Marico's new baby

She's more about bellydancing than babies. But in a remarkable transformation of roles, last September, popular South Indian actress Simran appeared on TV screens across the region, minus her characteristic sashaying, promoting Sparsh, a new brand of baby oil. It was an unorthodox entry into baby care for Marico.

No other brand in the Rs 300-350 crore industry had roped in a brand ambassador, leave alone an actress. Less than a year later, following the national launch of Sparsh oil and bathing bar, another film star, Sonali Bendre, spoke up for Sparsh.

Why was Marico "" owner of Parachute, the world's largest packaged coconut oil brand "" sprinkling celluloid dust on baby products?

"Brand ambassadors build brand conspicuity, so why not extend that benefit to baby care? Besides, we've chosen women who've made successful transitions to motherhood," explains R Chandraseker, category head, Sparsh.

Marico's entry into babycare products is also a transition of sorts. The Rs 1,147-crore consumer goods company has been attempting to change its profile from a hair oil and edible oil products company to a personal and health care player, making forays into premium categories (such as value added hair creams and wellness services) that deliver substantial value growth with higher margins.

The baby care segment offers operating margins that are 5-10 percentage points higher than adult personal care. And, Marico has been striving to build up a healthy pipeline of new products and services, contribution of which has increased from 5 per cent of total sales in 2000-01 to 16 per cent in 2005-06.

Marico's official rationale for Sparsh? "It made sense to move into a product category that would benefit from the Marico brand equity," says Chandraseker.

Baby care still remains a niche product for personal care FMCG players. The adult personal care business is valued at Rs 12,000-14,000 crore (organised and unorganised), and for most companies operating in both spaces, revenue contribution from baby care is small.

According to Euromonitor 2005, India's per capita consumption of baby care products amounted to barely $0.05 in 2004 vis-à-vis $0.69 and $2.86 in Thailand and Singapore, respectively. Industry estimates the baby care category grew in value by 8-9 per cent in FY05-06, but considering there are roughly 25 million live births of babies each year in India (2003 census), this value growth is unimpressive.

That's probably because the market isn't easy. How do you build customer loyalty when the target audience keeps shifting? Typically, after the first birthday, parents switch to regular skin and haircare products that the rest of the family uses.

Repeat customers are another issue "" women are having fewer babies these days and they tend to stick to products they've used earlier or what their mothers recommend. The biggest obstacle to market growth in India, though, comes from home remedies: uptans and herbal infusions are still popular, even in urban, upper class homes.

There's also the incumbency factor. This is a market where Johnson and Johnson (J&J), after 59 years, still commands an overwhelming 68 per cent share (Euromonitor 2005).

J&J continues to enjoy near-monopoly status within the niche baby hair care and toiletries sub-segments and has a 50 per cent value share within the largest sub-category of baby skin care (Euromonitor 2005). J&J's unshakeable dominance has only been stirred by Dabur and Wipro, currently at No. 2 and No. 3.

Most players agree the only way to loosen J&J's stranglehold over the market is by expanding the consumer base: converting non-users to branded baby care. Wipro is trying to achieve that with price propositions. Others like J&J ("skin same to same") and Biotique ("safe for baby, safe for mother") are expanding the market through recommended usage to adults.

Sparsh's strategy involves piggybacking on the Parachute "promise" of "long-lasting natural goodness", publicising its ingredients "" tulsi, turmeric and coconut oil, the traditional choices for home concoctions. Even the yellow packaging, signifying the healing properties of turmeric, reinforces traditional perceptions.

Says Chandraseker, "Sparsh addresses an unmet consumer need for products based on traditional ingredients, in modern packaging."

Of course, Sparsh isn't the first to play the "natural goodness" card. Thirty years ago, Dabur India extended its brand equity in Ayurveda to launch Lal Tail baby oil; it's now the leader in the baby oil (skin care) category with 22 per cent value share (Euromonitor 2005), with an overtly mass positioning.

And a few months before Sparsh's launch in South India last year, herbal healthcare provider Himalaya Drug Company established its herbal baby care division. Its theme is "new age parenting is safe parenting", and its success is banking on a new wave of urban consumers that pays a premium for perceived safety.

