& Present

Surface Care Supremacy of Harpic & Road Ahead

A Case Analysis Contest - The Case

In association with

The Marketing Club of MDI

CASE INTRODUCTION
Harpic, the leading brand for toilet cleaning (also known as lav care) in India had witnessed phenomenonal growth in recent years beginning early 2000s. Launched in India in 1984, Harpic created the product category 25 years ago. Being the pioneer in the Toilet cleaner market commanding a share of about 80%, the brand growth has paralleled the growth of the toilet cleaner product category in India. The heady growth seen by this product category during five years of 2002 to 2007 had attracted the attention of the competition which had started to become very active and gave much more focus to their products and marketing efforts. Fresh competition from international players in recent times has also made its entry in the promising Indian home cleaning care market. On the other hand, the growth of the product category had considerably slowed down in the last couple of years. In the face of these dramatic changes in the competitive environment, the brand team of Harpic was brainstorming in September, 2009, to chalk out a strategy for its future growth. The dilemmas being faced were typical for a brand leader. It had to prioritize its options and decide what directions to give to its marketing strategy, amongst defending its falling market share, working towards increasing the product penetration levels, increasing usage and consumption by existing users, or taking some other new initiatives, while at the same time ensuring that its marketing mix efforts and allocated investments were optimized for maximized returns for the brands growth.

*Unless otherwise stated, all data given in the case refers to research done by Research International (Consumer Survey) and AC Nielsen (Market Data), supplied by Reckitt Benckiser India Ltd
This case is prepared by Prof. Vinod Kalia of Management Development Institute, Gurgaon for the Harpic case study contest organized by Reckitt Benckiser India Ltd. in association with MDIMarQuity. The case is not intended to serve as a source of primary data, or effective or ineffective management. The author would like to thankfully acknowledge inputs from the brand team of Reckitt Benckiser India Ltd. and Mr. Parag Raheja, Mr. Saurabh Sharma and Ms. Pallavi Sud, students from MDI PGPM class of 2010
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COMPANY BACKGROUND
Reckitt Benckiser India Ltd (RBIL) is a fully owned subsidiary of Reckitt Benckiser Plc, world's No.l Company in household cleaning. Reckitt Benckiser Plc came into being with the merger of Reckitt & Colman Plc with Benckiser NV in 1999. The company has operations in 60 countries, sales in 180 countries and has had net revenues in excess of $6.5 billion last year. The year 2008 saw the company achieve very strong financial results despite increasingly turbulent economic conditions globally. Net revenues grew by 13% to 6,563m and adjusted operating profit was up by 15% to l, 535m. This performance, following a number of years of strong growth, was testament to the global strength of the Company's strategy and execution, and the quality of its employees and their leadership. The Indian subsidiary RBIL manufactures and markets a wide range of products in Personal care, Pest control, Shoe care, Antiseptics, Surface care, Fabric care and other categories. Amongst its many well-known brands are Dettol, Mortein, Harpic, Cherry Blossom, Lizol, Disprin, Robin powder, Colin, etc. Most of these brands are either number 1 or number 2 in their respective categories in India. RBIL distributes all its products through its common distribution channel, which has a wide and deep reach in the Indian market and is a key strength of the company. The channel is managed by a well-structured sales force, responsible for achieving sales for the entire product portfolio of more than 150 Stock Keeping Units (SKUs).

BRAND HARPIC
Harpics origin dates back to 1920, when a British gentleman named Harry Pickup found that surplus explosive bye products, once refined, had an equally devastating effect on germs and stains. Thus, post World War 1, it was this act of serendipity that led to the invention of "Harpic", a brand name derived from the inventor's name Harry Pickup. In 1932, Reckitt and Sons took over the company and soon Harpic became a household name in Britain. By the Sixties, more than 50% of the housewives in Britain had bought this brand. (Refer annexure 1a for image of introductory Harpic bottle)
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The brand has made a long journey since its humble beginnings. Harpic is now sold in over 47 countries worldwide on the platform of "Powerful Cleaning". It is positioned as the expert in Lavatory Care and offers a complete range of lavatory care products such as liquid toilet bowl cleaners, toilet bowl blocks, cistern blocks, wipes and tablets. In liquid cleaner segment, the brand offers Harpic Power and Harpic Fresh. In automatics segment, it offers Harpic Flushmatic and Harpic Hygienic (Refer annexure 1b for current Harpic range of products)

