Veet Case Study free essay sample

Opportunity is a matter of perception. It is not for every eye to spot opportunity. Only a perceptive eye can achieve this feat. Hair removal market in India has remained quiet and sleepy for very long until RB (Reckitt Benkiser) forayed into it with its Veet brand in 2006. And in a short span of seven years of its launch the brand transformed the category from a meager Rs 50 crores to Rs 350 crores creating a seven fold jump. The brand went on to become not only market leader but a dominant player leaving the incumbent brands far behind. It certainly is a remarkable marketing feat. But success is intoxicating. Success fuels desire to succeed further. For Rajneesh, marketing manager (personal care business) and Sandeep, brand manager (Veet), this certainly has been a milestone reached, but they both seem to concur that this market leadership of Veet is not an end itself rather a beginning. We will write a custom essay sample on Veet Case Study or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Though Veet’s claim to fame has been hair removal or hair depilation, this is not the only knitting to which the brand must stick for ever. How far can the brand go if it sticks to its territory of hair removal, certainly not very far? Both Rajneesh and Sandeep intuitively feel that Veet masks huge potential to become a mega brand simply if it manages to transcend its current product domain. Sticking to knitting is fine but it is also limiting. But a brand like Veet can grow leaps and bound if the brand finds new knitting. Amidst this conviction, there is confusion as to what course the brand should take and how. The Company Reckitt Benckiser is a multinational corporation with presence in over 180 countries. Its origin dates back to 1823 when Johann A. Benckiser laid its foundation. With over 150 years of existence the company is founded on British and German heritage. The company has distinguished itself for bringing innovative solution to meet customer needs. Reckitt Benckiser (RB) came into existence after the merger of Reckitt Colman and Benckiser in 1999. This merger created world’s top house hold cleaning solution provider. RB operates in a number of high growth categories considered to be at the core of its business strategy: fabric care, surface care, dishwashing, home care, health care, personal care and food. Four of the top amongst these in terms of revenue are fabric care (22%), health care (26%), personal care (20%) and surface care (17%). The company has operations in 60 countries, sales in 180 countries and has had net revenues in excess of 6. 5 billion pounds last year. 4 Reckitt Benckiser India Ltd (RBIL) is a fully owned subsidiary of Reckitt Benckiser Plc. The year 2010 saw the company achieve very strong financial results despite not so positive economic conditions globally. Net revenues grew by 9% to ? 8,453m and adjusted operating profit was up by 18% to ? 2,231m. This performance, following a number of years of strong growth, is a testament to the global strength of the Companys strategy and execution, and the quality of its employees and their leadership. RB has strategically built an impressive brand portfolio in the above categories. Most of its brands consistently figure on the shopping list of customers worldwide. RB’s brands stand apart from others by combining an irresistible combination of innovation and value for money. A total of nineteen power brands drive company performance including Airwick, Dettol, Clearasil, Disprin, Harpic, Lisol, Mortein, Vanish, and Cherry Blossom. Most of these brands enjoy top positions in their respective markets. These are either number one or two in their categories. For instance, Lisol is a number one disinfectant brand in the US. The other brands that lead the category include Dettol (antiseptic), Vanish (fabric stain remover), Harpic (toilet cleaner) and Cherry Blossom (shoe polish). For RB India like other countries where it operates, most of its brands are top performers in their respective categories. A good innovative product when combined with ingenious marketing methods creates a mix par excellence. For instance a great marketing feat is achieved when an antiseptic brand like Dettol was completely transformed into to a health brand. Dettol subtly and strategically moved away from antiseptic yet leveraging its core benefit to become a brand embracing new product categories like toilet soap, shaving cream, talc, plaster and hand wash. Company’s toilet bowl cleaner brand Harpic enjoys market leadership with a share close to 75%; glass surface cleaner Colin tops the category with about 88% share and mosquito repellent brand Mortein dominates the market with about 20% share. One of its recent launches, Vanish a fabric stain remover, went to create and dominate the fabric stain remover category. Most of these brands are either number 1 or number 2 in their respective categories in India The company’s products need a wide distribution set up in order to reach their target customers. Some of the products typically fall in the fast moving consumer categories which require servicing a wide market area. RBIL uses its common distribution channels for distribution of its products which enjoy wide and deep reach in Indian market. This is one of the important strengths of the company. The channel system of the company is managed by its well structured sales force which is accountable for ensuring supply and sales of company’s entire product portfolio of more than one hundred and fifty stock keeping units. Quick way to leadership Veet brand was launched in India in 2004 and within a very short span of time it went on to become the category leader. At the time of its launch the total category sales stood at Rs 50 crores. Seven years later in 2010, Veet