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1 Competition analysis and product positioning

Competition analysis represents an analysis of the subject which deals with the same or
similar businesses on the market and whose task is to attract the same or similar groups of
customers. In conducting the analysis of the competition and acquiring the information about
position in the market, it is necessary to identify the competition and to collect the necessary
data on the basis of which strategies, strengths and weaknesses of the competition can be
established.

Henkel has a department for research and development that consistently provides information
necessary to satisfy customer needs by applying its innovation. Department of research and
development provides information to change and improve the quality and uses of products to
differentiate the products relative to the competition in order to gain the leading market
position.

Henkel manufactures its brands at the maximum quality in order to preserve customer loyalty
of those who choose to use their products.

STRENGTHS WEAKNESSES

Large capital High costs

Efficient labor force Slow response to problems

A wide range of products A large company where it is very easy to lose

control of the management of business
Good reputation among customers

Quality of products

OPPORTUNITIES THREATS

Market development New competitive products

Elimination of barriers The fight over prices

An expanded range of products Changing consumer needs and preferences

The existence of competition to Henkel is not a problem because the company likes to keep a
constant race with the competition through various analysis and research of customers and
competition. Henkel knows that the customers are its greatest assets and is constantly
investing in its products to meet their needs. Also, Henkel believes that the existence of
competition is good for customers who are offered a greater selection of products with a range
of different prices. Henkel holds onto the perfectly planned program and well-built customer
relationships which brings it good results. The business units of Henkel are aimed at
achieving customer loyalty. Henkel carries out various promotions on the basis of which they
gain customer feedback. In order to remain at a leading market position relative to the
competition, Henkel constantly organizes promotions at various supermarkets and
hypermarkets where students or unemployed customers work part-time at promotions of a
particular product.

Promotions of specific products are often accompanied by gifts to current and potential new
customers which can be largely of use, but which also attract them to try the company's
products. Also, various focus groups are conducted where they examine the needs of
customers and their products and after the processing of data, information can be obtained
about the user's needs and products and the prices offered by the competition.

Although Henkel takes a good position in the market regarding the distribution of products for
cleaning and washing, they constantly monitor growth and reduce the difference that emerged
between competitors.

Research and product development is marked by a series of unique innovations and new
products. By conducting intensive and detailed research, Henkel constantly achieves success
in identifying the wishes and requirements of its customers and meets needs with creative
ideas and extraordinary innovation. The key to success lies in the fact that all employees of
Henkel cooperate in order to further increase their power of innovation and leveraging their
creative skills to develop new products. Henkel also encourages every associate to exhibit
innovative ideas and develop awareness of the great importance of renewal. Associates of
Henkel combine analytical observations of trends with a direct and strong contact with their
customers, and exploit that knowledge to further develop creative concepts and innovation in
the business sectors. The primary responsibility of the department for research and
development is turning new ideas into products that will be sold. For this reason, that
department has the largest number of employees.1

The Henkel company is present on the soap market with international brand Fa and local
brands Ten San and Djeiji Sapun which are one of the most popular and favorable brands
on the local market. In the category of soaps consumers can find a wide variety of liquid
soaps in a dose with a pump and bar soaps. In addition to the two most important sub-
categories within the categories of soap, Henkel, as an environmentally responsible company,
offers its customers practical refill packs of 500 ml of liquid soap. As part of the brand's best-
selling Fa are bar soaps, although the sale of liquid soap through the years records very
significant growth rates. Fa soaps provide the best price to quality ratio with a wide range of
fragrant lines and nourishing products that can satisfy even the most demanding needs of
consumers. 2

1 http://www.henkel.com/sustainability/strategy/targets
As the category of soaps are needed in every household, the movement of sales are present in
all departments dealing with trade, from various drugstores, hypermarkets, to local markets.
Djeiji sapun is a brand that has a long tradition and form that has been used by many
generations, and today it is present on our market. Thanks to the natural glycerin, which is one
of the basic ingredients of their soaps, it keeps skin moisturized and makes it soft. It is
available in four versions: Original, Aloe vera, Almond and milk and Milk and honey.
Innovations are to Henkel of great strategic importance, because every year Fa introduces new
innovations on the market that are aligned with the needs of consumers and set international
trends and improve the entire category.