HARPIC IN INDIAN MARKET

Harpic is the brand which changed the way toilets were cleaned in India. Launched in India in 1984, the brand experienced a slow acceptance by consumers in the initial years. Consumers were using a range of substitute products such as plain water, phenyl, acids, detergents, bleach and whole lot of other proxy products. Many consumers were habituated to pouring residual detergent water, after washing clothes or mopping floor, into their toilet to clean the same. They believed that reusing the detergents was an economical way to clean the toilets. They had also resigned themselves to the sub-standard cleaning achieved through these methods as they thought that they couldn't get cleaner toilets any other way. In such a backdrop where underperformance of toilet cleaner proxy products was widely accepted, Harpic was perceived to be a very expensive product (when Harpic was launched, same amount of Harpic liquid cost the consumer at least double that of phenyl and about five times that of acid). Consumer research indicated a number of widely believed consumer perceptions which were coming in the way of Harpics acceptance by consumers. Many consumers believed that Harpic doesnt clean any better compared to phenyls or acids. Traditional "acid" was thought as the best cleaning agent as it gives visible fumes during usage which creates an effect of powerful cleaning/germ killing. Harpic was perceived as a premium product only for the use of working women or busy house wives who did not have sufficient time to clean the toilets by other more economic means (the advertising campaigns at that time also reinforced such association with high education, high income users); traditional housewife felt that household cleaning, including toilet cleaning, was part of her job, and she shouldnt spend on Harpic just to save some time, and so on.
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The brand thus had the challenge of educating consumer about effectiveness of Harpic and its utility for every household. Thus came the "Harpic challenge" campaign which intended to startle the consumers with surprisingly good results. RBIL started to painstakingly build the Harpic brand with the help of Door to Door Consumer Contact program - whereby the product efficacy was actually demonstrated to the consumers and its cleaning superiority highlighted (against the generic cleaners that were primarily used). The campaign became highly successful, and was continued over for a long time, with constantly expanding coverage, thus helping to build the brand through the eighties. Expanding its ambitions to greater heights, the brand started mass communication in the year 1988 - with the TV Commercial of Harpic educating and informing consumers about the need for hygiene in the toilet and bathroom (being equally important as the need for hygiene in other rooms of the house). The brand was consistently positioned as an "All Powerful" cleaning alternative to traditional products and Harpic became synonymous with toilet cleaners. In early 2002, a new advertising campaign was tested in the South market to establish the superior performance of Harpic over the proxy products. In real scenarios, potential consumers were contacted and a challenge thrown to test Harpics cleaning power. RBIL offered to replace the toilet free if Harpics superior cleaning power was not proven in the demonstration. The campaign proved successful with sales picking up sharply, and the company launched the TV Commercial in the entire national market in September 2002. The years 2002 to 2007 were the golden years in the journey of Harpic. Having created a strong association for Harpic in consumers mind with toilet cleaners, the company went ahead aggressively to build the category and create new users. The product penetration in all urban households started to climb rapidly, and in a matter of five years, the penetration level more than doubled from 8% to 19%. The gross sales for the toilet cleaner product category grew almost five times in the same period, crossing Rs. 150 crores in 2007. In terms of volumes, India became the biggest market for Harpic across the globe.
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SURFACE CLEANING MARKET IN INDIA

