Managing Customer Value - Group Assignment

EXECUTIVE SUMMARY
Hemas is one of the top diversified conglomerates in Sri Lanka. Out of Hemas various business stances in Sri Lanka, FMCG industry plays a significant part in generation of profits which help them to be market leaders. Baby Cheramy is the flagship brands in Hemas FMCG sector. It is being in the market for baby products for more than 40 years. Due to immense competition emerging from existing local and international products for babies Hemas is now facing threats. Authors carried out a primary survey to recognize what is the current positioning about the brand in the customers mind and what are their expectations. After identifying the current stance in the customers mind authors developed repositioning strategies which could be adopted by Hemas to retain the market leadership and to improve the market share. The following report has been prepared based on the analysis carried out in the following areas: Introduction to the company (SWOT, Porters 5 force Analysis and strategic group mapping) Gap Analysis Repositioning strategies and justifications Relevant appendices to give support to the analysis

Based on the research findings possible recommendations are also been given at the end of the report.

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ACKNOWLEDGEMENT
The authors are heart fully thankful to their Managing Customer Value lecturer Mr. Rajitha Silva, whose encouragement, guidance, and support from the initial to the final level enabled to the authors to develop an understanding about the subject. Also the authors are thankful to Dr. Mahesha Samarathunga, for directing them in the correct path regarding citation and references. The authors also wish to thank the librarian. Lastly, the authors offer their regards to all those who supported them during the completion of this group assignment. The authors are responsible for any errors that remain in this assignment.

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TABLE OF CONTENTS
EXECUTIVE SUMMARY .......................................................................................................................... 1 ACKNOWLEDGEMENT ............................................................................................................................ 2 TABLE OF CONTENTS .............................................................................................................................. 3 1. COMPANY BACKGROUND ............................................................................................................. 5 1.1 1.2 1.3 Introduction to Hemas ................................................................................................................... 5 Marketing Philosophy ................................................................................................................... 5 Product Portfolio ........................................................................................................................... 6

2. SITUATION ANALYSIS ........................................................................................................................ 7 2.1 SWOT Analysis .................................................................................................................................. 7 2.1.1 Strengths ................................................................................................................................... 7 2.1.2 Weaknesses ............................................................................................................................... 7 2.1.3 Opportunities............................................................................................................................. 7 2.1.4 Threats....................................................................................................................................... 7 2.2 Porters Five Forces Analysis ............................................................................................................ 8 2.3 Strategic Group Mapping .................................................................................................................... 9 3. GAP ANALYSIS .................................................................................................................................... 10 4. REPOSITIONING STRATEGIES ......................................................................................................... 14 5. RECOMMENDATIONS ........................................................................................................................ 16 REFERENCES ........................................................................................................................................... 17 APPENDICES ............................................................................................................................................ 18 1) 2) 3) 4) 5) SWOT Analysis .............................................................................................................................. 18 Porters 5 Forces Analysis .............................................................................................................. 23 Strategic Group Mapping ................................................................................................................ 24 Sample Questionnaire ..................................................................................................................... 27 Survey Analysis .............................................................................................................................. 31

WORK LOAD MATRIX ........................................................................................................................... 39

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LIST OF FIGURES
Figure 1 - Piyawera CSR scheme of Hemas ................................................................................................... 5 Figure 2 - Product Portfolio........................................................................................................................... 6 Figure 3 - Porter's 5 Forces ........................................................................................................................... 8 Figure 4 - Positioning Map ............................................................................................................................ 9 Figure 5 - Repositioning Strategies ............................................................................................................. 14 Figure 7 - Market Share for soaps ............................................................................................................... 19 Figure 6 - Market share of toiletries ........................................................................................................... 19 Figure 8- Taxation on Profits ....................................................................................................................... 22 Figure 9 - Preference Level ......................................................................................................................... 32 Figure 10 - Attribute Preferences ............................................................................................................... 33 Figure 11 - Brand Switching ........................................................................................................................ 34 Figure 12 - Brand Perception ...................................................................................................................... 34 Figure 13 - Purchase Decision ..................................................................................................................... 35 Figure 14 - Customer Awareness ................................................................................................................ 35

LIST OF TABLES
Table 1 - Gap Analysis ............................................................................................................................... 13 Table 2 - Product Range .............................................................................................................................. 18 Table 3 - Ratios............................................................................................................................................ 20 Table 4 - Product Varieties .......................................................................................................................... 26 Table 5 - Preference Rates .......................................................................................................................... 31 Table 6 - Attribute Preferences................................................................................................................... 33 Table 7 - Brand switching rate .................................................................................................................... 33 Table 8 - Perception .................................................................................................................................... 34

LIST OF ABBRIVIATIONS
CDDA Cosmetics Drugs and Devices Authority 5S Japanese Quality Management System ECCD Early Childhood Care & Development SL- Sri Lanka J & J Johnsons & Johnsons FMCG Fast Moving Consumer Goods B/C Baby Cheramy

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1. COMPANY BACKGROUND
1.1 Introduction to Hemas
Hemas is one of the top diversified conglomerates in SL with 20 active subsidiaries which operates in 5 different sectors FMCG, healthcare, transportation, power and leisure, started its operations in 1948 (Hemas Annual Report, 2009). This is a listed company guided by its core values passion for customers, obsession for performance, driven by innovation and concern for people (Hemas Annual Report, 2009). The following report is prepared based on the flagship brand Baby Cheramy of Hemas. According to Hemas corporate website (2011), In its life span of over 40 years B/C has grown into a complete range of toiletries and accessories for babies. Renowned for simple purity of product, using ingredients carefully tested for mildness and suitability for use on babies.