This year, Fa has introduced a new, inspirational line Fa Coconut Milk that, apart from shower
gels and baths, includes creamy soap bars and liquid soaps with refreshing, natural coconut
extract. The innovative formula of the Fa Coconut Milk line protects the skin from drying out
and gives a feeling of soft skin. Today, Fa is one of the largest and best-known brands in the
world that is specialized in body care. They are continuously focusing on the vitalizing and
inspiring freshness that is provided to their customers in more than 120 countries worldwide.
Since Henkel continuously monitors the needs of customers and their financial capabilities, Fa
products are one of the most dominant because of their affordable prices. Some of the
elements that make their one of the best-selling products are:

- Affordable prices
- Keeps skin soft and moisturized
- Products for all skin types
- Frequent promotional prices
- Promotions such as free products/buy one, get one for free

Also the Henkel company is present at the shampoo market with a wide range of shampoos
from international brands Schauma, Gliss and Syoss, as well as the domestic brand Glamur.
In their assortment, Schauma offers shampoos that meet the needs of different hair types for
women, hair care shampoos intended for men, children's shampoos and baby shampoos. Their
formula has improved this year and contains intensive proteins. All Henkel brands have great
success on the shampoo market and record a constant increase in sales, both in traditional
stores and the big chain stores and, also, drug stores.

Among the best-selling shampoos are those for dry and damaged hair. Henkel, as a leader in
innovation, is particularly proud of the innovations in hair care, which are well accepted and
favored by consumers: Schauma Cream&Oil shampoo with intensive proteins and argan oil
which nourishes damaged hair and prevents split ends, Gliss Ultimate Volume shampoo with
liquid keratin and collagen for incredible volume to the hair and Syoss silicon, paraben and
paraffin free products for professional hair care. Although the competition is very large and
active on this market, the great success of Henkel brands that is achieved is based on quality
products and their constant innovations and improvements in order to meet the growing needs
of consumers.

2 http://www.henkel.hr/brendovi-i-poslovne-jedinice/beauty-care
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The total costs for introducing the Essensity into the market of Bosnia and Herzegovina
should be 194.310,00 KM. The period we have considered is 8 months long, and the costs are
divided into four categories: personnel, travel, contractual and unexpected costs.
Personnel costs represent the costs of employees that are employed by the company to make
sure the project succeeds. We assume that a team of 10 people will be needed, with project
manager in charge of the completion of the project and achievement of all the previously
established goals.
In order to conduct meetings and expand the companys influence in the market of Bosnia and
Herzegovina, there will be a need to travel around the country and therefore we have
introduced the travel costs. The distances covered are not so great and therefore the only
means of transportation that we have stated is automobile transportation.
Other costs of the project include the costs associated with the design and publishing of
promotional materials. Because their design is a one-time endeavor, we have decided sign
service contracts for a one-time job with freelancers available online.
Finally, because no prediction is 100% certain, we have allocated an amount of KM 40.000,00
for any unexpected costs that might arise.

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In order to make sure that the project is completed as predicted, we are proposing the
following organizational hierarchy that should make sure that every task is completed:
1. Project manager is the man in charge of the project and is responsible for its final
completion. He signs all the contracts and creates a control system that he finds the
best to use.
2. Market researcher is tasked with assembling a team that will provide the project
manager with detailed analysis of the market of Bosnia and Herzegovina, in order to
maximize the effect of the promotional messages that will be used to establish a
market position for the product.
3. PR Manager is running the PR activities that were listed earlier. He is an subordinate
to the project manager as well.
4. Corporate Relations Manager is finding partnerships and conducting meetings with the
companys potential partners. His aim is to create a stable value chain and find spots
for serving the projects promotional messages. He is a subordinate to the project
manager.
5. Project assistants and interns conduct daily activities related to the project. They are
divided into teams and are subordinate to market researcher, PR Manager and
Corporate Relations Manager. Project manager can give them individual tasks as well.
Each member of the team has to attend a weekly meeting, where their performance is
evaluated and where the eventual costs for the week are listed, noted and justified.
For the contractual costs, the signed contracts and the visible results are the means for
justifying the money expenditures.