HOUSEHOLD PRODUCTS (INDIA) LTD.

-D Evaluating a Test Mar et

SEHRA the Companys new toilet soap which offered the twin benefits of purity because it was made from pure ve etable oils and e!otic "asmine fra rance# was introduced in the towns of $ndore and Hyderabad in %ctober &''() *he brand had been in the test mar+et now for nine months) *he company had to very soon decide on national e!tension of the product) *he ,ar+etin ,ana er for toilet soaps# ,r) Rahul# had set up an information system eared to provide feedbac+ on the brands performance at re ular intervals) Apart from the company sales data which were available from the internal sources# information about brand performance was bein received from two other sources) A re ular bi-monthly audit of a sample of retail shops in these mar+ets# the lin+ between the company and the consumer# had been arran ed to ascertain the offta+e of the brand vis-.-vis other brands) And finally# a sample of households was chosen in each town for monthly chec+s to enerate data from the primary source about the acceptance of the brand) *hese chec+s were conducted to measure the penetration of the brand in the tar et roup# i)e)# the e!tent to which it is tried at least once by tar et consumers# the rate of repeat buyin amon those who tried the product# and the mar+et share the brand achieved in the panel of households) $n addition to this continuous flow of information# a mar+et research study had "ust been completed in the two test towns to et /ualitative feedbac+ about the product from consumers) *he bac+ round information about the company# the toilet soap mar+et# the decision to introduce the new toilet soap# and the development of the product and the advertisin compai n of Sehra is iven in Household products 0$ndia1 2td) 0 C1 O!"e#tives $% t&e Test Mar et ,r) Rahul# in his test mar+et proposal# had indicated the ob"ectives of the test mar+et and action-standards for decision on e!tension as follows3 4) *he brand should achieve a mar+et share comparable to that of the competition brand 5aimala offerin the benefit of 5asmine fra rance) 0*he company did not have information on its mar+et share in test towns# althou h nationally the brand had a share of 6)7 per cent in the total toilet soap mar+et and 48 per cent in the hi h price sector1) *he brand should position itself in the premium price sector of the toilet soap mar+et emer in with a distinct ima e of a lu!ury soap due to its e!otic fra rance and purity)

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Case written by Late (Prof.) Labdhi Bhandari, IIMA and updated by Dr. S. R. Sin h!i in "#$#

*he initial support e!penditure to promote the brand in the test towns had scaled down from the national level of e!penditure at which the brand would ma+e desirable contribution to the company profits if it obtained a mar+et share of 4' per cent in the hi h price sector) *he test mar+et tar et for mar+et share# ,r) Rahul ar ued# had been +ept at a hi her level to allow for the hi hly concentrated effort that this operation was oin to receive# would could not be duplicated on a national level) Test Mar et A#tivit' Sehra was launched in the two test towns with a 2aunch Conference attended by the sales mana ers responsible for the sales areas of ,adhya 9radesh and Andhra 9radesh# sales supervisors responsible for the towns# the salesmen who wor+ed in these mar+ets# and the company stoc+ists from these towns) *he ,ar+etin :irector and the ,ar+etin ,ana er outlined the company strate y in the toilet soap field# e!plained how Sehra fitted into the strate y and stressed the importance of the tas+ that they were about to underta+e) *he ;eneral Sales ,ana er dwelt on the sellin strate y and ave them their tar ets) *hey were as+ed to achieve a distribution for the brand e/uivalent to that of the competition brand 5aimala and if possible e!tend it beyond that level) *he merchandisin strate y and the importance of displays were stressed) *he launch was accompanied by a display contest for retail shops# desi ned to achieve hi h visibility for the brand in the first month of launch) *he advertisin in the local press and slides in the cinema houses bro+e two wee+s after the sellin -in be an) :urin the second month of the launch# coupons were distributed in selected localities which entitled the consumer a discount of Rs)6 on one ca+e of Sehra) *hese were accompanied by a leaflet ivin the product story and were meant to achieve a hi h rate of trial of the brand amon tar et consumers) Test (ar et Results *he initial sales fi ures were very encoura in althou h after a few months sales tapered off and established at a lower level) 0E!hibit 4 ives the sales data for both the towns)1 A similar trend was observed in the mar+et share data measured on the retail shop panel audited bi-monthly) *he brand had dropped its share from around < per cent in the first few months to around = per cent in later periods in Hyderabad) However# in $ndore it dropped to 7)8 per cent after a hi h level of 4'-4& per cent durin the introductory discount offer period) 0E!hibit & ives mar+et share fi ures as measured by the retail shop audit1) *hese shares# however# were less than half the levels of share en"oyed by the competitor > 5aimala) C$nsu(er Panel Data *he consumer panels set up in these two towns consisted of households each representin income roups A 0household income above Rs)6'#''' per month1 and ? 0household income between Rs)47''' and Rs)6'#''' per month1) *he income roups C and : were e!cluded from the sample as it was felt that the bul+ of the mar+et for hi h price

