Splitting Hairs

Did you ever think that consumers would want lice to eat into their haircare spends? The Rs 671-crore Marico Industries "" best known for its flagship Parachute coconut oil "" seems to be exploring that as a value proposition. In December last year, the company launched a brand extension of its anti-lice shampoo Mediker "" in the form of Mediker hair oil.

Marico acquired Mediker shampoo for Rs 15 crore from the fast moving consumer goods (FMCG) major Procter & Gamble in July 1999. Since its acquisition, the brand's volumes have grown from 14.8 kilolitre per month to 17.8 kilolitre per month in 2002-03.

But there's a catch. Company insiders feel that though Mediker is a profitable brand, the anti-lice shampoo segment constitutes a mere Rs 14 crore of the Rs 1,069-crore shampoo market. Dominated largely by the unorganised sector, the category has been growing at 5 per cent for the last three years. Marico, clearly, has to grow the category.

And the brand extension is one way towards that end. In fact, according to company officials, piggybacking on the brand extension, Marico hopes to double the anti-lice category to Rs 27 crore in the next one year.

Why was there a problem taking the brand forward? First, there was the price point. As far back as 1992-93, when most shampoos were selling at price points of Re 1 to Rs 3 for a 10-ml sachet, a 15-ml pack of Mediker cost Rs 4. Today, a 50-ml bottle of Mediker shampoo is priced at Rs 32 and a 10-ml sachet at Rs 7. In comparison, Hindustan Lever's Clinic anti-dandruff shampoo retails at Rs 15 for a 40-ml bottle and Rs 3 for a 7-ml sachet.

In urban markets and the higher economic strata, growing disposable incomes and awareness levels have ensured that a brand like Mediker finds takers. Lice is considered "tacky", and these consumers would gladly pay a premium to get rid of the problem. In the lower economic strata, however, not too many would use the product.

To illustrate the point, let us consider the results of a school hygiene check organised by Mediker in 1999 in Maharashtra, Madhya Pradesh and Gujarat. It was revealed that up to 58 per cent of girls were found suffering from lice. Only 10 per cent of them used Mediker. The rest of them either used cheaper brands like Licel or went in for traditional remedies like oil and lice combs.

What compounded Marico's problem was the communication platform. Right from its P&G days, Mediker's television commercial showed a schoolgirl being irritated with lice in her hair "" till her mother finds a cure in Mediker. Although the ad highlighted the efficacy of the shampoo, it also threw up an unlikely problem: consumers perceived that a potion that could kill lice was also capable of being harsh on their locks.

When Marico acquired the brand in 1999, it did little to change that perception. It was only two years later that Mediker was relaunched. But even then, other than packaging changes and the addition of a conditioner (to make the shampoo feel more gentle) the communication still nursed the hangover of the P&G days.

In its new avatar, the Mediker label sported the friendly face of a fairy "" previously, there was a mnemonic of a demon with an evil grin. This, the company hoped, would kill the perception that the shampoo could be harsh on hair. But it didn't worked.

Admits Arvind Mediratta, head of marketing, Marico Industries, "We went wrong initially as we never focused on the quality of hair in our communication. We only talked about the product."

Now, Marico hopes that the brand extension into oil will fix the problem. "Our new communication for oil shows healthy and bouncy hair," says Mediratta. It talks about how lice affected hair is unhealthy and a kind of a social taboo, and uses a sequence of a girl learning to dance "" and how Mediker oil brings back the bounce to her hair and her steps.

According to Mediratta, the "natural nourishment" promise of Mediker hair oil was driven by customer needs: "Consumers were looking for a natural remedy to get rid of lice. Hence there was a need for introducing an anti-lice formulation in oil form with known natural ingredients such as neem and camphor." Historically, lice sufferers have been using oil to rid themselves of the problem. "So, it made sense for us leverage the age-old remedy for lice and thereby extend the brand to oil," he adds.

However, an ex-official of the company feels that the brand extension is giving Marico an opportunity to take Mediker to the mass market. He says that Mediker's premium pricing was always a barrier for mass appeal and that the oil "" priced at Rs 18 and Rs 10 for 50-ml and 25-ml bottles respectively "" is expected to bridge that gap.

How does Marico plan to do this? So far, Mediker retailed largely at chemist shops. It was a good tactic inasmuch as it lent credibility to a product which had medicinal values. Now, in a bid to appeal to a larger audience, the distribution is being tweaked. "Mediker was an over-the-counter (OTC) product sold mainly at chemist shops. We are gradually extending the product to groceries and kirana stores to create a greater demand," says Mediratta.

Marico plans to target different consumer segments for its oil and shampoo. The shampoo will be sold in the urban markets, the oil will find its way to the rural consumer. To intensify rural penetration, the company is contemplating smaller stock keeping units for both shampoo and oil.

Mediratta says that there are plans to bring down the price of the shampoo sachet to Rs 5. "Similarly, we will consider launching lower price packs of oil for the lower SEC," he adds.

Although the company seems optimistic, retailers have a different story to tell. Drug stores across cities like Mumbai are complaining that Mediker shampoo sales are plateauing "" one retailer, for instance, says that till last year, he sold around 20 bottles of Mediker shampoo per month; now, he is selling only a dozen units. Retailers also claim that Mediker oil, which Marico launched in Mumbai and Delhi three months ago, is yet to hit shop shelves.

Significantly, line extensions of Maricos's flagship Parachute coconut oil "" Parachute Amla, Parachute Herbal, Parachute Uttam "" fell by the wayside.

Can Mediker provide an effective remedy for Marico?