The Indian surface cleaners market comprises of three main segments: toilet cleaners, floor cleaners and specialist surface cleaners for glass etc. The toilet cleaners market is the largest and had a sale of Rs 180 crores in 2008, floor cleaners is the next biggest market with sales of Rs 75 crore, and the specialist surface cleaners is the smallest with sales revenues of Rs. 35 crores in 2008. Each of these segments has multiple players, some present in various segments with the same brand, while other players have different brands in different segments. Reckitt Benckiser which is the market leader in Lav care has Harpic brand in this segment while Lizol in the floor cleaning segment. In specialist surface cleaners it has a brand called Colin, a liquid spray product used for cleaning glass. Hindustan Unilever Ltd (HUL) entered this market with the brand Domex which was an APDC (all purpose disinfectant cleaner) that can be used on the floors, in the kitchen sink, for wash basins and in the toilet. HUL has recently launched Cif (a specialist surface cleaner) which has been positioned as a cream with micro particles which does tough cleaning with minimum effort. Henkel India also has a brand called Bref which is present both in lav care as Bref toilet cleaner and in the specialist surface cleaner as Bref power cleaner. A relatively new entrant in surface cleaning category is S C Johnson & Co. with a single brand Mr Muscle which is positioned as a multipurpose cleaner suitable for toilet and floor cleaning. Indian FMCG major Dabur India Ltd operates with two brands in the surface cleaning categoryDazzl which is a disinfectant floor cleaner and Sanifresh which is a specialist toilet cleaner available in two variants Sanifresh shine and Sanifresh extra power. The surface cleaner category has reached a penetration level of 55% of urban Indian households.

INDIAN LAV CARE MARKET

The total market for Lav Care products in India (Rs. 180 crores in 2008) has been witnessing high growth rates of about 20% per annum in both value and volume terms for last few years (refer annexure 2 and 3). The market is dominated by Harpic which has a share of about 80% by value, and the balance market is mainly shared by Domex from Hindustan Unilever Ltd (10.5%) and Sanifresh
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(6.3%), a brand acquired by Dabur India Ltd from Balsara Hygiene about two years back. As stated above, Lav Care market has also attracted a number of other major MNCs - Sara Lee with Kiwi Kleen, S C Johnson & Co. with Mr. Muscle and Henkel India with Bref who currently have a very small presence, but trying to establish themselves in this fast growing market.

PRODUCT CATEGORIES IN LAV CARE MARKET

Lav Care products can be broadly classified in two formats: Liquid Cleaners Automatic Cleaners Automatics are basically "in the cistern, ITC" (Harpic Flushmatic) or "in the bowl, ITB" (Harpic Hygienic) cleaning blocks that are kept/suspended in the cistern. They work with every flush, hence, giving a continuous, all the time cleaning action. Globally, the automatic cleaner segment is a large and well developed one, ranging from 20% to 50% in different countries, of the total Lav Care segment. In India, however, automatics are relatively a new kind of format started in 2003, and account for less than 5% of the total Lav Care segment. Research shows that use of automatics does not fully replace the use of liquid cleaners. Consumers continue to use the liquid cleaners for periodic tough cleaning, while they get the benefit of continuous cleaning with every flush from the automatic ITC or ITB. It is believed that ITC and liquid toilet cleaners are not substitute products but rather complimentary products. Thus, automatics present opportunities for the marketers to increase spend per toilet and hence, increase total Lav Care consumption. However, to be used, automatics require a western cistern and regular water supply, the percentage of which is very small in India. Within the automatics segment, Harpic Flushmatic is the leader in India with more than 70% of the automatics share. It had supported the ITC product with small bursts of media advertising which resulted in huge sales jumps in initial years, but after growing almost six times in the last five years, the sales have become stagnant

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COMPETITION / PLAYERS IN THE MARKET

Some of the major competitors of Harpic in the Lav Care market, and their strategies are briefly described below: Domex: Sold in other countries as Domestos by the global FMCG giant Unilever, Domex was launched by its Indian affiliate Hindustan Unilever Ltd (HUL) in 1997 in India. Over more than 10 years of its existence, it has not been able to garner a large share, and currently is a distant second to Harpic in the Lav Care market in India with a share of 10.5% in 2008. When launched, Domex was positioned in India as an all purpose disinfectant cleaner (APDC) product which could be used for floor, sinks, other surfaces, as well as toilet cleaning. The Indian market for specialist floor cleaners was a nascent one - only 3% of the households use specialist floor cleaners while 97 % use proxy products which combination of phenyl, detergents, acids and bleaching are the

