SURVIVAL STAKES

CASE STUDY

INTRODUCTION

Western India Cosmetics (WIC), a cosmetic company, was established in 1992 at Aurangabad (Maharashtra). It was acquired by the Excelsior Group, Rs. 1000 crore company whose core business is liquor. Excelsior acquired WIC as a part of a deliberate diversification strategy because of the risks faced by its core business.

Excelsior Group - The Current Scenario

Excelsior Group, Is A Rs 1000 Crore Conglomerate Its Core Business Is Liquor, Diversified Into Real Estate, Consumer Products, Finance Etc. Acquires Western India Cosmetics(WIC) To Further Diversify. It Is Diversifying To Overcome The Threat Of Prohibition On Liquor Sales In Different States (Such As AP, Haryana). Liquor Business Under Threat Of Possibility Of Take-over
Consu mer Financ Produc Others e t 4% 10% 6% Real Estate 10%

Liqour 70%

SALES

PROBLEMS FACED BY WIC

Burdened with unsuccessful brands. Little product differentiation. Labor strikes and bloated workforce Relatively less market share Erratic support by the parent company i.e. Excelsior.

Annual Sales of WIC Brands

30
25 20 15 10 5 0 Bharat Herb Wash Bonjour Sparkle

Annual Sales in Rs. crore

BHARAT
Medium-priced, ayurvedic and ethnic soap. Direct competition from Chandrika(South India) and Medimix(Pan
India).

Implicit threat from Mysore Sandal and Santoor but neither of them
are ayurvedic products.

Flat Market share. Bread and Butter for the company.

Solutions/Improvements

Add new features to the product by adding new ingredient like

assortment of healing oils.

Introduction of smaller sizes to cater to lower-middle class as well.

Sparkle

Bonjour
1. 2. 3.

A premium/high-priced soap. Currently on a refreshing soap platform. Quite unsuccessful in product positioning. No proper promotional campaign.

Toilet Soap Annual Sales : 5 Crores Half Dead Product

4.
5.

No sign of revival
Lack of adequate promotion

Solution/Improvement1.

Solutions/Improvements
1. 2.

Short term strategies

Discontinue Production If there are lack of buyers,

Focus on product design and packaging. Divest the product

2.

Long term strategies

Invest only in day to day operations

and slowly divest.

HERB
Herbal Toothpaste 1. 2. 3. Has Gone Down Well With Consumers Occupies A Place In The Competitive Market Competitors : High-end : Close Up And HUL; Gel Toothpaste Medium : Low Colgate : Babool

SALES
Babool Pepsode Others nt Promise Colgate Gel CloseUP Colgate

4. Lacks New Idea 5. Not Having Idea Of Shifted Into Gel Tooth Paste Solutions/Improvement

Follow The Strategy Of MARKET PENETRATION, Launch The Product In Sachets. Market Development Strategy By Launching Product As Tooth Powder In Rural Areas.

WASH
Detergent Powder 1. 2. Annual Sales : 8 Crores Competitors : High-end : Ariel, Surf Ultra Low Priced: Ariel Supersoaker, Rin Power White, Nirma & Wheel. Others : Shudh, Henko. 3. No Money To Made At Top End 4. Flanks Covered By Other Players Solution/Improvements Remove The Product From the Portfolio.

Sales
12% 2% 6% 36% 8% 10% 26%
Nirma Wheel Surf Ultra Ariel Super Soaker Rin Power White

Ansoffs Model

(Market Expansion Grid For WIC)

PRESENT PRODUCTS
NEW PRODUCTS

Present Market

I. Market Penetration (Intensive Growth)

Increase Market Share Herb and Bharat

III. Product Development (Intensive)

Sparkle
Product reformulation strategy Feature Addition-Anti Bacterial

Convert nonusers into users Advertise their Health benefits

Product feature additions strategy Offer product in different colors

II. Market Development (Intensive) Herb

IV. Diversification
Introduce ayurvedic shower gel Launch herbal mouthwash

New Market

Target new segments Toothpowder for consumers of rural area

Questions

Should WIC phase out its existing consumer products and bring in its current range of products or retain them all? Should it sell of its assets and cut its losses before it is too late? Should it strengthen its consumer goods business through backward and forward integration?

or

IS THERE A FUTURE FOR WIC??