became a Rs 350 crore brand registering a seven fold increase in seven years since the time of its launch. Like many of the other RB brands, Veet is the number one depilatory brand in the world. It reigns at the top of the heap in the hair removal 5 products category. Following the global footprints, in India too, Veet has emerged as the top most hair removal brand. Prior to the launch of Veet, hair removal market was in a state of dormancy. Only a few brands competed in this space. One of them has been the Anne French brand from Wyeth Consumer Healthcare. India. This brand has been present in India for over four decades and as a result of its long existence in the market it developed a close connection with hair removal. Being probably the first mover and having been present in the market for a long period, the brand was not aggressively promoted. Its communication, few and in between stressed on the ease with which hair could be removed. The brand simply promoted how the product could be used to remove hair conveniently. The advertising of the brand followed an illustrative or demonstrated approach to explaining the prospective customers as to how hair could be removed by simply applying Anne French cream on the body to get rid of unwanted hair. The central idea centered on the product functionality. A period of long presence in the market can both be a burden and an advantage for a brand. It can be interpreted as heritage and hence excellence which could be leveraged to build brand strength. At the same time long existence can also imply ‘old’, ‘obsolete’ and of ‘yesteryears’. It is in this context that a long standing brand requires a careful and tactful manoeuvre. Anne French’s reality was somewhat similar. It was a brand with time of its side but it was not contemporized as time passed by. The result was a brand which enjoyed high recall and recognition and continuous support of customers. Rajneesh, Marketing Manager (personal care) is joyous over the feat that Veet managed to achieve: We studied the category and found immense potential waiting to be exploited. There were few players, at top Anne French followed by others like Fem. Anne French was known nationally with high recall and recognition in the target segment but here was a brand which was stuck in a time capsule. The brand was entirely promoted on the plank of product functionality. It focused on the ease of hair removal. But the brand image was not modernized to meet evolving desires and aspirations of target customers. Time or its long existence in the industry had rendered it fuddy-duddy meant to be used by only older customer. It was like „my mom? s brand, not for me?. The writing on the wall seemed very clear. The category was shouting out loud for players to join and provide what children of a liberalized era wanted. Liberalization and its consequent impact on consumer economy and consumer psychology fueled the growth of segments closer in outlook with any developed market of the world. Sandeep, Brand Manager ( Veet) concurs with Rajneesh: 6 There has been a subtle shift from sustenance led consumption to pleasure seeking. People want excellence in product functionality, but this is only the starting point. Now customers are willing to pay more if the brand delivers something beyond product functions. If a brand can rise up in the value ladder and forges a connection, it would certainly be rewarded. Consumption Consumers are making a transition from sustenance to indulgence. We had a brand in our portfolio which led the depilation market world wide. And the Indian market seemed just right for its launch with only one issue that needed to be resolved and that was what approach the brand should take to take on the then existing players. Further examination of the category threw up other interesting insights. The products available in the hair removal category had not evolved with time and thus as a result these formulations were inferior to the ones marketed elsewhere. These were not improved over time. In a way these were primitive. This category suffered from lack of innovations. It was not just the product, even the marketing, especially communication did not convey any sense of excitement. The brands stuck on to the matter of fact reason centric copy, more like sponsored information. Ads showed how application of the product allowed easy hair removal. Relying too much on the ‘reason why’, communication failed to activate emotional triggers. This probably has been due to the fact that product like this is not openly talked about. Hair removal deals with private parts and to promote this aggressively could have violated the sense and sensibilities of people twenty thirty years back. But things had moved on, yey brands did not. Veet needed a strategy by which it could directly connect with its customer better and at the same could set itself apart from other brands in the category. Rajneesh explained how Veet carefully negotiated this challenge: We were particular about making our objective of achieving brand leadership through innovation both in product and branding. Veet is a world class product with a superior innovative formulation. So we scored better on this count. However communication was a challenge. Instead of focusing on product functionality, we brought what customers seek by using a product like this at the centre of our brand building. Our strategy was to develop further on from superior hair removal and make a transition to benefits and we chose beauty and the confidence that comes as a result as the rallying point in our communication. We got our brand endorsed by Katrina Kaif, one of the top actresses in Bollywood. Katrina? s endorsement allowed the brand to develop strong linkage with words like the „beauty? , „attractive? , „success? and „modern?. The ads showed how using Veet makes skin smooth and attractive. Katrina was shown as arresting the attention of the opposite sex after product usage and gesticulating „V? for victory at the audience. The brand communication found an instant connection with its target customers. It built resonance by relating with below the surface desires to be beautiful and ultimately be attractive to the opposite sex. Hair removal’s instrumentality in achieving higher order goal made the 7 brand an instant hit. It did not take much time for the brand to emerge as the category leader (see exhibit 1). Veet managed to put action into a sleepy category with the result that both the category and the brand expanded impressively (see exhibit 2) Market Reality Veet’s emergence as the dominant player in the hair removal category is certainly an appreciable achievement. But a perceptive glance at the market also reveals that there lies phenomenal opportunity to catapult the brand on to a higher valuation if the total market expands. First of all the category is not yet fully penetrated. Hair removal penetration is relatively lower in India as compared to other markets of the world. Only about a 68% percent of the people do depilation compared to above 80% in developed countries like the US, France and Spain. Hair removal penetration is even lesser for arms and legs at 40%. Secondly there is tremendous scope to multiply per capita consumption if customers who visit to salons for depilation could be shift to self depilation. The ‘salon only’ market is larger in North and West India. The usage of hair removal products is related to age. Its consumption goes down with age. The user of the category tends to be younger, single and educated. More than half (54%) of the women in the age group of 15-34 years use hair removal products and this percentage drops to 39% for 34-44 years age group. This goes down further to 18% for 45-65 years age group. The category consumption is also related to social grade. People in the higher social group are greater users of hair removal products. The Indian market is not much different when it comes to product usage concern. Hair removal product penetration/usage in terms of body parts is similar to that in other countries. The application areas for hair removal products are face, underarms, arms, stomach area, bikini line, upper legs and lower legs. The top three application areas in India are underarms, bikini area and face. This is in line with other markets. The Indian customer differs from the others with respect to usage on legs. Upper leg and lower leg usage in India is 11% and 24% which is much lower than 59% and 93% in other markets. Hair removal products are very intimate and personal. The path between Veet and customer is not straight and simple. It is full of myths and psychological barriers. Rajneesh explains: The industry offers hair removal solutions in the form of waxes, creams, and razors. And each of these products comes with their own perception baggage, some parts of which are positive and some negative. Razor is quick but difficult to use and does not give the smooth effect. Wax is cumbersome, messy, time consuming but is perceived to remove hair from the root, effect lasts longer and gives smooth effect. Creams are easy to use, gives smooth skin but people perceive that creams make skin dark and these are chemical formulations. This perceptual bias works against creams, hence against Veet. The usage of hair removal products can be broadly classified into two categories. Creams are used mainly for Underarms and bikini area. This is hygiene depilation. Arms and legs depilation is guided by the consideration of beauty. These are exposed part of the body and hair on them makes the person 8 unattractive. This is beauty depilation. Data on the product usage and application area is give in exhibit 4, a careful glance reveals that there is a scope for Veet to become bigger if it penetrates into application area where waxes and razors are used more. Sandeep, the brand manager for Veet articulated the challenge: The brand can become bigger if a shift in the product usage type is achieved. Wax is dominantly used for beauty depilation. There is an opportunity for a brand like Veet to expand by shifting people from wax to creams. Cream usage is higher for hygiene depilation. The usage of razor is also high for underarms and bikini area depilation. Hair removal for beauty involves bigger quantity usage hence this shift promises big opportunity. Waxing is predominantly a parlour activity. It is not simply the process of getting rid of unwanted hair for beauty purposes for which parlors are visited. Factually waxing is time consuming, messy, painful and a joint process. With all its negatives waxing looks like an inferior solution to customer needs compared to creams. Creams are neither messy nor painful. They save visit to parlour and are empowering. Therefore a shift from wax to cream is logical. Reading this opportunity a cold wax strip variant of Veet was launched. The anticipation was that the market would explode and target customer would lap it up. By this extension it was expected that Veet would steal a large market away from parlours. The ready to use cold strip version of Veet was met with only part success. Instead of getting into a permanent routine, it ended up being a solution only for emergency situations. One man’s reason is another’s unreason. There has to be something more than simply hair removal in a visit to a beauty parlour. Had it not been so then cold wax strip of Veet would have become a blockbuster success. Waxing and hence a visit to a parlour is rooted in the psycho-social reality of women. A visit to a parlour apparently involves planning, taking time off, and undergoing the pain, yet the