powders. After a

lukewarm response from consumers in initial years, and aiming to tap the large potential market in the floor cleaning segment, HUL reduced the price of Domex from Rs 42 to Rs 22 per bottle. HULs strategy was to directly attack the phenyl market that incidentally comprises of a large number of small brands from the unorganized sector. A new variant of Domex plus phenyl was launched to capture the segment which still had strong faith on phenyl as a surface cleaning agent. The packaging of the new variant was also based on a multiple usage product, unlike the angle necked bottle that was used by Harpic as a toilet cleaner specialist. In 2002, the company also invested in a direct to customer initiative named "phenyl Khallas" to educate the consumers about the virtue of using Domex comparing it with local phenyl. The strategy of All Purpose Disinfectant Cleaner at a low price did build the sales revenues for Domex in the years 2003 2005, but perhaps headway made was not fast enough to match companys expectations. The toilet cleaner market meanwhile had shown very fast growth and was being nurtured by Harpic. At this time, Domex decided to do a frontal attack on
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Harpic and re launched itself as a "Specialist Toilet Cleaner". It re-launched the product with parity pricing with Harpic, a new angle necked bottle and a new communication. While most of the players in the household cleaning segment focus on the cleaning ability, Domex positioned itself as a germ fighting cleaner. The brand promises 100% germ kill (if Domex is used undiluted) and is targeted at households where there are kids. The communication is also based on its positioning of "germs kill" expert. ( Refer annexure 4 for Domex bottle images)

Sanifresh: This local player has been in the market for a long time and has been like a me too product to Harpic with similar packaging, but lower price. It used to be the second largest player in toilet cleaning segment and had peak shares of 15%+ in early and mid nineties, but lost ground after entry of Domex. By 2008, its share had fallen to 6.3%. The brand was bought by Indian FMCG major Dabur India Ltd from its erstwhile owners Balsara Hygiene about two years back. After Daburs take over, the brand has gained some momentum and focus since 2007. Sanifresh has been following a strategy of volume gains on the back of heavy discounting and promotion support, but, its value share gain is relatively low. Moreover, its marketing resources are largely spent on consumer/trade promotions and discounts. It has a very low presence in mass media and primarily advertises the promo tags only. Mr Muscle: Another global biggie - SC Johnson &Co. was sometime back attracted by the lucrative and fast growing market of Lav Care & Surface Care in India and forayed into it with its global brand Mr Muscle. It first entered the Surface care segment via Kitchen Cleaners, Multi Purpose Cleaners and Glass Cleaners. Thereafter, it did a test market for Mr Muscle toilet cleaner in Dec 2008 ( in Tamil Nadu). Post the test, it launched Mr Muscle toilet cleaner nationally in Jun 2009. Since, then it has been advertising heavily on the national media. Its positioning is based on the surface care positioning of "Mr. Muscle science of tough cleaning". While toilet cleaners are promoted for use in the toilet bowl,
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Mr. Muscle is promoted for use in the toilet bowl, as well as on the outside surface of the bowl, the toilet floor and the wall tiles in the toilet/bathroom.

CONSUMER RESEARCH
Growth of lav care market in India is essentially linked to a multitude of factors like availability of toilets in Indian households, types of toilets, common or shared, cleaning practices and habits, availability of running water in toilets etc. In India, cleaning is generally a daily routine in most homes, with 'living' room/area, kitchens and halls being cleaned at least once a day. Bathroom / toilet cleaning are found to be a little less frequent. Also in India, squat type toilets are the norm with only 4% of the population owning a western style toilet. Findings from a sample based research on toilet facilities and cleaning practices in India are given in annexure 5 and annexure 6 respectively. The choice of toilet cleaner by consumers is governed by large number of attributes which they are looking for in a product. Traditionally, Indians associate cleanliness more with visual cues rather than hygiene. Unlike western countries, where most important product benefit sought by consumers is Germ free followed by visually clean, in India, there is a huge emphasis on visual cleanliness rather than germ free. This has also been the reason that some of the all time popular formats for surface cleaning have been phenyl, acid, and detergent, and the acceptance of specialist toilet cleaners has been limited. A consumer research done on brand choice parameters has identified about 30 attributes with varying importance. The research indicates that perceived ITB (In the Bowl) cleaning and disinfecting ability have the highest correlation with brand choice in the lav care category. Consumer research studies done by RBIL over the years have also shown that in the Lavatory Care category, the key category attributes sought by consumers are 1. Cleaning/stain removal 2. Disinfection-Germ Kill 3. Fragrance/ removal of malodour

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Harpic owns the platform of "powerful cleaning" and its current claim of Triple Action addresses the three key drivers as mentioned above. Research has also shown that toilet cleaners are used at varying periodicity by different consumers. On average, its usage is about three to four times a month by its users, which results in a per household consumption of just over one litre of toilet cleaner per annum.