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sector consisted of households in the first two cate ories) Re ular monthly chec+s were made and the information re ardin household purchases durin the precedin month was ascertained) *he interviewer did not ive any indication of either the company represented or the particular product roup that she was interested in ) She however# did occasionally as+ for either cash memos or products@pac+s to be shown in order to chec+ the reliability of responses) *he data collected was analyAed to brin out penetration# repeat buyin and mar+et share) Special analysis was also made to ascertain which brand had contributed to the sales of Sehra) 9enetration was defined as households who bou ht Sehra at least once as a percenta e to total toilet soap buyin households) *his analysis was also done ta+in the tar et population as hi h-price toilet soap buyers) *he cumulative penetration at the end of first ei ht months 0for which data are available1 is iven below) E!hibit 6 ives detailed month by month penetration) $ncome *otal Class A $)C) A H')era!a) 4) &) In)$re 4) &) Amon toilet soap buyers Amon hi h-priced toilet soap buyers &')6B (4)&B 4<)8B (')'B 4()4B (')'B Amon toilet soap buyers Amon hi h-priced toilet soap buyers 4<)8B 64)=B <)8B &=)8B C)&B 6')'B Class ? $)C) ? $ncome

Repeat buyin rates in the two towns were also different) $n Hyderabad the rate was around 6' per cent whereas in $ndore it was around &' per cent# althou h it fluctuated from month to month) E!hibit 8 ives month by month analysis of percenta e of households buyin Sehra and 5aimala# and E!hibit 7 ives mar+et shares in the total toilet soap mar+et as measured on the consumer panel) $n Hyderabad Sehra achieved a share of around 6 per cent to 6)7 per cent 0by value1 as a ainst 7 per cent for 5aimala) $t was# of course# much hi her in the A income class households) $n $ndore Sehra was showin a hi her share in the first five months but in the last two months it was lower) E!hibit = ives the sources from which Sehra ained its sales) As would be seen# very little was ained from the competition brand 5aimala# when purchases of household buyin Sehra in second period were analysed for the previous period) *he ains seemed to be more from the low-price brands)

Mar et Resear#& *in)ings A consumer survey had "ust been completed which involved interviewin 6'' women in each town from income classes A and ?) *he final report on this was not yet available# but the preliminary results indicated that on the whole the brand was li+ed by users) $ts perfume was# however# considered wea+er than that of 5aimala) Dot many respondents played bac+ its claim of made from pure ve etable oils) Nati$nal E+tensi$n ,r) Rahul was oin over the test mar+et results to arrive at a sound recommendation supported by results) He was not sure whether the information available was ade/uate to formulate a recommendation) He felt that while it may not be possible to collect more information from primary sources# he could re/uest the mar+etin research department for more analysis# if necessary)

