How Godrej created space for itself in the highly fragmented and commoditised henna market.
Hair care is a segment where Indian fast-moving consumer goods companies have held their ground against multinational corporations. The market is heavily loaded in favour of hair oils; shampoos and gels are still small. And multinational corporations have stayed away from hair oils because it can never be a part of their global product strategy — hair oils are used only in the Indian subcontinent.
There are other opportunities in hair care for local players. Henna, for instance. Six years ago, executives at Godrej Consumer Products began to deliberate their next move in the hair care space. Subsequent conversations with consumers revealed that many of them use henna, which they buy in loose. “People were dependent on small brands and trusted the retailer more. We saw a huge opportunity where we could provide the Godrej trust,” says Godrej Consumer Products Chief Operating Officer RK Sinha.
None of the other homespun FMCG companies had thought of entering the space as it was highly commoditised with many small regional players. Investigations by the company showed that all of these local companies worked on very low overheads and offered poor quality products. At all times, there was a price war in the henna market. In the absence of brands, price was the USP. In short, the market was large and fragmented. The situation was ideal for a national player.
The right product
There were other reasons as well: 44 per cent of all households in the North and West use Henna. On top of that, the format was characterised by as much as 70 per cent consumer loyalty that spread across socio-economic categories.
Keen to tap into this, Nupur henna was launched in November 2003 positioned as the “purest quality Rajasthani henna”. Extensive research went into the product. Prior to the launch, Godrej Consumer Products discovered that henna from Rajasthan gave the best colour and quality. Early on, the company had realised that people see henna as something that nourishes and colours their hair. Also, people mixed various ingredients to get the right colour. With that in mind, Godrej Consumer Products added herbs including gooseberry (amla) and bacopa (brahmi) to Nupur.
For its part, the company wanted the product to be a traditional one. Hence it chose the name accordingly. The name Nupur means anklet and in the larger context stood for celebration, feminity and Indianness. It also wanted to pick a name that appealed to all communities of the country. “There was no question of picking an English name; besides Nupur was easy to pronounce,” Sinha points out.
On the marketing front, Nupur is not very active on mass media. Instead it relies on on-ground activation with consumers. Interestingly, Nupur spends 50 per cent of its money on consumer activations in a category where 85 per cent of the media spends are on television.
On-ground activation
One such initiative was the Nupur Jagriti campaign, the objective of which was to create awareness against dowry in 2007. The brand created a human chain at the Gateway of India in Mumbai with people taking a pledge against dowry. After that, the company organised “Nupur Shravan Sandhya” in large cities across Maharashtra which is its biggest market. This was a talent show where women participated in various events with the objective of associating the brand with festivities. What is more, instead of doing trade discounts regularly, the brand keeps attractive consumer offers for two or three days during festivals and the marriage season.
That said, the company has not completely ruled out the mass media. In fact, in its six-year stint, the brand has come out with three television campaigns. The most recent of which was released last June when the brand repositioned itself as the right mix of nine herbs. On this, the company has spent approximately Rs 3 crore.
Nupur contributes just about Rs 30 crore to the revenue of Godrej Consumer Products. Furthermore, its market share is still negligible at 4 per cent across India, though it is slightly higher at 10 per cent in Maharashtra.
That’s because distribution plays spoilsport. Typically, local brands give retailers high profit margins of up to 25 per cent; Nupur, on the other hand, offers margins of just about ten per cent. As a result, in the past, retailers have been hesitant to sell Nupur. On top of that, Nupur sells at a premium of 50 per cent above the local brands. “But we’ve seen that once consumers try our brand, they stick to it. Besides we rely heavily on word-of-mouth publicity,” Sinha says.
To tackle this problem, the company brought out packs priced at Rs 5. “This works as an entry point for us,” says Sinha. According to him, once consumers have tried the product they switch to bigger packs of Rs 10, Rs 15, Rs 30 and Rs 75. Another important distribution strategy that Godrej Consumer Products has adopted for Nupur is promoting the product close to districts where it is already doing well. For instance, when the company wanted to go beyond Hyderabad, it chose to go to the closest region — Vijaywada. “Retailers in neighbouring areas spread the word about the product and retailers are more welcoming. Going 500 kilometers away from a district where the product is faring well is suicidal,” says Sinha.
This, it seems, is working well for the brand. Nupur’s share to the business is continuously growing at a rate that is nearly three times the market growth. Sinha is hopeful that turnover will hit Rs 100 crore in the next three years.