1.2 Marketing Philosophy

Hemas has adopted societal marketing concept. They have invested in Piyawera scheme which has the motive to improve ECCD developments in early childhood of children in SL. This has started 32 pre schools all round the nation which educates more than 3000 students.

Figure 1 - Piyawera CSR scheme of Hemas

Source: Hemas corporate website, 2011

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1.3 Product Portfolio

FMCG

Transportation

Leisure

Health

Power

Personal Care

Home Care

Foods

Paper Products

Traded Brands

Figure 2 - Product Portfolio

Source: Austceyl corporate website (2011) & Authors work

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2. SITUATION ANALYSIS
2.1 SWOT Analysis
2.1.1 Strengths Hemas is a Sri Lankan company with 20 active subsidiaries and shares being traded in stock exchange (Hemas corporate website, 2011). B/C product range has been in the market since 1962 (austceyl corporate website, 2011) with a wide range of products. As said by super brands corporate website (2011) it has the market share of 47% currently in toiletries segment. Hemas has adopted lean manufacturing systems recently and won various prices for brand excellence especially for B/C (you tube corporate website, 2011 & hemas annual report, 2009). Financial policy is in a good position. (Refer appendix 1.1) 2.1.2 Weaknesses B/C has to face various competitive activities from its close rivals like Pears and J & J which make Hemas to retaliate based on their strategies. Customers mostly prefer foreign brands thinking that they have more quality than B/C. Maybe due to the above reasons Hemas facing difficult times in certain segment like baby soaps. B/C racks in super markets are filled with some other brands which could have an impact on the purchase behaviour.

(Refer appendix 1.2) 2.1.3 Opportunities Tormenting war came to an end in SL which has created a gateway to enter into North and Eastern markets. According LBO corporate website (2011), customer spending patterns has increased to a certain extent. On average 340000 children are born in SL gives a available market for B/C (super brands corporate website, 2011). Many universities offer industry oriented degrees which the company can adopt. (Refer appendix 1.3) 2.1.4 Threats Unregistered CDDA imports are dominating the market (LBO corporate website, 2011). Tax rate has gone up from 14.6% - 16.1% (Hemas annual report, 2011). More recognition is there towards Unilever and P & G. Environment can get polluted by the polythene based packages. (Refer appendix 1.4)

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2.2 Porters Five Forces Analysis

Threat of Substitutes
-Herbal products:Aloe vera soap
-Home made remedies: Egg york, neem oil -Aromatherapy products. -Organic products.

Threat of new entrants and entry barriers -Government policies.

-Health and safety rules. -Legislation process. -Trade barriers. -Initial investment. -Registered trademarks with high brand loyalty. -Benefit over the economies of scale

Existing Rivalry
- More than 11 competitors. -High switching cost -Monopolistic competition -Constant changes in prices and differentiation in product. -High asset specificity -High exit barriers

Buyer Bargaining Power Supplier Bargaining Power -Low bargaining power over suppliers.
-Cost of changing brand -Buyer fragmented and dispersed. -Higher switching cost. -Moderate power -Labour inputs -Raw material supplies -Utilities

Figure 3 - Porter's 5 Forces Source: Done by Authors

(Refer appendix 2)

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2.3 Strategic Group Mapping

Source: Done by Authors Figure 4 - Positioning Map

(Refer appendix 3)

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3. GAP ANALYSIS
Attributes Available Expected Market (Local/Foreign) Product Variety B/C offers a large There are some more J & J, Pears have almost similar like B/C.

range of baby care varieties that the present launched products and customers and potential customers products

are extremely happy expect from the brand Foreign brand does not about it. such as baby bath, offer all the variety as offer in their

bottom balm, toothpaste, they lotion etc

mother countries. Other local firms still have to improve their product range to make it comparable with B/C.

Package

In 2009 October B/C Customers re-launched its product satisfied

relatively J & J uses see through with new bottles.

packaging to enhance packaging but Hemas Other brands do not customer acceptance could use various shapes make any difference in

(Hemas annual report, relating to kids and also packing. 2010). could thing of attractive colors. Features Very differentiations few Customers are various expect J & J offer various in fragrances which are

fragrances

available regarding the B/C. products.

favored by babies.

