[Marico Limited has emerged as the fastest growing FMCG Company. Their approach to the market with uncommon sense has helped them challenge the norm to push the boundaries of their existing businesses and set up new ones.]
Table of Contents: Topic name Page Number Executive Summary .3 Introduction of Marico .4 Values of Marico Industries .4-5 How Marico Structured .5 Primary activities .5-6 International FMCG Business .6-7 Reason for Global Success ..7 SWOT Analysis ..8 Porters Five Forces ..9 Technological advantage of Marico
EXECUTIVE SUMMARY MARICO INDUSTRIES LTD. is the market leader in organized Hair oil market and faces competition from many players. The products offered by Marico Ltd. have not only created a long lasting customer delight but has also given its shareholders a value addition. In India, Bangladesh and Middle East Marico has grown every year. Time and again Marico comes up with different variant of products to satisfy the customers and even enhancing its own image by doing so. There are many FMCG players who are running their business in different countries in different segments. The companys management strategies are built around differentiation. The Company's products are sold under various brand names Parachute, Saffola, Sweekar, Marico's Hair & Care, Revive and Sil. The products such as Marico's Hair & Care, Revive Instant Starch, Parachute Amla and Parachute Herbal are work basis as per the Company's quality specifications and under the brand names of the Company. Marico Industries has launched three new variants of coconut oil. Marico has flat organizational structure, with just five levels between the Managing Director and the Shop floor operator. Their aimed at delivering better performance as each division operated as a strategic business unit and achieved the company reporting better performance over the years. Marico concerned with inbound and outbound logistics and fewer than two logistics Marico complete primary activities. In Maricos International business continued to grow and record share gains in its traditional markets. In Bangladesh, Parachute coconut oil has achieved market dominance backed by supporting strong market. In the Middle East, Parachute Cream has yielded good results by advertising and in-store promotional activities. This brand is now closing the gap between the leaders in the GCC counties. Marico started the fast growing South African ethnic hair care. Their health care market position is growing up through the acquisition of Enabling Pharmaceuticals Consumer Division Pty Ltd. Marico continued its local currency rate against the United States Dollar about some pressure on the International Business margins and growth in currency terms. Marico has many competitors who provide almost same category product with better quality. Through Marico have huge loyal customer but some new competitors which are threatened for the company. The product of Marico are highly substitable but numbers of sellers very less compare to the number of buyer that is serious problem for Marico. pg. 4
INTRODUCTION OF Marico: Marico is a leading Indian Group in Consumer Products & Services in the Global Beauty and Wellness space. Marico Ltd is a family-owned company, incorporated on October 1988 as Marico Foods Ltd. The name was changed to Marico Industries Ltd with effect from October 1989. In April 1990 the company commenced commercial operations by taking over the business of the consumer products division of The Bombay Oil Industries Ltd (BOIL). Marico later changed its name to Marico Ltd. Maricos Products and Services in Hair care, Skin Care and Healthy Foods generated a Turnover of about Rs.13.6 billion during 2006-07 e.g.(http://fmcg-marketing.blogspot.com/2007/12).Marico is a flat organization with only five levels of reporting between the managing director and an operator on the shop floor. Parachute, Saffola, Sweekar, Hair & Care, Nihar, Shanti, Mediker, Revive,Manjal, Kaya, Sundar Aromatic, Camellia, Fiance and Hair Code these are the products of Marico. Maricos brands and their extensions occupy leadership positions with significant market shares in most categories- Coconut Oil, Hair Oils, Post Wash Hair Care, Anti-lice Treatment, and Premium Refined Edible Oils, niche Fabric Care etc. Marico is present in the Skin Care Solutions segment through Kaya Skin Clinics and its soap franchise (in India and Bangladesh).Marico's branded products are also present in Bangladesh, other SAARC countries, the Middle East and Egypt. The Overseas Sales franchise of Maricos Consumer is one of the largest amongst Indian Companies and is entirely in branded products and services. Marico has also won various other Awards Like- Indias Employer of Choice for 2007, Award for HR Excellence & Award for Best Employer in the Consumer Products and Healthcare Sector. VALUES OF MARICO INDUSTRY Opportunity seeking Bias for Action Consumer Centric Excellence Innovation pg. 5
openness & transparency Global outlook Boundary lessness