HARPIC ADVERTISING HISTORY

Harpic pioneered the process of building the Lav Care category by investing time, effort and marketing resources for educating the consumers. It educated the consumers on the need for care & proper hygiene of the toilet space. TV communication started in 1988. (Refer Annexure 7 and Annexure 8) The advertisements clearly positioned Harpic as a "Powerful Toilet Cleaner". The key innovation was its packaging i.e. Angle necked bottle to easily reach into the corners/ rim of the toilet bowl, and this innovation has been highlighted and leveraged by RBIL in Harpics communication from 1993 onwards. The big change that happened in the evolution of Harpic communication was the launch of "Door Step Challenge" in year 2002. The key challenge was to convince non users that Harpic could give a level of performance that was superior to the current cleaners (acids/ phenyls). The creative idea that got developed based itself on "see to believe" strategy. Hence, a mini celebrity anchor was chosen (TV actor Aman Verma, initially) and he would go to consumer's "Door Step" and show them the magical cleaning that Harpic was able to deliver. Thus, the tag line came into place - "Take the Harpic Challenge and see the magic in front of your eyes". The benefit that the brand promised consistently in its communication was "Harpic banaye aapke toilet ko naya jaisa" (i.e. Harpic makes your loo look like new) The brand saw phenomenal growth in the initial years of the Door Step Challenge campaign (2002 -2006). The Harpic Challenge TV commercial was hugely successful and resulted in sales going up by almost 50%.
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HARPIC: RECENT DEVELOPMENTS

The change in the competitive scenario in the last two years saw a shift in Harpic strategy of focusing on trying to increase the penetration levels and bringing new users of toilet cleaners in Indian urban households. Sometime in 2007, Harpic significantly cut down on below the line activities like Door to Door campaigns and started pouring more money in advertising through mass media. The idea was to defend the brands share in the face of increased competition by spending a major chunk of its budget in advertising campaigns. The copy of the advertisements was also changed to communicate that Harpic was better/more effective than competing brands. In 2008, the Door Step Challenge was brought in again, and intensity of advertising increased by 20% over the previous year. Even with higher advertising spends, Harpics Share of Voice started falling due to disproportionately higher advertising spends by some of the competitors as they were keen to invest in building their brands. The competitors were slowly able to increase their market shares, and Harpic started to see a downward trend in its dominant market share. From a peak share of 86% in 2006, Harpics share dropped to about 75%+ in the recent April-June 2009 quarter (See annexure 9 for value and volume sales of major brands in the last four quarters). To address its declining share, and increase its presence in retail stores, the company launched Harpic Power Fragrance range in January 2009. Some of the competitors have been concentrating their efforts more in Southern India which is the largest of the four zonal markets in India, and have been able to make major gains there. Harpics share has therefore dipped much more in South than, say, in East . The retail penetration levels of different brands for the three years are given in annexure 10. The total number of stores stocking toilet cleaners reached almost one millio n in 2008, and it is predominantly in urban areas, with rural areas accounting for less than one hundred thousand stores.