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Size

Shampoo size is only Can improve the size of J & J offers 1 litre available 40ml 400ml the bottles to 600ml 1 bottles at a different liter where they do not package. need to go to purchase them eventually

Price Market Price

Price available in the According to the survey Local

brands

like

market is the lowest young parents seek to kekulu, kohomba, panda price. look at other attributes etc. offers at the similar like quality and sense of price as B/C. satisfaction rather than only price. J/J, Avent, Curash & Mother care offers at a relatively high price.

. Special Schemes B/C offers triple value People from sub urban Kohamba pack and offers gift

BOGOF areas seek more value packs at a high price

schemes for cologne for money from B/C comparing to B/C. consumption. Gift packs available at lower price consists of most of the product range of B/C. Promotion Tag Line Pure Love products. J/J offers different sizes of gift packs with a price lower than B/C.

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Managing Customer Value - Group Assignment Tools B/C uses national level Comparing to J & J B/C J & J uses repetitive TV radio etc to advertisement, is lacking behind in the advertisements which

announcements development of emotion promotes bond between reach the which enhances the mother and child.

potential customers.

bond between mother and child. Imaginative Pears use to animative capture

Hemas is one of the and creative ads can be creatures conglomerate which used to bridge the gap.

small toddlers attention.

tries to promote ECCD development in Sri B/C can use repetitive Mother care, Avent and are mainly

Lanka. It has launched advertising on channels Curash Piyawara scheme to as like J & J. improve childhood development. corporate 2011). early B/C and Pears

purchased through word of mouth publicity by TV the users in the foreign are countries and in SL.

(Hemas advertisement

website, similar in nature so it These CSR might confuse B/C the can

activities improve its audience. awareness.

change it current ads with taking the above

Stores

are

provided mentioned points into

with racks to shelf their consideration. branded products to

promote them. Place Channel B/C island second is distributed Current users of the J & J and Pears products through brand are satisfied with are displayed in separate of the placing of B/C. racks provided. They are available in most of the regions in SL.

wide

level

distribution channels to all the super markets like Keels, Cargills etc and boutique shops.

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Managing Customer Value - Group Assignment Reach B/Cs target segment Hemas spreads from can establish Other brands like Avent,

low new strategies to make Mother care & Curash

income to upper middle sure that the brand is are sold in baby care income. So it is available at all possible shops which are very

distributed island wide. locations in the areas few. Due to this they retain aftermath of war. their market leadership. Local customers mostly get these brands

imported or got them from friends in other countries. Store Displays B/C racks are displayed in prominent places to attract and make the customers easily reach what they wanted.

Online

E- Commerce websites

Most of these brands were purchased online through e- commerce websites.

shopping like Kapruka, Alibaba, Keels online etc sell B/C brands.
Table 1 - Gap Analysis

Source: Table was prepared based on survey findings and direct observations in supermarkets

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4. REPOSITIONING STRATEGIES
Repositioning is where a firm tries to change the perception that their customers hold in their mind regarding a particular product (Lovelock &Wright, 2002). Repositioning has gained vital importance in todays context due to ever changing customer preferences (Jobber, 2010). Jobber (2010) explained that there are four strategies that a firm can adopt into to reposition.

Figure 5 - Repositioning Strategies Source: Adapted from Jobber and Fahy, 2008 .

Hemas can adopt image repositioning strategy to improvise the mental perception of people about the brand. Image repositioning is where keeping the product and target market the same but to change the image of the product (Jobber & Fahy, 2008). In terms of the requirements to be in the baby care market B/C has required functionalities. But it is lacking behind in creating a strong brand image to combat competition stemming from the industry. According to the primary survey conducted by the authors it is evident that customers perception on quality regarding B/C is considered to be low. This is because of the strong image of quality regarding other brands created through promotional campaign, word of mouth etc. Through image repositioning strategy Hemas could focus on how to implant the view that B/C is a good quality product. Hemas could focus on getting medical approvals that ensures that the brand is out of any harm to the skin conditions of toddlers. Hemas could get advice from SL College of dermatologists who

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Managing Customer Value - Group Assignment can give advice regarding quality enhancements they can have in each product variety of B/C. Hemas signed an MOU with UNICEF in 2001 relating to its ECCD development programs initiated to enhance ECCD developments in SL (Hemas corporate website, 2011). So Hemas can give more emphasis in this additional recognition from an international treaty to convince that they are producing reliable baby care brand with giving more concern for the society in which they operate. It is already said in SWOT analysis that there are chemical and bio technological degrees offered through local universities in SL. So Hemas could make use of these graduates to enhance the current ingredients to make it more effective on tender skin conditions. Hemas could be benefited from carrying out promotional campaigns which would give more focus to the relationship of mother and child rather than of limiting to animated creatures. The TV ads would give more impression to the customers rather than in any printed medium. Repetitive ads could be able to lift up the need to purchase a product variety of B/C. Hemas could use celebrity endorsements that would be inspirations to mothers having kids. Appearance of doctors would create more awareness towards the brands. Ads should not be of high end standard but could be able be understood by low income level as well. Another strategy that could be used by Hemas is product repositioning, where target market would be the same but product will be enhanced. It is a general issue that authors came across that most of the customers are expecting more variety from B/C. For example they were expecting baby bath, bottom balm and requested some variations in term of cologne fragrances. J & J seems to be the leader for varieties of products. So Hemas could use this strategy to make their position better in terms of varieties. Hemas could improve their backward vertical integration with their suppliers to get best quality products to manufacture requested product varieties of the customers. It is essential to look into the capabilities of the firm to get quality ingredients to manufacture varieties of fragrances. If they going get imported from other regions of the world the cost aspect