While Dabur and Marico are going head to head for the mass market, Himalaya, at a marginal price premium to J&J, believes there is enough potential to grab the upper end of the mass segment and the lower end of the niche market. Marico's first task will be to create brand differentiation within this basket.

Significantly, Sparsh isn't doing that with price adjustments, which could have helped it drive volumes and perhaps penetrate deeper into the market "" the brand is priced on par with J&J in soap and just below par in baby oil.

"You can either play the volumes or the value game. In a segment where perceived quality governs decision making, value is often a better choice," says Rajeshwari Sheth, an FMCG consultant.

Marico's stance is in stark contrast to Wipro Baby Soft, a player since 1991. At retail, a buy-one-get-one-free offer runs indefinitely on Baby Soft oil. And there's a free soap dish with every bar of Baby Soft soap. A year ago, Wipro rolled out its value engineered tulsi and almond baby soap, slashing prices from Rs 25 to Rs 16 by changing packaging and also taking a hit on margins.

"Baby Soft's goal has always been to take baby care to every mother through price arbitrage and value proposition," explains Kumar Chander, vice-president (marketing), Wipro Consumer Care and Lighting.

Value propositions are central to Sparsh's marketing strategies, too. And it's emphasising them through advertising . The catchphrase in the tv commercial (TVC) "Zaroor maa ne banaya hoga" suggests generations of wisdom and the media buying pattern is skewed towards regional channels in South India and Maharshtra, traditionally high penetration baby care markets.

Numbers don't come easy for ad spends on Sparsh, but Marico has traditionally followed a strategy of brand building where it spends a larger portion of its advertising and sales promotions budget on advertising, rather than on promotional incentives. So Marico used a two-pronged advertising approach, adding advertorial testimonials to the attack.

"Thematic TVCs establish brand values but testimonials cut through clutter," says Ramanuj Shastry, Senior Creative Director, McCann Erickson, the creative agency for Sparsh. Other baby care brands have shown similar reliance on advertising. AdEx India 2006 recorded a 58 per cent growth in 2005 in baby care TV advertising, and a whopping 162 per cent growth in print advertising.

Sparsh is also reaching out to doctors and paediatricians to help influence consumers, targeting parents through brand promotions in paediatric clinics and maternity homes.

Says Chandraseker, "Establishing word-of-mouth credibility for Sparsh is more critical than wooing the trade." That may have been spoken in haste. An FMCG brand "" even in a sub-category where brand loyalty is among the strongest "" can ill afford to ignore trade influence over consumer behaviour.

Especially in the early days of the brand, when demand-push, and not demand-pull will drive sales. Even in Mumbai's largest examples of modern trade, Sparsh is lost in an absence of any introductory sales promotions. And despite Chandraseker's claims that the distribution of Sparsh is skewed towards modern trade and chemists, at an OTC chemist and personal care chain of stores, Sparsh is unrepresented. So is Himalaya. But then again, its distribution strategy is confined largely to Himalaya's 100 exclusive outlets and 800 shop-in-shops in India's top 42 cities.

In a quick run-through of six stores (modern trade, chemist and neighbourhood general stores), Sparsh was available in two. One of the two, a general store, stocked Sparsh, but didn't recommend it until prompted repeatedly.

"Sparsh's distribution strategy," defends Chandraseker, "does not rely on kirana stores." But if Sparsh is operating in the mass market based on its price points, alongside Wipro, Dabur and J&J, all of which rely heavily on the neighbourhood general store to generate volume sales, wouldn't capturing market share be reliant on at least being present as an alternative?

Meanwhile, Marico's competition attempts to sounds spirited about its entry. According to Wipro's Kumar Chander, greater competition will increase the value of the market.

"Heightened overall activity could drive consumers," he says. Besides, predicts a marketing consultant, 70 per cent marketshare (such as J&J's) is "unsustainable in a mature market. Consumer needs will get more diverse and the market is bound to get fragmented."

Sparsh believes it has identified one of those diverse needs. But, operating in categories where it will directly compete with J&J's brand heritage and distribution network, Wipro's pricing and the democratic popularity of Dabur's Lal Tail, Sparsh will have to convince mothers it is the one to meet that need.

Importantly, it will have to reflect carefully on which slot it eventually wants to occupy, the volumes through pricing and distribution game, or the differentiated product proposition and value game.