All Outs Strategy

BACKGROUND In countries such as India, the market for mosquito repellents is quite large. This is because of the prevalence and incidence of a number of diseases associated with the bite of mosquitoesdengue, encephalitis, malaria, etc. In spite of the best efforts of the government, the occurrence of such disease continues to remain high. A pointer to this is the fact that even during such a high-profile event such a XIX commonwealth Games in New Delhi in October 2010, the authorities were battling an outbreak of dengue. Even in the upmarket Games Village constructed by authorities for the athletes participating in the games, there were fears of the incidence of dengue due to issues related to water logging, since the river Yamuna had overflowed its bank that year. In fact, the monsoon season is often a high-risk period, in which the usage mosquito repellents peak (it has been reported that the demand for mosquito repellents is highest between February and May and then again between July and November). Various types of drugs are available in market. Another issue was that the traditional compound of dichlorodiphenyltrichloroethane (DDT) had gradually lost its potency in fighting mosquitoes. The little pest had gradually developed resistance toward it. Hence the need for new products. In India, a variety of repellents are used, ranging from mats to coil to lotion to vaporizer. Many of these products use the allethrin group of compound, or diethyl toluamide (DEET). In addition, traditional products, such as neem leaves, were also used in a number of areas. It is said that the smoke produced by burning neem leaves drives out mosquitoes, The growth rate of repellents is expected to continue to be robust, at least till mosquitoes remain in plenty. Given the state of hygiene and lack of sanitation or drainage in many parts of the country, the mosquito menace is unlikely to go away in a hurry! Another pointer to possible growth rates is the penetration of such products continues to be relatively low, with only 15% of the population using repellents (while the penetration in metropolitan towns exceeds 20% and below 10% in rural areas). BACKGROUND OF ALL OUTS PARENT, KARAMCHAND APPLIANCES PRIVATE LIMITED Karamchand Appliances Private Limited (KAPL) was established by three brothers, originally from Maharashtra. The family had a business that involved importing books for the sale in Indian market. The three brothers, however had different ideas and shifted to the land of entrepreneur, Gujarat, and partnered with a relative in making diesel-fuelled agricultural engines. However, this was not for long, because the brothers had an eye for the opportunity. They noticed the success of a small mosquito repellent company in small Gujarati city of Rajkot and decided to enter into a similar business. Thus, KAPL came into existence.

It was not vaporizers that the brother first set their sight on; the concept was new to India. They first thought of selling conventional mats and decided to look towards Japan for technical collaboration. At that time, a few Indian companies did have partnership with Japanese firms, notably BPL Sanyo in the electronic business. The Indian consumers believed that Japanese products had an edge as far as technical superiorities are concerned, hence the brothers interest in the country. Indeed, a number of modern mosquito repellents had been developed in Japan. The three brothers had actually agreed on a technical collaboration for mats, when one of them serendipitously noticed a vaporizer being retailed by their Japanese partner. The product comprised of two units: a) A heating unit that vaporizes the chemicals b) A small container holding the liquid mixture that served as a repellent The vaporizer was reportedly making waves in Japan. One of the reasons was that the vaporizers had an inherent advantage over the matsthe potency of mats reduced after a few hours of use and had to be replaced, whereas vaporizers could function without regular replacement (only when the bottle of chemicals was finished was a replacement necessary). Getting the Japanese firm to agree to a transfer of technology for the vaporizer was not easy. Much persuasion, negotiation and lobbying were needed, before a revenue-sharing arrangement was inked. KAPL was to invest in manufacturing of the components of the product, which it did at its factory in the northern Indian state of Himachal Pradesh. After some thought and the initial rejection of some proposals from a research agency commissioned for the purpose, KAPL finalized a brand name for its new product. It was to be called All Out. The connotation was that the usage of the product would drive all mosquitoes out of the room or home. THE MOSQUITO REPELLENT INDUSTRY IN INDIA Due to a relatively large market size, attractive margins and expected growth rates, marketing of repellents in India is relatively well organized, with a number of national brands. Some of the main players are as follows. KAPL, with its vaporizer-based All Out Godrej Sara Lee, with its products such as Good Knight (for mosquitoes in particular) and Hit (targeted mainly cockroaches) Reckitt Benckiser, with its brand name Mortien Bombay Chemicals, with its anti-mosquito coil called Tortoise Dabur-Balsara, with its cream-based product called Odomos Bayer, with its Baygon spray, Baygon powder mats etc. Jyothi Laboratories, with its Maxo