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Managing Customer Value - Group Assignment should also be given much concern otherwise the current position of the brand in pricing would be cannibalized. Hemas could also use organic and natural ingredients to their new varieties or could introduce a product range. Due to emerging concepts on organic product and Hemas societal marketing concept this would aligned. Hemas should again be able to promote it to the customers in a way which could get good reach. By coming up with products satisfying customer expectations the culture could be enhanced on being customer focused. Hemas is doing relatively well in sub urban areas and as well as in urban areas. So shift of target market is not essential. So above mentioned strategies could shift the current position of Hemas to a different and yet desirable place to improve market position and profits in future.

5. RECOMMENDATIONS
As per the research findings illustrate it is clearly evident that Hemas is in a very crucial point to reposition its flagship brand to bring up the perception of quality. Hemas could adopt image/product or both repositioning strategies to get rid of the emerging competition from baby care products. Hemas could get adapted to the evolving changes in the current market to be successful in the market. By using the strengths identified in SWOT, it could invest more in R & D and quality standards. It could seek the unarticulated needs of their customers and should utilize its unique resources and capabilities to develop new products. Hemas could be able to develop marketing intelligence to gather useful information about any moves of its rivals. By doing all the above it should be able to develop a customer centered culture which would lead to the success of the repositioning of the business venture.

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REFERENCES
Austceyl corporate website, (2011), [online], Available http://austceyl.com.au/index_files/Page820.htm [Accessed on 20th May 2011] Daily mirror corporate website, (2011), [online], Available http://print.dailymirror.lk/business/127-local/19546.html [Accessed on 5th June 2011] Hemas Holdings, (2009), Hemas Annual Report 2009, Sri Lanka Hemas corporate website, (2011), [online], Available at: http://www.hemas.com/finrepos/98_Hemas%20Holdings%20AR%202009-10.pdf [Accessed on 19th May 2011] Hemas corporate website, (2011), [online], Available at: http://www.hemas.com/index.php?action=nav&main=newsnmedia&sec=news&sel=15&ex=1&i d=69 [Accessed on 28th May 2011] Jobber. D, (2010), Principles and practice of marketing, 6th edition, UK, Mc Graw Hill. Jobber. D & Fahy. J, (2008), Foundation for Marketing, 2nd edition, UK, Mc Graw Hill. LBO corporate website, (2011), [online], Available http://www.lbr.lk/fullstory.php?nid=201006091528589716 [Accessed on 20th May 2011] at: at:

at:

Lovelock, C. and Wright, L. (2002), Principles of Service Marketing and Management, USA, Pearson Education. Quick MBA corporate website, (2011), [online], Availble http://www.quickmba.com/strategy/porter.shtml [Accessed on 30th May 2011] Super brand corporate website, (2011), [online], Available http://www.superbrands.com/lkc1/pdf/07_consumerSB.pdf [Accessed on 18th May 2011] Scribd corporate website, (2011), [online], Available http://www.scribd.com/doc/22046549/A-PROJECT-ON-BRAND-REPOSITIONINGSTRATEGY-OF-TITAN-WATCHES [Accessed on 29th May 2011] at:

at:

at:

You Tube Corporate website, (2011), Baby Cheramy Pure Love, [online], Available at : http://www.youtube.com/watch?v=Xf-NG7-ROqA [Accessed on 29th May 2011]

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APPENDICES
1) SWOT Analysis 1.1 STRENGHS
Being a product of Sri Lankan company

Baby Cheramy is a product from Hemas, which is one of the Sri Lankas top 10 diversified conglomerates (Hemas corporate website, 2011). This has enabled the brand to reach the target group without any difficulties. Long term sustainability in the baby care market

Baby Cheramy is being in the market since 1962 (austceyl corporate website, 2011). As it is a baby care brand this has created bond with mothers and children and the value has been transferred from generation to generation. Wide range of products Napkin rash powder Baby Cologne Body Oil Baby Shampoo Baby Soap Pampers Cotton Buds Gift Packs

Baby Talc Prickly Heat Powder Baby Cream Napkin rash cream
Table 2 - Product Range

Source: Authors Work

The product range satisfies almost every need of a baby. Position as the market leader

Baby Cheramy is in the market leader position in the market of toiletries with 47% (Colognes 35%, Creams 54%, Talc 38%, and Soap 42%) and accessories for babies (Super brands corporate website, 2011). It is in a healthy lead against Pears.