shift to creams is not easy to achieve. There is something more, highlights Rajneesh: A beauty parlour is not simply a functional space. It is cherished for its own psychological and social significance. Women do not simply visit for waxing rather their visit is combined with other beauty routines like eye brow shaping, pedicure and manicure etc.. Besides these „reasons why? there are other implicit needs which parlours satisfy. Parlours are pampering places. The beauty routines performed on customers by the staff creates an uneven power equation where the women assume power over the server. It gives a great feeling. Parlours are also exclusive meeting places with friends; the interactions with staff evolve from a professional relationship to a personal relationship. Here people can freely gossip, exchange ideas and learn beauty tips. Beauty parlours are not only direct competitors to Veet but also bad ones. In order to protect their market and perpetuate dependence, parlours are also myth generating places. Customers hold parlour staff as knowledgeable and expert. Directly or indirectly a bad word about creams is spread such as creams are harsh chemicals and therefore the skin can get damaged, usage of creams leaves dark spot and creams remove hair from surface without taking them off the roots. This has been obstructing the brand’s growth, Sandeep feels: Veet comes in different sizes. The international 100 gm which sell the most in western countries does not move that fast here. Veet also comes in a 60 gm pack, which is about 25% contribution. A small pack of 25 gm was launched to facilitate trials. But this variant went on to become the 9 largest seller. The sale of smaller pack implies that first of all people do not use cream for beauty depilation (arms and legs) because it requires larger quantity. Secondly this pack too is kept to meet unexpected emergency situations. Getting people to use Veet for beauty depilation is an important marketing challenge. New Knitting All through Veet has been guided by the understanding that for customers ultimately hair removal is not an end itself. Customer ultimately wants to look and feel beautiful and to be attractive to others. Accordingly brand’s communication strategically focused on benefits such as smooth skin and beauty and kept the hair removal in the background. Quite unlike other brands in the category which rallied the idea of hair removal and ease or product functionality, Veet built its equity based on emotions (‘confidence that comes with smoothness’). The ad execution typically followed a concept very similar to beauty brands use celebrities or attractive model as emotion triggers. It is in this context Katrina Kaif who epitomizes success, beauty and sensuality, played a significant role. Veet’s strategy combining an innovative superior product with excitement and glamour of a beauty brand paid off very well. Leadership surely is satisfying but this can’t be everything. Explains Rajneesh: There have been many instances when a successful brand went on to become a mega brand by crossing over its existing product boundary. For instance, Dettol evolved from being solely an antiseptic lotion brand. It has become a dominant health and hygiene brand and accordingly apart from antiseptic lotion it enjoys a wider range of products in its fold such as bathing bar, talc, shaving cream and hand wash. On almost similar lines, one of the bathing bar brands, which for a long period of time was exclusively sold for its „1/4 moisturizing cream? has gone on to become a much bigger brand. The brand now sells shampoo, lotions and creams along with its original product ,a bathing bar. The brand essence of „1/4 moisturizing cream? was reinterpreted as „less damage or damage free? to support products in other categories. One option for Veet is to be content with its leadership and stick to its knitting and build volumes within this space. Second is to make a transition to becoming a bigger beauty brand or find a new knitting. Does Veet have a legitimate right to do so? Examples are illustrative. A lot can be learnt from examples but blindly following the success model of others is full of risks. But then there are many good examples in the industry which show how some brands move on with time by not just withstanding the challenges unleashed by change, but rather by proactively converting these into business opportunity (see exhibit 5). Within the hair removal market, Veet is marketed in different variants both in terms of sizes (25, 60, and 100 gm) and types to suit application and skin type (normal, dry, skin and suprem essence). Same is the case for its wax strips. These are marketed in three variants-for normal, dry and sensitive skin. This strategy to extract volume by market penetration has contributed to Veet’s leadership in the hair removal market. It is a critical time for the brand. It probably is a time for the brand to make a transition. Its equity could be leveraged to build business in other categories. This is only possible if the customers find the brand relevant in the beauty space. The body routine includes primarily four care areas: face, body, fragrance, and bath (exhibit 6). There are a number of brands worth emulating, points out Sandeep: 10 Brands like Ponds, Vaseline and Dove are particularly instructive. Pond? s earlier was cold cream, Vaseline was known exclusively as petroleum jelly and Dove was a bathing bar. Consider now, all of these brands have made a very successful transition into becoming multiproduct brands. The time probably has arrived for us to explore new pastures for Veet by transforming it into a beauty brand. Optimism is fine, but wrong moves sometimes can backfire and erode the equity of a primary brand. We certainly do not want the brand to make a blind