Mortien is estimated to have almost a third of the market share of the total market, followed by Maxo and Good Knight with an approximate share of one fifth each. The relative pros and cons of each category of the products and their market shares are provided in the table below: Repellent Pros Effective indoors; doesnt require electricity for use Effective indoors Cons Relative Market Share They could cause allergic ~5-10 % reaction; some says it is greasy They emits fumes when heated, ~15-20 % could cause breathing problems or allergies; requires electricity for use, a problem during power cuts Fumes should not be inhaled; ~9-10 % could cause breathing problems or allergies Smokes from coil could cause ~40-50 % breathing problems or allergies

Creams Vaporizes

Sprays/Aerosols Effective indoors and outdoors in a limited area; doesnt require electricity for use Mosquito coils Effective indoors and outdoors (though in a limited area); doesnt require electricity for use Mats Effective indoors; requires electricity for use

Fumes could cause breathing ~10 % problems or allergies; a problem during power cuts Neem leaves or Relatively mild; doesnt They could cause allergic oils not require electricity for reaction use Within mosquito coil market, Mortien from Reckitt Benckiser is the clear leader with more than 40% market share. All Out leads in vaporizer market, followed by Godrejs Good Knight and Jet. But Godrej leads the market for mosquito repelling mats and aerosol categories.

THE ISSUES The Indian market is, thus, clearly quite competitive with a range of players and products. In addition to the players aforementioned, it is also necessary to keep in mind that a number of local brands were also available, with their offering priced lower than that of larger players. In fact, some estimates put the number of brands in the market at as much as 72, being produced by as many as 54 manufacturers. It is in this scenario that Karamchand Appliances All Out operates. Godrej Sara Lee and Reckitt Benckiser were direct competitors for All Out. The former had launched a range of one after the other in the late 1990sGood Knight Jumbo, Jet Fighter, Good Knight Smokeless, Jet Jumbo etc. Other products from Godrejs stable included Banish (mats), Hit aerosols and chalks (especially targeted at cockroaches), an antimosquito lotion called Mosfree, etc. the Jet sub-brand was also extended to coil-based products and sprays. Reckitt in turn also came up with a variety of coils and mats under the brand names Mortien, Mortien King and Mortien Red. The global major Hindustan Lever Ltd (now Hindustan Unilever Ltd) also stepped into the fray with its product such as Raid and Attack. The market was witness to increased activity, with the new brands being heavily promoted and advertised. Although other players were clearly aiming at straddling the various product categories (creams, lotions, mats, coils, etc.), thus offering the consumers greater choice depending on their predilections, All Out decided to remain true to its original avatar, sticking to its vaporizer-based product. It quickly came to dominate the vaporizer category, though vaporizers by themselves constituted a relatively small share of market in the 1990s. However, the strong growth of this segment attracted the attention of Godrej, which launched its own vaporizer under the GoodKnight brand. The launch was a direct attack on the monopoly that All Out had hitherto enjoyed and, as often happens, the market leader in this segment lost its substantial ground. GoodKnight was estimated to have taken 40% of the vaporizer market within a few years of the launch. Mercifully for All Out, the overall growth of the vaporizer segment and the market in general meant that its sales were not impacted to a catastrophic intent. What could All Out now do to claw its way back? It was faced with a strong challenger coming from the stable of an already-established brand in the Indian market. People were quite familiar with GoodKnight mats, and the Godrej name was well known throughout the country. The Godrej brand was also trusted by many consumers, because of the near-generic name that its steel cupboards and door locks that the company enjoyed in India. In addition, both Godrej and Sara Lee were players with extremely large pockets and would not have much difficulty in sustaining large investments in the market. This was important in context of a product, such as a vaporizer for the people had to make an initial

up-front investment in purchasing the machine, besides the actual repellent bottle. However, no such extra investment was needed to purchase a lotion, cream or coil. Godrej Sara Lee, with its deep pockets, could choose to sell its machine at a low cost to get the consumers to migrate to using vaporizers. The managers of Karamchand Appliances, thus, felt that they were at crossroads. How could they effectively meet the challenge of Godrej and other players? The GoodKnight vaporizer had already taken up as much as 40% of the market. New players were also eyeing the segment. Some of the questions faced by All Out executive were as follows: Should All Out get into new segments and extend their range to coils, creams, mats, etc.? Should they decrease their prices and possibly impact margins? How could they tackle the challenge posed by Godrej and other possible entrants? It seemed clear that the good marketing and advertising was necessary in the face of increased competition. How this marketing to be handled was and what initiatives could the company take? How best could be the company get its message across to its audience?