E,HI-IT . Sales $% /Se&ra0 (*igures in 1r$ss) 0$n#''' Enits1 ,onth F Gear %ctober &''( Dovember &''( :ecember &''( 5anuary &''C Hebruary &''C ,arch &''C April &''C ,ay &''C Hyderabad 8'' 87' 8<7 6(' 6&' 68' 6'' 64' $ndore 67' 8'' 87' 84' 6'' &(' &=' &77

E,HI-IT 2 MAR3ET SHARE 4 HI1H PRICE SE1MENT HG:ERA?A: Sehra 5aimala <)& 4=)< =)C 47)' =)4 47)6 =)6 48)7 7)7 46)( 84'' ='' Sehra 7)= 4&)8 4')& 7)8 7)' $D:%RE 5aimala 48)' =)4 48)< 48)6 46)( 6&'' 7''

%ctober :ecember Hebruary April 5une Do) of shops stoc+in *oilet soaps Do) of shops in the panels

E,HI-IT 5

Anal'sis $% Cu(ulative Penetrati$n $% Se&ra A($ng T$ilet S$a6 -u'ers

Hyderabad $)C) ? 4)' 6)' 8)< 7)& 7)< 7)< =)C <)8 $ndore $)C) ? <)C 4')7 48)7 4=)& 4=)< 4=)< 4=)C 4<)8

,onth %ctober Dovember :ecember 5anuary Hebruary ,arch April ,ay

$)C) A 6)6 <)= 44)8 46)= 48)8 48)8 47)C 4<)8

*otal 4)= 8)4 =)8 <)6 <)C <)C C)& C)&

$)C) A 8)& ()& 4<)C 4()C 4C)< 4C)< &')6 &')6

*otal <)4 4')' 47)6 4=)C 4<)8 4<)8 4<)( 4()4

E,HI-IT 7 /Se&ra0 Mar et S&are (-' 8alue) %ct) Hyderabad $)C)A $)C) ? *otal 5aimala $ndore $)C)A $)C) ? *otal 5aimala &)6& ')(& 4)&< 7)(< 6)== 6)=C 6)=( 4)6C Dov) 6)'( 4)=( &)48 C)46 8)(6 &)'' &)=4 4)4C :ec) 7)'7 4)(6 &)(' 7)=< <)CC 6)(8 8)C' 4)=' 5an) 8)8' 4)6' &)&< 7)(7 =)&4 6)'7 6)C4 4)'( Heb) 8)'8 4)47 &)46 7)46 <)8' &)(< 8)'( 4)C' ,ar) =)=' &)6& 6)7C 8)(8 4)8< &)'8 4)<C 4)<6 Apr) <)'6 4)6= 6)4' 8)(< &)'C 4)(C 4)C8 4)7' ,ay =)C' 4)84 6)44 8)C' &)4' &)'' &)'& 4)='

E,HI-IT 9 :&ere Di) /Se&ra0 1ain *r$(; Peri$)s $% C$(6aris$n< Peri$) I 4 O#t$!er = N$ve(!er Peri$) II 4 *e!ruar' = Mar#& (*igures in 6er#entage) Hyderabad $ndore Rs)&6=''J4''B Rs)&'7''J4''B 8=)C 46)C 4)6 46)4 ()8 4)6 &)C &)6 ()& 4)= 86)6 4&)& =)6 7)& ')C ')C ')= =)' 44)' 46)=

Ialue of Sehra bou ht ;ained from KKSehra K?eauty Lueen KSea ;reen K;low KK5aimala KKHresh KK;ulab KK*ender *ouch KKChandan %thers K 2ow 9rice ?rand KK Hi h 9rice ?rand

9ossible /uestions3 E!amine the test mar+et results in li ht of the ob"ectives setM Nhat is the mar+et share Sehra is li+ely to achieve in the test towns in futureM $s the info available ade/uate for ta+in a decision for national e!tensionM Nhat +ind of info would you have li+ed to obtainM Should the company launch the product nationallyM Nhat modifications would u su est in product# ad# distribution and price of Sehra for national e!tensionM

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