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Another development of concern for the Harpic brand team was a significant slowing down in the growth in the penetration levels of toilet cleaners seen in the 2nd half of 2007, and the penetration level has remained almost stagnant over the year 2008. Meanwhile, the brand team was also noticing new competitive activity in the Modern Trade, where the fast growing major Retail Chains like Spencers, Reliance, Big Bazaar started to stock lesser priced local brands of toilet cleaners as well as their own private labels, next to Harpics shelves in their attempts to lure their customers and also get significantly higher margins on such products. The huge margins allow them to run promotional schemes like buy one get one free to attract customers. This has been aided by the fact that toilet cleaners are an easy to manufacture product, with low entry barriers. On another front of growing the automatics format like in the western countries, the brand teams efforts to drive the consumption levels have not seen much headway so far. Although, Harpic has been investing moderately in the automatics with limited TVC support and periodic In Store branding in modern trade, this format has not shown much response from consumers so far. With a typical market leader's dilemma, and a fixed marketing budget, Harpic now needs to prioritize its options for further growth. Maintaining current users, defending aga inst competition, increasing consumption and increasing penetration are some of the elements which Harpic's brand team needs to ponder about to come up with right strategies and optimal marketing investment mix for the brand. The brand team also needs to p lan out a clear approach to attain its internal target of growing the category penetration levels to 25 to 30% by 2012.

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ANNEXURES ANNEXURE 1A: HARPICS INTRODUCTORY BOTTLE

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ANNEXURE 1B: CURRENT SKUS OFFERED BY BRAND HARPIC

Harpic Liquids Range:

Harpic automatics range:

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ANNEXURE 2: MARKET SHARE DATA BY VALUE

Value Market Share Total Toilet Cleaning Market (In Million Rs) Harpic Sanifresh Kiwi Kleen Mr Muscle Domex Bref Others

Year 2008 1804 79.4% 6.3% 1.7% 0.0% 10.5% 0.5% 1.6%

Change in MS % points 19.9 -0.6 -0.4 -0.7

2.3 0.6 -

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ANNEXURE 3: MARKET SHARE DATA BY V OLUME

Change in MS % points

Volume Market Share Total Toilet Cleaning Market (Volume Kilo Litres) Harpic Sanifresh Kiwi Kleen Mr Muscle Domex Others

Year 2007

Year 2008

15565 77.3% 7.0% 2.1% NA 10.6% 3.0%

18148 75.8% 7.5% 1.4% 12.9% 2.4%

16.6 -1.5 0.5 -0.7 0 2.3 -20

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ANNEXURE 4: DOMEX BOTTLES

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ANNEXURE 5: TOILET CLEANING FACILITIES IN INDIA

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ANNEXURE 6: CLEANING ACTIVITIES BY INDIAN CONSUMER

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ANNEXURE 7: HARPICS COMMUNICATION

ANNEXURE 8: HARPICS COMMUNICATION - THE HARPIC CHALLENGE

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ANNEXURE 9: MARKET SHARE CHANGES IN PAST FEW QUARTERS

By Value Value Market Share Data - Last four July - Sept quarters of 2008-2009 Total Toilet Cleaning Market (In Million Rs) Harpic Sanifresh Kiwi Kleen Mr Muscle Domex Bref Others 479 79.2% 6.1% 1.5% NA 11.4% 0.5% 1.3% 502 77.9% 7.1% 1.7% 0.0% 11.1% 0.8% 1.4% 502 75.3% 6.5% 2.0% 0.3% 13.3% 1.0% 1.6% 524 75.5% 6.5% 1.6% 0.9% 12.1% 0.9% 2.5% 2008 Apr - Jun 2009

Oct - Dec 2008

Jan - Mar 2009

By Volume

Volume Market Share Data - Last four July quarters of 2008-2009 Total Toilet Cleaning Market (Volume Kilo Litres) Harpic Sanifresh Kiwi Kleen Mr Muscle Domex Others 4903 76.1% 7.2% 1.1% NA 13.6% 2.0% 2008

Sept

Oct - Dec 2008

Jan - Mar 2009

Apr - Jun 2009

5021 75.0% 8.7% 1.4% 12.3% 2.6%

4931 71.5% 8.1% 1.8% 0.3% 14.8% 3.5%

5178 71.4% 8.6% 1.5% 0.8% 12.8% 4.9%

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ANNEXURE 10: NUMBER OF STORES COVERED BY MAJOR PLAYERS

No. of Stores Category Harpic Domex Sani Fresh All (U+R) India Mr Muscle Bref YEC06 814,512 733,683 148,539 141,344 NA 1,295 YEC07 891,586 799,362 160,829 136,737 NA 324 YEC08 995,795 917,428 213,739 122,620 930 21,301

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