ANNEXURES
Classification of Mosquito Repellents Repellents can be classified according to their chemical composition as follows: Inorganic chemical compounds, such as DEET and N, N-diethylbenzamide Organic compounds of plant origin, such as neem, Thai lemon grass, etc. Synthetic organic-based compounds, made from neem, eucalyptus, etc.

Types of Mosquito Repellents Mosquito Repellent Mats These work by making conditions uncomfortable for insects and creating a distortion in their behavior. These products are retailed in the form of a mat placed in an electrical device. The mat releases fumes when heated through the electrical device. GoodKnight is traditionally one of the popular brands. Organic products- Neem seeds and leaves The neem tree has provided a traditional remedy against mosquitoes for decades, perhaps even centuries. In fact, several parts of the tree find application in indigenous medicine. The bark is even used for brushing teeth. After drying the leaves in the shade, they are commonly placed in books and clothes to protect them from moths, etc. The leaves may be burned to achieve protection from mosquitoes. Mosquito Repellant Liquidator, vaporizer Made popular by All Out, as this case indicated. This consists of a vaporizing machine that heats the repellant in a plastic bottle. Mosquito Creams Odomos is almost a generic brand in this category. Although greasy and criticized for its unpleasant smell earlier, many people still use this product. An advantage is that it does not require electricity, unlike mats and vaporizers. Mosquito Coils Mosquito coils were made popular by Mortein. The product commonly consists of a spiral shaped and green-colored coil that is lit at one and slowly burned. The smoke is said to drive away mosquitoes. One of the component manufacturers of coil based repellents stress in its web site: the mosquito coil stand is as important a product as the coil, as it provides the base to burning coil. Made out of electrolytic ally coated tin plate, the product requires accurate press operation and the use of multi-activity tools for its manufacture. The product is coated with special organic chemicals to ensure resistance to corrosion, proper gloss and good finish. Perhaps the inspiration for coils came from the incense sticks that have been burned in Indian households for centuries. One problem with coils is that the ash needs to be cleaned up and disposed of. Aerosols or Sprays As the name suggests, these insect repellents come in aerosol or a spray can and are dispensed through a nozzle. Popular brands are Baygon and Hit. Devices using Static Electricity A new mosquito-hunting device is becoming increasingly available in the metros. This Chinese made device kills mosquitoes by attracting them to static charges developed from electricity. The machine needs to be connected to a power supply and charged to begin its functioning.

Table A1 All Outs Various Pricing Offers Product/Model/Offers Cord model Cord model Pluggy Twin pack (pluggy + cord) Deadly Offer (pluggy + refill) Deadly exchange scheme Price(Rs) 225 135 90 135 99 27 Year 1990 1994 1995 1996 1998 1999

Table A2 Products and Players in the Mosquito Repellent Market Product Category Coils Sprays and mats Company Name Brand Name Bombay Chemicals Ltd Tortoise (BCL) Bayer Baygon Spray Baygon Power Mats Baygon Knockout Balsara Hygiene Odomos Tainwala Chemicals Casper Godrej Sara lee Ltd Jet Fighter (GSSL) GoogKnight Jumbo GoodKnight Instant GoodKnight Smokeless Jet Jumbo Godrej Sara lee Ltd Banish (GSSL) Godrej Sara lee Ltd Hit (GSSL) Godrej Sara lee Ltd Hit Lines (GSSL) Godrej Sara lee Ltd Mosfree (GSSL) Godrej Sara lee Ltd Hexit (GSSL) Reckitt & Coleman (R&C) Mortein Mortein King Mortein Red Hindustan Unilever Ltd Raid Attack (HLL) Year of Launch 1970

Creams Mats and coils Coils

1997 1999

Mats Aerosols Chalks Lotion Spray Mats and coils

Coils

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