VIBHAVA CHEMICALS MARKETING ANALYSIS

NAME: ABHIJEET
PANDE

SAP ID : 80303190097

SUMMMARY:

In April 2011, Vithal Gambhir, the marketing director of Vibhava Chemicals, a leader in the
black phenyl category in the home cleaning agents (HCA) market in South India, faced with a
marketing challenge. A number of multi-national corporation(MNC) brands were emerging in
new category of specialty cleaning agents had plummeted down Vibhava's share of the
traditional black phenyl category by 50 per cent over the previous eight years. The marketing
efforts of the MNCs had also led to a gradual transformation of the HCA market, expanding and
segmenting it in terms of applications (e.g. floor-cleaning agents and toilet-cleaning agents) and
benefits (e.g. disinfecting, cleaning and deodorizing). As a result, Vibhava's leading brand,
'Black Belt' black phenyl disinfectant, began lost its market. Vibhava had successfully responded
to this decline by launching Ozone, a pine-oil-based floor cleaner, in 2003. Positioned as an
herbal, eco-friendly, deodorizing floor cleaner, Ozone managed to keep out of the way of
Domex, the leading MNC brand of disinfecting floor cleaner; While the sale of Ozone rose in
absolute terms, Vibhava's share in the growing home cleaning market dropped from 25 per cent
in a predominantly traditional product market in the 1990’s, to 11 per cent in the transformed
market of 2010. Gambhir now faced the tough challenge of meeting an ambitious sales target of
INR1 billion for 2011-12, which was double the sales of the previous year. These are the
solutions he thought:

1. Intensify promotion of new product line : Ozone.

2. Launch chlorine based floor cleaners at relatively low prices. The pricing can be kept
aggressively low e.g 50% of leading brands
3. Introduce new phenyl base cleaner and disinfectant for toilet cleaning
4. Introduce liquid detergents for washing machine
5. Expand the market geographically which includes new areas like new urban and rural
markets.

5C Analysis :

1. Customer : The customer mainly is rural based around Karnataka, over the period they
have increased their region to Maharashtra, Tamil nadu and Andhra Pradesh as well.
 Their customers are mainly low to middle class customers who prefer low priced
products.
2. Company : Vibhava chemicals operates on low margin profits, their revenue is moderate
sized. The company is however ambitious of goal of making sales of INR1 billion in
2011-12. Their resources and budgets are modest. Their spending on R&D is not
disclosed and their limited range of products indicates minimum spending on R&D
3. Competitor : They have many MNC compeititor like Rekitt Bekinser, HUL ,Dabur,
Johnson and Johnson. Their products like domex, harpic, Lysol , sanit fresh nearly wiped
Vibhava chemicals core product which is phenyl based derivatives.
4. Collaborators: Their main collaborators are 640 distributors and 70,000 retailers spread
across south of India. Each distribution channel has 135 salespeople headed by a director.
Vibhava realized supporting retailers garnered higher business,this led to higher
confidence and managerial competence and professionalism of Vibhava.
5. Context: Vibhava clearly understood the market , they well segmented and targeted the
market which being rural market of south India. Their model of low margin clearly
helped them establish a network.

SWOT Analysis:

Strengths:
1. Their strength being phenyl based
products. They could maximize their
revenue through and be leader in this
segment.
2. Their consumption was mostly local
based , though Bangalore showed good
results they could focus more in the
local market.
Weakness:
1. Their core product being phenyl based
products which proved to injurious and
have unpleasant smell, MNC started
defaming phenyl products to launch
new products.
2. Vibhava have a limited range of
products.

Opportunities:
1. Development of new semi urban and
rural areas clearly is a boon for
Vibhava chemicals as appointing more
distributors they could capture more
market by intensifying the campaign.
2. This could boost ozone sale in the
market.
Threats:
1. Threats from MNC , as their marketing is
way better and far-fetched , if they capture
local market, Vibhava would be wiped
2. If the profit margins are reduced by other
local competitors , they would pose a stiff
competition to Vibhava
3. Introduction of new product, faces a risk
of failure for e.g ozone in this case.
Porters 5 forces evaluation:

1. Competitive rivalry : There is heavy competition in the market, but Vibahava chemicals
have completely targeted and segmented a specific sect, they have managed to stay away
from the likes of MNC products like domex , Lysol. Thereby maintaining a specific
consumer base.
2. Threat of substitute : Local competition is always a threat as substitute can come and
replace the products, so a keen network, business and marketing intelligence is absolutely
needed as products of leading brands are not a threat in local market due to pricing
disadvantage.

3. Supplier power: Realizing that distribution was crucial to the successful production and
sale. Vibhava chose to associate with distributors of leading FMCG brands.Margins were
15% for distributors and 30-40% for retailers. Vibhava offered higher margins.

4. Threat of new entry: Since major players have launched their key products no major
threats from MNC but there is always a threat of new MNC making their debut in the
market with complete different line of product which can disrupt.

5. Buyer Power: Vibhava should not get into a price war with the MNCs. MNCs have great
resources at their disposal, which if used could be bad news for vibhava. Vibhava cannot
afford to lose their margins that would mean that margins of the suppliers and retailers
fall. This would negatively impact their relationship, which is critical for achieving the
company’s target of INR 1 Billion.

.
Conculsion :

Vibhava should not get into a price war with the MNCs. MNCs have great resources at their
disposal, which if used could be bad news for vibhava. Vibhava cannot afford to lose their
margins that would mean that margins of the suppliers and retailers fall. This would negatively
impact their relationship, which is critical for achieving the company’s target of INR 1 Billion.

Company should adopt the blue ocean strategy. Vibhava should focus on research and
development of new products and should focus on tapping new markets such as Indian rural
market and urban markets.