move. For Veet to succeed in new product categories the brand must add a relevant and differentiating dimension. In this context Veet has cultivated equity based on ‘smooth skin benefit’ supported by aspiration and attraction created by its celebrity endorser. The following statements summarize customers’ feelings towards the brand: â€Å"Veet makes our skin feel smooth after using it†; â€Å"Katrina fits the brand as we all want our skin to be like hers†; â€Å"Veet has better fragrance as compared to other players† ; â€Å" I generally don? t require to apply cream afterwards, it has some moisturizing lotion†; â€Å"Veet is an international brand† ; and â€Å"It? less painful than waxing and less risky than using razor. It doesn? t make our hair hard† On the whole the brand comes across as sophisticated, premium and international. Endorsement by Katrina Kaif has contributed to the creation of brand’s personality as glamorous, stylish, and sophisticated. The values associated with the brand are: good fragrance works in three minutes, easy to use, and leaves the skin smooth. Optimism and Caution Veet enjoys a clear functional advantage over its rival brands in its home category of hair removers. It also enjoys equity based on non-functional aspects. The Exhibit 7 provides a critical look at the brand. Veet’s functional value delivery runs common across competitive brands except that its fragrance makes it different. The associations such as ‘international’ and ‘sophisticated’ are relevant for a select set of customers which makes its appeal limited to a premium niche. Other customers may find it difficult to relate with the brand. The glamour and sex appeal added by its endorser may be perceived as superficial in the absence of credible credentials as a beauty brand. Exhibit 8 shows the imagery associated with the brand. The brand conjures images of confidence, carefree, glowing, glamorous, and smooth and supple skin. Do these associations make the brand ready to take a plunge into the beauty space? These associations do create lure and temptations but this is insufficient. The brand must offer some differentiated value to customers to create pull. Since its launch, Veet has managed to establish its credibility in the hair removal space with ‘smooth skin’ benefit. The growth trajectory for the brand can take three forms: first, extending the core range of hair removal product by launching different hair removal products and moving up to premium formats (product centric). This has already been done. Second, the brand can move into new product categories beyond its core product domain by directly stretching on the core proposition of ‘smooth skin’ (benefit centric) and retaining the association of hair removal. Third, this is an indirect path to grow the brand. This would involve exploring brand growth avenues by extending the brand into beauty category. This can only be achieved when the brand connections are based on non-product or abstract considerations like ‘smoothness and beauty’ (see exhibit 9). 11 Personal care consists of a number of routines. These include caring for the face, hand, hair, and skin (see exhibit 10). The overall depilatory market is limited to a small portion of the total personal care market. Sticking to the depilatory market severely limits by its size and growth prospects. Veet can grow if it is able to branch into other underleveraged segments of the personal care market. The feeling that runs through the team behind the brand is that of optimism and caution. Both marketing manager and brand manager at Reckitt Benckiser agree: There is an opportunity for transforming Veet into a „beauty brand?. But this is not a cake walk either. Specifically we need a road map with a complete milestone plan for the next five years for making Veet a beauty brand. There are very specific issues which need to be addressed: first of all what needs to be done to move Veet? s equity from being a „hair removal brand with some smooth skin connect? to a „true beauty brand ?. Second, the new segments in which Veet can enter in the personal care space. Third, what new products with relevant product differentiators could be launched in new segments? And finally, what specific initiatives must be undertaken so that this transition is smoothly achieved? It has been a long time since anything like this has been initiated. Everyone agrees on the point that there is an opportunity waiting to be exploited by Veet but at the same time doubts also cloud thinking. Global marketing head of Reckitt Benckiser who is expected to arrive in India for a review meeting has posted the following concerns: Veet has all along been a depilatory brand known to provide „smooth skin? benefit, how is the brand going to be seen by customers in other categories? There are strongly entrenched players in the beauty market. What blueprint does Veet have to succeed against these giants in the beauty space? What differentiating value would Veet bring to beauty customers in order to push the purchase trigger? Success in hair removal market does impose and create a baggage on the brand which may hinder its smooth transition to beauty category. What tactical maneuvering would this require? And above all it is very critical to choose the right category and right now it is unclear as to what categories are more suitable than the others. Apart from the above concerns, it is important to spell out what the brand should do to exploit its equity in the interim period before new products are launched. How should the brand build further on its beauty appeal and take it to a higher level so that later the brand is not seen with skepticism in the beauty category? Apart from the transitioning issue, right now what can be done to make Veet even a bigger brand in its home turf of hair removal?