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Market Share - Toiletries

3% 19% 47% 31% Baby Cheramy Pears J&J Others

Figure 6 - Market share of toiletries

Market Share - Baby Soaps

3% 5% Baby Cheramy 9% 42% 41% Pears Kekulu J&J Others

Figure 7 - Market Share for soaps Source: Authors Work based on youtube corporate website (2011) and superbrands corporate website (2011)

Affordable pricing and island wide distribution

Baby Cheramy targets the lower income to upper middle target segments (super brands corporate website, 2011). The pricing seems to be reasonable. According to super brands corporate website (2011), Baby Cheramy now permeates all geographical and socio-economic households in Sri Lanka. Product is also been distributed to Australia, New Zealand, Maldives etc. Recognition through awards received

B/C has received SLIM brand excellence (2007), Brand of the year (2007), Best local brand (2007), Best product brand (2007) and it is the No 1 brand for Hemas (YouTube corporate website, 2011).

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Managing Customer Value - Group Assignment Financial Stability

The financial highlights through ratios show a steady improvement over the past few years.

Table 3 - Ratios

Source: Adopted from Hemas Annual Report (2009)

Lean manufacturing production systems

Hemas first step towards implementing 5S lean manufacturing system is now complete where Hemas has also received Gold award in the manufacturing sector and Silver award in overall category in the Taiki Akimoto award competition in 2010 (Hemas annual report, 2009).

Continuous product developments and product launches

In order to combat the immense competition in the market Hemas continuously launches new product ranges time to time. Eg: Aloe Vera cream 2004, Plastic Cologne bottles 2005

1.2 WEAKNESSES
Lacking back in certain Segments Pears launched new soap range with flower fragrances which is new to the market. This activity would increase the potential market share of Pears which is already the market leader in soaps for babies.

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Managing Customer Value - Group Assignment Customer Perception

Hemas is yet to retaliate the misconception of the quality of the product range. Quality wise J & J seems to be preferred first. Lack of Promotion

Hemas does promotion when they do product launches or when they do CSR to kids whereas, foreign brands (J & J) promotes repetitively. Packaging is not that attractive compared to other brands. Other brands placed in B/C racks

B/C has provided certain racks which promotes its brands. In that various other brands were placed. So this would have an impact on purchase decision at the store where as this is not the case in J & J racks.

1.3 OPPORTUNITIES
End of civil war in Sri Lanka "Aided by markets that were previously underserved, and the improvement in the local economy, most FMCG categories saw double digit growth," Hemas chief executive Husein Esufally told shareholders in the annual report (Lanka Business Online corporate website, 2011). Hemas can reach the Northern Province markets easily. Child Birth Rate

In SL approximately 340000 children are born each year on average (Super brands corporate website, 2011). If Hemas tap these markets in could generate more revenue. Qualified work force accessibility

Many universities in SL for example Moratuwa provides chemical engineering degrees and Colombo University provides biotechnological degrees. Hemas can be able to access these students to improve their R & D functions for better products. Increase in consumer spending pattern
According to LBO corporate website (2011), Hemas groups said its FMCG division grew revenues at double digit rates in the latest financial year and it re-launched brands as consumer spending rebounded. Sri Lanka had high inflation in 2008. It hit a peak of 28 percent in mid-2009 but fell thereafter.

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Managing Customer Value - Group Assignment 1.4 THREATS Competition from imported brands

There are many international companies which cater to the same market of baby cheramy. There is a threat of reduction in the market share of the brand. "Over the years our fragrance category has been adversely impacted by the plethora of unregistered with CDDA imported fragrance produces available in the grey market," says Esufally (Lanka Business Online corporate website, 2011). Increase in taxation rate The taxation rate has increased from 14.6% - 16.1% during last year which is a threat as it would have an impact on the revenue generated by the product ranges of baby cheramy.

Figure 8- Taxation on Profits Source: Hemas corporate website (2011)

Environmental Pollution

Product range often uses plastic and polythene based packages. This would have an impact on the environment and would go against their social responsibility concept. More recognition towards Unilevers and P & G

Hemas has to compete with Unilevers which has baby care brands targeted towards segment in two extremes i.e. J & J for premium price and Pears for average price range. P & Gs pampers, Farlin are also in the same markets. Overcoming this brand recognition creates immense threats to the company.

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2) Porters 5 Forces Analysis 1. Existing Rivalry

Baby care market is highly concentrated as there are 3 dominant players i.e Baby Cheramy, Pears and J & J. There are various foreign and local emerging players which makes the market monopolistic competition. The dominant players face difficulties in the market due to changing prices, differentiation in products etc. Demand sometimes tends to be cyclical where it fluctuates over birth rate (Quick mba corporate website, 2011). Asset specificity will be high as equipment used in production is very unique in nature and wouldnt be able to find a readily available market price. So exit barrier would be high.

