Downgrading need not be a dirty word if a brand is ready to cash in on the opportunity. At least, that's been the Godrej No. 1 experience. For 76 years, Godrej's toilet soap brand, No. 1, played the role of a side-kick in the company's soap opera. Its younger cousin Cinthol, which was launched 30 years after No. 1's birth in 1922, played the lead role in the Godrej screenplay.
Now, however, No. 1 is hogging the limelight. With a volume market share of 6 per cent, it is Godrej's largest soap brand (Cinthol currently lags behind with a market share of 2 per cent). In the process, No. 1 has also become the fifth-largest toilet soap brand in the country, compared to a distant 15th just two years ago. In markets like Punjab, the brand lives up to its name and leads the market with a volume share of 20 per cent. (Source for all figures: ACNielsen ORG Marg)
The slow lathering of Godrej's 82-year-old soap brand presents a case on how downgrading could be a business opportunity; even if you have not traditionally targeted the masses.
Godrej No. 1 was not always a sub-popular soap brand.(The sub-popular category is the lowest price segment "" up to Rs 8 "" of toilet soaps in the country. One of the biggest brands in this category is Hindustan Lever's Breeze.) In fact, it sold at the premium end till the 1990s and was priced on par with soaps like Hindustan Lever's Pears and Lux International.
But No. 1 hardly found its place in the bathrooms of upmarket consumers. Consultants say that its appearance was a put-off; the pink, rectangular bar was too reminiscent of mass market product, Lifebuoy, in its earlier, carbolic avatar. And upmarket consumers wanted no part of that.
To be fair, in the early days, even brands like the now-contoured Lux were chunky, rectangular bars. But Lux changed with time in look and feel and actively marketed itself as "the beauty soap for the film stars".
Godrej No. 1 made no such claims. In fact, the brand was notoriously miserly when it came to spending on marketing efforts. Even Godrej executives agree. Says R K Sinha, vice president, soaps, Godrej Consumer Products, "In 82 years, we have spent less than what a major soap brand would spend in a month of heavy promotions (Rs 12-13 crore)."
The downturn in the toilet soap industry in the past five or six years, though, became an opportunity for Godrej to lather up No. 1. That's because even as the category as a whole has been witnessing negative growth in both volume and value terms, the sub-popular segment has been bucking the trend.
For instance, in 2000, total soap sales volumes declined by 9 per cent, and value degrew 6 per cent. The sub-popular segment, though, was bubbling along at 15 and 16 per cent increases in volume and value, respectively. Considering that the sub-popular segment was 22 per cent of toilet soap sales, these were figures that could not be ignored. The increasing emphasis on hygiene was another reason to cheer.
Sinha points to research that shows that Indians are bathing more "" apparently, there's a 6 per cent annual growth in the number of times Indians bathe. That fact, taken in conjunction with the negative growth in soap sales, points to an interesting conclusion: soaps are lasting more, which means that better quality soaps are taking over the market.
For instance, a 75 gram bar of Grade III toilet soap (certified by the Bureau of Indian Standards) would last only for 19 baths, while a 75 gram Grade I soap would last for 28 baths. (Grade I soaps have less talc/fillers and a high total fatty matter, or TFM, content of above 76 per cent).
No. 1 being a Grade I soap belonged to the long-lasting variety. This qualified it for the sub-popular segment since the lasting power of a soap is as crucial as the bathing experience in this segment. So, in 1998 Godrej offered a 75 gram cake of No. 1 at the Rs 6 point (half the price at which it was selling before that).
But along with dropping price by as much as 50 per cent it also followed a variant strategy that worked wonders. As Ashish Mishra, head, strategic planning, Mudra (the advertising agency for No. 1) points out, it was the "Robin Hood" strategy of introducing variants which worked for the brand. "We took what worked in the popular and premium segments and gave it to the sub-popular segment," he says.
For instance, when No. 1 entered the sub-popular category in 1998-99, it had only one offering: Rose. It soon also introduced its first variant in the Sandal soap franchise. Until then consumers in the country were accustomed to Sandal soaps only in the premium segment (Mysore Sandal sells at Rs 18 for 75 gm at present) or in the economy segment (Wipro's Santoor sells for Rs 13 for 75 gm).
When Godrej offered the sub-popular segment a Sandal variant, there was no shortage of takers. At present, even as Godrej No. 1 has five variants, Sandal soaps make up 50 per cent of the No. 1 franchise. The company extended this strategy to the other variants as well. For instance, when in November 1999 No. 1 launched a "natural" variant, it was to attract the franchise of Rexona and Hamam.
Even the Ayurvedic variant, launched in November 2002, was to compete with established soap brands such as Medimix, Chandrika and so on. Only No. 1's latest variant Jasmine (launched in April 2004), was in an area that the competition had travelled in the sub-popular segment. (HLL's Jai had a Jasmine variant, which was fairly popular until the company put it on the back-burner when it reprioritised its product range and came up with the five power brands.)
The variant strategy also helped Godrej attack specific regions around the country. For instance, Sandal soaps are more popular in Andhra Pradesh and Karnataka while natural soaps like Hamam dominate 50 per cent of the market in Tamil Nadu. Similarly, the rose variant was popular in the northern states of Uttar Pradesh, Bihar, Punjab, Madhya Pradesh and Rajasthan where brands like Lux, Breeze and Lifebuoy dominate.
But the clinching factor was in January 2001, when No.1 went to town with its buy-three-get-one-free offer. Through this offer, the cost per soap not only climbed down from Rs 8.50 for a single soap to Rs 6.50 "" its 1998 retail price "" it also encouraged repeat purchase.
For the past three years, No. 1 has sold only through the 3+1 offer. So, a first-time user of the brand is compelled to use the brand for at least three months (in case of individual use). Or else, at least four members in the family will try the same brand and at least one of them could get hooked. The company claims that this has ended in a high repeat purchase of 70 per cent.
Of course, it also helps that No. 1 offers higher retailer margins than the competition. For instance, Mumbai retailers say that they get 10 per cent margin on No. 1 while HLL offers margins of 8 per cent on low-end soaps like Breeze or Lux Popular (Lux retails in two variants, Popular and International).
One thing hasn't changed, though: No.1 is still stingy with media spends. Sinha says that the brand continues to look at low-cost options such as vernacular print campaigns, radio spots and TV commercials in regional channels, where the brand woos the girl-next-door with its promise of sachchi prakritik sundarta (true natural beauty).
From being an insignificant part of the supporting cast to playing the lead role, No. 1 may have come a long way. But will it manage to become a superstar?