How Marico structured A Flat Structure: At Marico, they are an organization, which is flat with only five levels of reporting between the Managing Director and an operator on the shop floor.They believe that a flat structure helps them in being more responsive to the environment while providing enriched roles for their members. Their structure defines clear roles and supporting relationships .Keeping in mind the fast and ever changing business neighborhood, Marico's structure is dynamic and constantly developing. E.g. (Marico Bd. prospectors) Primary Activities of MARICO Inbound logistics These are the activities concerned with receiving the materials from suppliers, storing these externally sourced materials, and handling them within the firm. Here goods are received from a company's suppliers. They are stored until they are needed on the production/assembly line. Goods are moved around the organization. MARICO purchase their raw material from all around the world. In order to maximize their availability of raw material MARICO maintain good relationship with their suppliers. MARICO use JIT (Just in Time) approach for handling of raw material
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Outbound Logistics These are all the activities concerned with distributing the final product or service to the customers. For example, in case of a hotel this activity would entail the ways of bringing customers to the hotel. The goods are now finished, and they need to be sent along the supply chain to wholesalers, retailers or the final consumer. MARICO manage their Distributor and Super Distributor in different rural and urban area. MARICO make their product easily assessable. e.g.(Marico industries ltd./Scribd.com)
International Maricos Business Maricos overall international business grew by 59%, while its organic growth over year 2007 was 21%. In its traditional markets, namely the Middle East and Bangladesh, Maricos International business continued to grow and record share gains. In Bangladesh, Parachute coconut oil has been going from strength to strength. It has gained market dominance backed by strong marketing support. During the 12 months ended February 08, its market share was 67%. E.g. (http://fmcg-marketing.blogspot.com/2007/12/maricos-distribution-network.html).Parachute will focus on growing the branded market by encouraging conversions from loose oil. In the Middle East, Parachute Creams focused marketing efforts, including advertising and in-store promotional activities have yielded good results. The brand has now begun closing the gap on the leader in the GCC countries. Its advertising is locally tailored and uses a regional celebrity for endorsements. The GMR Outstanding Achievement in Marketing Award was conferred upon Parachute for the second consecutive year. The Egyptian brands, Fiance and Hair Code are performing as per expectations. They achieved a turnover of about Rs 88 core during the year. Advertising support accompanied by promotional offers during the Africa soccer championships helped in expanding the franchise. The current combined market shares of the two brands in Egypt stand higher at 62%. Marico entered the fast growing South African ethnic hair care and health care market through the acquisition of Enabling Pharmaceuticals Consumer pg. 7
Division Pty Ltd. The market for Ethnic Hair Care and Relevant OTC Healthcare products in South Africa is estimated to be in the region of about Rs. 600 core. A good performance from all geographic regions has enabled the International Business to show healthy growth. Maricos International Business now comprises about 16% of the groups turnover. Reasons for Global Success Its international success is due to the global mindset that the company has adopted. An Indian company needs to stop thinking of an India-forward mind set and start playing by the rules of that market. The key is to participate in formats relevant to that market as opposed to transporting the India portfolio on an as is basis. In the Middle East, Marico reformulated Parachute hair cream to work effectively under high chlorine conditions prevalent in the region. In Egypt, where soccer is almost a religion, Marico runs programs to leverage the soccer fever. The emerging economies in Asia and Africa like Bangladesh, the Middle East, Egypt, and South Africa were chosen because they have low-to-medium penetrations in some of the FMCG categories. This signifies considerable headroom for growth in the mid-term. E.g. (http://fmcg-marketing.blogspot.com/2007/12/maricos-distribution-network.html). Marico listed their wholly owned subsidiary in Bangladesh on the local stock exchange. And in Egypt, where Marico acquired family-run organizations, professional managers were sent. Marico before entering a new geography always interacted with non-competing Indian companies that have established themselves in that market and learnt from their experiences. e.g. (www.scribd.com/marico)