2. Threat of Substitutes
Most of the rivals produce chemical based baby cosmetics where as some of the new players like Kohomba baby and kekulu came up with herbal products which created a threat for the market leaders. In order to retaliate this threat now B/C and J & J has also launched herbal range. Home remedies are also available such as egg yolk, gingili oil, neem oil etc. But this has not created that intense threat. Organic products are been developed. If those brands enter the market it would be a substitute. Aromatherapy remedies are also available. So the demand curve remains inelastic due to lack of alternatives.

3. Buyer Bargaining Power

Buyers are fragmented and widely dispersed around the country. So there is no way that a particular customer can have bargaining power over suppliers. Products are differentiated. There are not standardized. When customers switch from one brand to another they have to face switching costs where the brands offer products at different prices.

4. Supplier Bargaining Power

Suppliers are powerful to a certain extent as companies in the sector needs to get inputs from various sources such as labour, raw materials, utilities etc.

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5. Threat of new entrants and entry barriers

Government procedures are to be followed when a new competitor enter into the market. Health and safety rules, legislation process and initial investments can be said as potential barriers for a new comer. But as it is a monopolistic market there are very little barriers to ban the entry to avoid cut throat competition as in oligopolies. All the brands in the segment are registered trademarks with high brand loyalty. Firms are well established foreign or local companies which has significant benefit over the economies of scale rather than of a new comer to the industry. It can be said that this forces impact is moderate.

3) Strategic Group Mapping

The strategic group mapping was done based on the two variables mentioned below: Product Variety Product Prices

The bases for the analysis were taken from the table below consisting of the information for each brand for the above variables. Brand BABY CHERAMY Variety
SOAP SOAP ALOE SOAP FLOWERS COTTON BUDS CREAM CREAM MILK POWDER PRICKLY HEAT TALC NAPPY RASH CREAM SHAMPOO FEEDING BOTTLE POWDER CREAM CREAM ALOE TALC FLOWERS CREAM MILK HA/BODY OIL ALOE COLOGNE COLOGNE FLOWER

Quantity Price
75G 75G 75G 100S 50ML 50ML 100G 100G 100ml 125ml 120ml 200g 100ml 100ml 200g 100g 125ml 50ml 50ml 33/= 33/= 33/= 43/= 58/= 58/= 67/= 70/= 85/= 90/= 100/= 105/= 105/= 105/= 105/= 105/= 110/= 110/= 110/=

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FEEDING BOTTLE DIAPERS SMALL 4S DIAPERS MEDIUM 4S DIAPARS LARGE 4S SOAP 5S SHAMPOO BABY CHERAMY TALC CREAM CREAM ALOE VERA COLOGNE BABY DOLL COLOGNE TEDDY BEAR BABY CHERAMY COLOGNE COLOGNE FLOWER OIL COLOGNE FLOWER COLONGE GIFT PACK CREAM NAPPY WASH POWDER DIAPERS X/LARGE 10S DIAPERS LARGE 12S DIAPERS MEDIUM 12S SOAP TIP TO TOE WASH BABY CREAM COLOGNE COLOGNE POWDER MIST POWDER BABY LOTION SHAMPOO HAIR OIL MILK CREAM MILK BATH GIFT BOX BABY BATH PEARS HERBAL SOAP SOAP SOAP FLORAL CREAM PEARS BABY POWDER SHAMPOO COLOGNE FLORAL 240ml 110/= 135/= 135/= 135/= 145/= 155/= 175/= 178/= 178/= 180/= 180/= 195/= 195/= 195/= 290/= 290/= 300/= 325/= 335/= 380/= 380/= 380/= 65/= 65/= 100/= 115/= 125/= 125/= 135/= 160/= 180/= 200/= 210/= 225/= 280/= 300/= 33/= 33/= 33/= 58/= 68/= 90/= 105/=

75G 250ml 400g 200ml 200ml 125ml 125ml 100ml 100ml 250ml 200ml 200ml 400ml 1kg

J&J

75g 50ml 100ml 50g 50ml 50ml 100g 100ml 100ml 100ml 100ml 100ml 200ml 75g 85g 75g 50ml 100g 120ml 55ml

PEARS

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OIL COLOGNE FRESH HERBAL CREAM CREAM COLOGNE MAGIC DROPS SOAP 75G 5S SAVE 20 HERBAL CREAM CREAM COLOGNE COLOGNE MAGIC DROPS MOSTURINSING LOTION MILK BATH SHAMPOO BABY OIL FACE CREAM SOAP SHAMPOO BABY WASH COLOGNE CREAM BABY TALC SOAP COLOGNE TOOTHPASTE SOAP FEEDING BOTTLES COTTON BUDS SOAP FREE BATH BABY WIPES SILICON TEAT FEEDING BOTTLE CREAM COLOGNE MOISTURIZING LOTION BOTTOM BALM FEEDING SPOONS COLOGNE GIFT PACK BABY SOAP CREAM 115ml 50ml 100ml 100ml 50ml 200ml 200ml 100ml 100ml 100ml 100ml 100ml 100ml 100ml 120ml 120ml 100ml 100g 75g 50ml 75g 110/= 110/= 115/= 115/= 115/= 155/= 178/= 195/= 210/= 210/= 120/= 120/= 120/= 140/= 160/= 110/= 130/= 100/= 95/= 68/= 32/= 95/= 50/= 220/= 431/= 767/= 1145/= 1031/= 45/= 45/= 98/= 140/= 175/= 1350/= 1250/= 725/= 175/= 380/= 33/= 105/=

