Beruflich Dokumente
Kultur Dokumente
Sridhar KM
18472
The soap industry is one of the oldest operating industry and it generates around $17 billion revenue
per year. Soaps were once considered a luxury but now due to the rise in the disposable income it is
a highly demanded product, and to a great extent a necessity in India. There are 48,000 tonnes of
soaps manufactured every year in our country. There are around 68 companies with 205 brands in
the fiercely competitive Indian market. Penetration of soaps is around 98% in our country. (Adithya,
2011) Soaps have become an integral part of an Indians life. Soap could be counted as an economic
indicator to our economy. Soap being a necessity, helps us understand the condition of our
economy.
Now the industry having gone through rapid changes, has expanded multi-fold. There are many
more brands in our country. The population in our country is heading towards an economy which
highly focuses on the personal hygiene.
Soaps can be mainly classified into three main categories- Beauty soaps, Health soaps and others.
Beauty soaps take the major portion of the market categorisation. Health soaps are catching up with
the imminent growth of the market due to health conscious customers. The increasing spread of
health and hygiene is giving the players a good opportunity to expand. A lot of demand is from the
rural market. Herbal category is also growing especially in the foreign markets.
The major brands playing in India are Lux, Santoor, Dettol, Vivel and others. Lux alone has a market
share of 13.5% followed by Santoor. (Indian Mirror, 2016)
There is not much differentiation in the beauty soaps category. Companies rely on the expensive
promotional campaigns launched to lure the customers.
HUL Godrej ITC Wipro Colgate Palmolive
This is just a glimpse into the soap market. There is high competition to get the prime spot in the
market. We cannot measure the reason behind customers being loyal. That is the reason why the big
players in the industry keep focusing on promotional events to grab the attention of the customer.
Brands are fighting to attain loyalty from customers. Revenues are not so uniform. Most of the
companies have an array of products to cover up the losses from the soap segment.
There are many other local players in the market. Such brands are not so popular, but are able to
push the products based on lower pricing. A huge customer profile still opts soaps which are
cheaper, than look for quality. The situation is mainly prevalent in rural areas.
Based on these details we can infer that soap industry has hit the ‘maturity’ stage. The major reason
being the awareness spread regarding the utility of soaps. The government has taken many steps to
make citizens understand the importance of soaps. There have been many ads to showcase the
importance of washing hands before eating, with a soap. Even the spread of literacy is an important
factor to spread the awareness of using soaps. 98% of the Indians use soap, this quantifies the
spread of soaps. Soaps are also facing competition from body washes which are replacement to the
way a person takes bath.
Hence we can say that the soap industry in our country has hit the maturity stage.
When we look at the herbal soap segment or the health soaps, we see that the products are getting
greater recognition amongst the customers. This particular category in the soap industry is seeing
good prospects of growth. The demand for these soaps have especially risen in the foreign markets.
People are understanding and appreciating the uses of these soaps.
PESTLE Analysis:
1. Political Factors
The industry faces a lot of strict regulations from the government. The main reason being
industry operates with products which come in contact with our skin. There are a lot of
clauses placed in case a product causes harm to any individual. There are strict testing
policies in place before a product is allowed to see the daylight.
The recent election would have hardly impacted the sales of the industry. Soaps are a
necessary product in our country, hence the sales are generally not impacted as per the
industry is concerned.
There are strict rules in place to monitor the import and export of soaps.
2. Economic Factors
It is an industry which was the least affected by the recession, people were conscious of the
prices only the premium segment soaps were affected. This also means that the import-
export is not affected drastically based on the market conditions. The demand to the
industry is spread evenly throughout the year.
3. Social Factors
Cleanliness occupies a prime spot in our society. People are really sensitive about anyone
commenting on their personal cleanliness. In such a situation soaps become a necessary
item. Soaps also form part of the expensive gifting. It is seen now as a status symbol for
people to use expensive soaps. The gifting packages are a combination of various other
cosmetic needs of an individual.
An important factor influencing the customers are the brand ambassadors for a product.
People in India or elsewhere have a mentality to get swayed by the portrayal of their
favourite personality. Companies must choose their brand icons with utmost care.
4. Technological Factors
Technology has impacted the availability of the products to the customers. People are not
required to travel till a store to buy these products, all of them are available online. E-
Commerce websites like Amazon and Flipkart in India has helped the industry in getting a
greater depth in their delivery systems.
Many of the companies themselves own websites to showcase their new products or any
other latest happenings in their company.
The production process has also been impacted positively due to technological
advancements. Companies have the capacity to produce to their optimum possibility.
5. Legal Factors
There are many approvals that need to be taken before a soap is launched. Soaps need to
legally be allowed by the authorities. The Drugs and Cosmetic Act requires all the ingredients
to be approved. There are many documentations required before a product is approved.
Such strict restrictions are in place to ensure that the product causes no harm to the skin.
6. Environment factor
This aspect of the PESTLE is crucial for the soap industry as it’s in constant touch with the
environment. These factors include all those that influence or are determined by the
surrounding environment. The major ingredients for the soap are perfumes, caustic and oil.
Oils & perfume are insoluble in water and if spilled can create problems.
5 Forces Analysis:
1. Competitive Rivalry
There are many brands operating in the same market. The competition is very high in
this market. All the companies hence have a wide array of brands to satisfy customers in
different strata. The switching costs are also very low in the market and hence people
are not reluctant to change.
2. Bargaining power of the Customers
The bargaining power of customers is quite high because of the low switching costs and
also the wide array of product ranges offered by the companies. Customers are not
extremely loyal, but once they are convinced of the quality of the product they will stick
to the product. This is because the product comes in contact with our skin and people
will not want to risk it.
In the current scenario where people are shifting to the herbal products, customers are
looking for these benefits in other products in the same category as well.
3. Bargaining power of Suppliers
The bargaining power of suppliers is relatively low as the companies have a large
number of suppliers meeting their requirements. They are very less chances of a supplier
to forward integrate. The quantity taken from the suppliers are not heavy and hence an
individual will not affect the production of the big companies.
4. Threat of Substitutes
There are no substitutes to the products from the industry. We can argue that body
washes are taking over the soap sales but soaps are also part of the FMCG industry as
are body washes.
5. Threat of new Entrants
This is quite high as the cost of starting a soap manufacturing house is not so high. The
knowledge required is already available online. Any new person interested can start
his/her person. The major challenge comes in the area of scaling the business. The major
players in the industry are extremely huge and have amazing market penetration.
These are the strategies for the company ‘Godrej’ based on the Industry Analysis.