

20000 15000 10000 5000 0

May-01

LUX Usage LHR

Average of Weight LHR

LifeBuoy Usage LHR

Mar-03
May-03 Jul-03 Sep-03 Nov-03 Average of Weight

LifeBuoy Usage

LUX Usage

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10 0

15

20

10

20

30

40

12000 10000 8000 6000 4000 2000 0 Jan-01 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02

Jan-01

Mar-01

Exhibit3 Continued.

May-01

Jul-01

Sep-01

Nov-01

Jan-02

Mar-02

Mar-02
May-02

May-02 Jul-02 Sep-02 Nov-02 Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Sep-02 Nov-02 Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03

May-02

Jul-02

Sep-02

Jul-02

Nov-02

Jan-03

Mar-03

LUX Usage FSB

Exhibit4 : Forecast for 2004 for Weighted Brand Usage Preference

May-03

LifeBuoy Usage FSB

Average of Weight FSB

Jul-03

Sep-03

Nov-03

LifeBuoy Usage

LUX Usage

Average of Weight

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Forecast for LUX in Lahore

800000 600000 400000 200000 0 Apr-01 Apr-02 Apr-03 Apr-04 Apr-04 Oct-01 Oct-02 Oct-03 Oct-04 Oct-04 Oct-04 Jan-01 Jan-02 Jan-03 Jan-04 F(t) Jan-04 Jan-04 F(t) Jul-01 Jul-02 Jul-03 Jul-04 Jul-04

Seasonally Adjusted Data

Forecast for LifeBuoy in Lahore

600000 400000 200000 0

Apr-02

Apr-01

Apr-03

Seasonally Adjusted Data

Forecast for LUX in FSB

250000 200000 150000 100000 50000 0

Oct-03

Oct-01

Oct-02

Jan-01

Jan-02

Jan-03

Jul-01

Jul-02

Jul-03

Apr-04

Apr-01

Apr-02

Oct-02

Apr-03

Oct-01

Jan-02

Oct-03

Jan-01

Jan-03

Jul-03

Jul-01

Jul-02

Seasonally Adjusted Data

F(t)

Jul-04

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Exhibit4 continued

Forecast for LifeBuoy in FSB

200000 150000 100000 50000 0 Apr-01 Apr-02 Apr-03 Apr-04 Oct-01 Oct-02 Oct-03 Oct-04 Jan-01 Jan-02 Jan-03 Jan-04 Jul-01 Jul-02 Jul-03 Jul-04

Seasonally Adjusted Data

F(t)

Lahore Month Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 LifeBuoy 555163 638532 644949 531757 506699 532545 501976 599822 527297 486185 422342 652693 LUX 252552 153178 233556 173743 275099 233741 258265 256795 234411 221811 168271 170993

Month Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04

Faisalabad LifeBuoy 114146 122138 111819 175024 125592 120912 113044 105895 151900 151426 153348 145844

LUX 31911 44038 72770 60288 63546 94879 88113 70903 81232 96249 76465 56611

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Exhibit5: Scatter plots for predicting trend.

LifeBuoy Usage LHR

30 20 10 0 Dec-99 R = 0.336 LifeBuoy Usage Linear (LifeBuoy Usage) Apr-01 Sep-02 Jan-04 May-05

LifeBuoy Usage FSB

20 15 10 5 0 Dec-99 Apr-01 Sep-02 Jan-04 R = 0.0107 LifeBuoy Usage Linear (LifeBuoy Usage) May-05

LUX Usage LHR

60 40 20 0 Dec-99 LUX Usage R = 0.3776 Apr-01 Sep-02 Jan-04 May-05 Linear (LUX Usage)

LUX Usage FSB

40 30 20 10 0 Dec-99 R = 0.0087 Apr-01 Sep-02 Jan-04 May-05 LUX Usage Linear (LUX Usage)

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Exhibit6: Brand Preference for LUX and LifeBuoy Quarterly comparison

Quater wise Comparison of Brand Usage of LUX & LifeBuoy

45% 40% 35% 30% 25% 20% 15% 10% 5% 0% LUX LifeBuoy

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Exhibit7 Regression Analysis: Method and procedure in modeling Brand Usage Preference

The following steps and criteria were adopted in devising the model for Weighted Brand Usage Preference: (a) First of all the demographics were converted into categorical variables. The number of categorical variables for a category was equal to (number of categories -1). The value -99 present in the demographic variables were also taken as a category. (b) Second step was to delete all those data rows that contained the value -99 in any one of the image attributes. (c) A correlation was found among all the dependent and independent variables and the independent variables were sorted in descending order of correlation values with the dependent variable. All the independent variables having a correlation greater than or equal to 0.08 with the dependent variable were taken as input to the regression model. (d) Once regression was found using SPSS16 all the independent variables having a p-value greater than 0.05 were discarded from the model, hence making the model more reliable. (e) Finally to reduce the number of variables to 10 multi co linearity was inspected amongst the model explanatory variable and the ones having higher correlation with each other were discarded from the model to reach the final output.

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Exhibit8: Perception map and location of LifeBuoy and LUX

Premium Brand

LUX

Anti Bacterial

Cosmetics

LifeBuoy

Mediocre Brand

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