BABY BONN

NS PANDA BABY

SIDDHALEPA KEKULU

FARLIN

CURASH BABY

200ml 400ml LARGE MEDIUM 100g 100ml 200ml 125ml 100ml 80g 100ml

MORRISONS BABY

AVENT

KOHOMBA BABY

Table 4 - Product Varieties Source: Done by Authors

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Managing Customer Value - Group Assignment

4) Sample Questionnaire BRAND PREFERENCES BABY CARE PRODUCTS IN SRILANKA

- PRIMARY SURVEY-

a) Location / Address: ________________________________________________________ b) No.of kids at home: _______

01. Income level a. <10,000 b. 10,000-20,000 c. 20,000-50,000 d. 50,000-100,000 e. >100,000 02. Rate the brands which you are familiar with, a. Baby Cheramy b. J & J c. Morrisons baby d. Rebeca Lee e. Curash f. Kekulu Baby g. Pears h. Baby Bonn i. Panda j. Kohamba Baby k. Avent l. Farlin m. Other _________________________________ (Give ranking from 1-10)

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Managing Customer Value - Group Assignment 03. What is your primary preference when it comes to brand for babies? a. Quality b. Price c. Varieties d. Availability e. Other ______________________________________

04. How frequently would you switch from one brand to another? a. Very Frequently b. Sometimes c. Never 05. What about your post purchase experience of the above preferred brand? Brand ______________________________________ Very good Good Moderate Bad Very bad 06. What is the perception on your mind in relation to baby cheramy product range? a. Value for money b. Superior quality c. Reasonable price d. Availability e. other ________________________________________________

07. What triggers/ affects your purchase decision on a baby product? a. Family culture b. Cost c. Word of mouth

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Managing Customer Value - Group Assignment d. Variety e. Status

08. How did you get to know about Baby cheramy? a. Word of mouth (Family & Friend) b. TV ads c. CSR projects d. Store display e. Other ______________________________________________

09. Rate your satisfactory level after using Baby cheramy for your kids?

+ 1

+ 2

+ 3

+ 4

+ 5

10. Do you intend to change your brand in future? a. Yes b. No If yes states the brand ______________________________________

11. Till what age do you use baby products for your kids? ______________________ 12. Would you recommend your brand to other person? a. Yes b. No Reason? ______________________________________________________________________ 13. Are Baby cheramy brand readily available in the market? a. Yes b. No 14. Do you buy branded products? a. Yes b. No

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Managing Customer Value - Group Assignment 15 Kindly choose an option, a. I am price conscious. b. I am quality conscious. c. I am brand conscious d. Both price & brand e. Both price & quality f. Both Quality& brand g. Price, quality, & brand

16. Do you think that low price goods would have quality? a. Yes b. No

17. What is your most favourite variety in Baby Cheramy? ________________________________________________ 18. What is your expectation from the brand mentioned above? Give your suggestions. ___________________________________________________________________________ Thank You.

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Managing Customer Value - Group Assignment

5) Survey Analysis
According to the preferences of the sample group from whom information was gathered the preference level of the baby care brands has been divided into three. First Preference Second Preference Third Preference

First Preference Brand Baby Cheramy J&J Curash Pears Baby Bonn Mother Care No of Respondents 27 36 4 10 2 5 Brand

Second Preference No of Respondents 34 14 20 2 8 6

Baby Cheramy J&J Pears Baby Bonn Avent Farlin

Third Preference Brand Baby Cheramy J&J Morrison's baby Rebecca Lee Curash Pears Baby Bonn Kohomba Baby Avent Farlin No of Respondents 16 12 2 4 2 30 4 6 4 4
Table 5 - Preference Rates

Source: Compiled by Authors

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Managing Customer Value - Group Assignment

First Preference
Baby Cheramy
Curash Baby Bonn 2% 6% 12% 5% 32%

Second Preference
Baby Cheramy
Pears Avent

J&J
Pears Mother Care

J&J
Baby Bonn Farlin

7% 2% 10% 40% 24%

43%

17%

Third Preference
Baby Cheramy Curash Avent J&J Pears Farlin 5% 5% 7% 19% 14% 36% 5% 2%
Figure 9 - Preference Level

Morrison's baby Baby Bonn

Rebecca Lee Kohomba Baby

5%

2%

Source: Done by Authors

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Managing Customer Value - Group Assignment

Source: Compiled by authors

Next concern was on what attribute the parent prefers when it comes to the purchase of baby care products.
Attribute Preference Attributes No of Respondents Quality 48 Price 7 Variety 13 Availability 16
Table 6 - Attribute Preferences
Source: Compiled by authors

60 50 No of Respondents 40 30 20 10 0 Quality Price Attributes Variety Availability

Figure 10 - Attribute Preferences Source: Done by authors

The next concern was on the frequency of switching from one brand to another.