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SWOT Analysis of Marico Ltd. Strengths: Understanding of consumer behavior in the hair oil segment. Rural Market search. Large distribution network all over India, Bangladesh, Middle East etc. Weakness: Not strong within the shampoo segment, having hardly any share. Not having any Anti-dandruff hair oil whose market potential worth 25% of the total oil market. Opportunities: Need to concentrate within the various other market potential zones like hair shampoo, hair colorants etc. Threats: Competition from the diverse players present in the market can cause loss of market share. FMCG market has to depend on volume for their profit maximization; they cannot play the margin game for their growth. e.g.(http://sunnymarketing.blogspot.com/2009/05/swot- analysis-of-all-fmcg-companies-in.html)
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Porters Five Forces Threat of Substitute Products: The products in fast moving consumer goods industry are highly substitutable. For every single product there are many players giving almost the same product or with some differentiation. Threat of new entrants: The establish companies have very huge base of loyal customers, which will create entry barrier for any new entrant in the market. Even if some new competitor will be a potential threat for the companies will buy out that competitor. Determinants of buyers power: Since the products in the industry are highly substitutable and the number of sellers in industry is comparatively very less with respect to the number of buyers. The market is also very price sensitive, if a company increases the price of their products the customer has many options to choose from. So the buyers can switch from one product to the other. Rivalry among existing players: There is intense rivalry among the companies operating in the Indian and Bangladeshi FMCG market; they sell the products with little or no differentiation. This includes some big and established names in the market like HUL, Dabur, Uniliver and P&G etc. e.g. (www.scribd.com/marico) Technological advantage of Marico Marico ltd. is the biggest player in the market for many reasons. Other than strategic marketing and management, Marico's technological advancement gives it leverage over all the competitors In Bangladesh; Marico has state-of-the-art plants for its flagship product, Parachute. Authorities claim that their products are 100% pure, which is refined and packaged by machinery and not pg. 10
touched by humans. With their modernized plants and automated system they rapidly took over the small operations. Marico has a vast R&D department overtly concerned with health hazards, new formulations and brand extension. Marico ltd. uses the SAP ERP (enterprise resource planning), and they have recently bought this software to Bangladesh. This strategy will give even more competitive advantage to the firm. Kaya Skin Clinic has Aqua Skin Jet technology that no other competitor in the market possesses. Saffola Gold is said to be one of the healthiest edible oil in the market. All these factors synergize to give Marico ltd. a big technological advantage over the market competitors. The highlights pertains to the financial performance of Marico Consolidated
1 PBIT*/Average Total Capital Employed@ 2 PAT/ No. of Equity shares 3 Net Worth/No. of Equity shares pg. 11
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By the table, income from operation and net income rise at the highest level in 2012 which indicate a very strong positive operational activity by the company. Earnings before interest, taxes, depreciation and amortization margin is nearly stable and rational. This line of the graph shows the strong control over the companys earnings against its expenditures. The graph also shows a high trend of cash profit and indicates higher liquidity conditions over years. And the tendency to pay dividend to the investors is very consistent indicate a strong financial condition of the business. Highest raised EPS in 2012 also shows a strong earnings rate on shares. E.g. (http://www.reportlinker.com/p0342227/Marico-Limited-531642-Financial-and-Strategic)
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Conclusion: The main criteria for a business to survive in this competitive market home or abroad are to be creative and innovative. Maricos large investment in brand building, 360 degree approach in marketing and expansion in distribution too has contributed rapid growth. Today, Marico Limited has emerged as the fastest growing FMCG Company. Their approach to the market with uncommon sense has helped them challenge the norm to push the boundaries of their existing businesses and set up new ones. By tapping into the minds of consumers and gaining a deeper insightful understanding of what they really seek, theyre able to identify opportunities and create categories where none exist. Marico Ltd's flagship, Parachute, is the market leader in hair oil for many bold reasons. It was a great learning experience to conduct a project on this company and to see how differently it functions from every other competitor in the market. The manufactured goods of Marico are exceedingly substitable however figures of sellers incredibly a smaller amount compares to the number of buyer that is serious problem for Marico. With a loyal and dedicated workforce as they presently possess, it is quite safe to assume that Marico ltd. will remain at the top for quite some time.