Brand Switching No of Frequency Respondents Very Frequently 7 Sometimes 53 Never 24

Table 7 - Brand switching rate

Source: Done by Authors

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Managing Customer Value - Group Assignment

Figure 11 - Brand Switching Source: Compiled by authors

Next element was based on the perception about B/C on customers.

Customer Perception about B/C Perception No of Respondents Value for Money 8 Superior Quality 16 Reasonable Price 29 Availability 25 Never Used 6
Table 8 - Perception

Figure 12 - Brand Perception

Source: Compiled by authors

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Managing Customer Value - Group Assignment Survey also focused on the triggers which affects the purchase of a baby care product.
Triggers of Purchase Decision Stimuli No of Respondents Family Culture 21 Cost 6 Word of Mouth 23 Variety 27 Status 7

Source: Compiled by authors

Figure 13 - Purchase Decision

People get knowledge about the B/C brand from various sources. The finding showed the results below.
Customer awareness Variables No of Respondents Word of mouth 17 TV ads 27 CSR project 25 Store display 15

Source: Compiled by authors

Figure 14 - Customer Awareness

An MCQ based question was asked to know which aspect of the product makes them take conscious decisions. The table below is prepared based on the gathered information.

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Managing Customer Value - Group Assignment

Elements Price conscious Quality conscious Brand conscious Price & brand Price & quality Quality & brand Price, quality & brand

No of Respondents 22 2 20 14 26
Source: Compiled by authors

Another focus was on the perception of customers regarding price and quality. 57% of the respondents said that they assume that low price doesnt have quality. Customer generally does not use only one brand satisfy their babys needs but pick different products from 2-3 brands to get maximum satisfaction. Customers are greatly satisfied with baby oil, cologne and soap varieties if B/C but they expect more variations in flavors and quality aspect of it. Summary As per the preference ratings, Most of the customers preferred J & J (43%) where as B/C occupied the second place (32%). Mainly in urban areas income level seems to be high and they are eligible to spend significant amount on their babys daily needs. They gave more preference to quality features of J & J and few foreign brands like Mother Care and Curash. B/C is being the first preference among sub urban people. As SL is in the middle income position in global rating of countries it has managed to sustain the market leadership throughout these years. It is evident after the survey by the gathered information. Second preference is given mostly to B/C (40%) and Pears got 24% of preference as second. This shows that B/C is even used in urban households for their popular product ranges such as baby cologne, baby soap etc.

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Managing Customer Value - Group Assignment In the third preference level Pears takes up its position of 36% and in B/C 19% which shows that Pears is considered to be the second best to B/C in overall view. Unilevers product range J & J and Pears are considered as in the proceeding and succeeding positions. Regarding product attributes, More than 50% of the respondents wanted good quality for their baby care products. They always think of post purchase experience they gathered after consuming a particular brand and always wanted to avoid rashes, itching or any skin effects. Next preference is given to variety and availability of the specific product range. Price is considered as the least preferred as the very last option for most of the respondents as they are ready to spend more for the sake of their kids. When considering about the willingness to switch from one brand to another, 29% of the respondents remain loyal to brands they use. There is very low room to convince them to change their mind set unless some value addition is done to Baby Cheramy. 71% of the people think of changing their brands if there is a better brand is available. B/C has to focus more on R & D to create more value to the existing emphasizing on quality to tap the people who prefer to change their mind set from other brands to B/C. The post purchase perception of B/C, B/C is well known among the sample group for the reasonable pricing (35%) and availability (30%). B/Cs perception for value for money and superior quality is lacking behind as very few has voted for them. Purchase decision of baby care products is triggered by, Mainly the variety of goods impressed most of the sample group of the survey (32%). 28% of the respondents preferred positive word of mouth publicity received from their

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Managing Customer Value - Group Assignment colleagues and relatives. The sample group got to know about the brand mostly from television advertisements (32%) and 30% of them came to know through their CSR projects carried out island wide. ECCD programs conducted by Hemas group have been resulted in more awareness generated to the general public. Sample group seems to be more focused towards quality where price, brand comes the next.

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Managing Customer Value - Group Assignment

WORK LOAD MATRIX

V.Archchana CB003654 100% Swot Porters 5 force Positioning map 33.33% 50% 50% 33.33% 50% 40% 30% 30% ...................... J.F.Farista CB3753 50% 33.33% 50% 50% 50% 33.33% 50% 30% 40% 30% C.Kugadhep CB3721 50% 33.33% 50% 33.33% 30% 30% 40% .

Executive Summary Company Background Situation Analysis

Gap Analysis Questionnaire Questionnaire Summary Repositioning strategies Recommendations Documentation Signature

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