RURAL SCRUB

Synergy is the key operating word when it comes to acquisitions. As a brand manager, w hen you are e looking to extend the line, it s very important to ensure that the bra nd you are acquiring gives a synergy with your existing portfolio. Your company manufactures and markets toilet soaps. Your Organisation is known f or its good distribution strength and has a strong presence in rural markets (in addition to an equally strong presence in urban markets). Your competitors hav e an equally good distribution in urban areas (towns and cities) and hence give a strong fight in these areas. However, you clearly dominate them in rural areas because of the strength of your distribution channel vis--vis theirs. In additio n, the company takes great pains in building brands as they feel that this is the best long-term option as opposed to short-term spurts in growth by artificial means. The company has made a policy decision to enter into the market for detergents b ecause of the obvious distribution synergy it offers. In addition, the market si ze of detergents is large (20 lakh tonnes valued at approximately Rs. 1300 crore s). As a Brand Manager in charge of a toilet soap, you have been asked by your G roup Product Manager to evaluate some brands of detergents that your Organisatio n is planning to acquire. Exhibit 1 gives the market shares enjoyed by the vario us brands of detergents (by weight). Exhibit 2 gives the consumer prices of the brands. Exhibit 3 gives the trial rates induced by the brands and is given as th e number of consumers who have tried the brand in the past. Exhibits 4 and 5 giv e the break up of sales for each brand over different income categories and town categories respectively. Exhibit 6 gives the margins given to retailers for dif ferent brands. The brands that are available for acquisition are given in Italic s and are underlined. You may assume that all detergents are sold in the same si ze. Your assignment: 1. Draw up criteria to evaluate the alternate brands available for acquisit ion. (08 Points). 2. Evaluate these brands across the above criteria and suggest the brand(s) to be acquired. (12 Points). 3. Estimate the segment sizes (by weight) of the different income categorie s AND the segment sizes (by weight) of villages, towns and cities. From this dat a, what inferences can you draw about the key tasks at hand after acquiring the brand(s) of detergent(s)? (20 Points). 4. If the Net Profit Margin (after tax) was 6% on all the brands available for acquisition and the prevailing P/E is 32, what would be the going rate price for this/these brand(s) chosen in Answer 2? (10 Points)

Exhibit 1 Market Shares Take-You-To-The 3.20% 32.20% Wishy-Washy Eyewash 11.85% Hogwash 9.58% Hath Ki Safai Pair Ki Safai Wash Out Cleaners 64.60% 23.47% 7.39% 7.38% 5.47%

Exhibit 4 % of Sales over Income Categories LIG MIG 28.54% Wishy-Washy Eyewash 12.21% 34.23% Hogwash 16.32% 41.34% Hath Ki Safai Pair Ki Safai Wash Out HIG Take-You-To-The Cleaners 8.45% 53.56% 42.34% 18.35% 65.34% 31.12% 37.23% 54.32% 43.23% 38.42% 22.32% 12.34% 41.23% 27.65%

India vs England (Dhulai) 67.13% 14.00% 18.87%

1.54%

India vs England (Dhulai)

Exhibit 2 Exhibit 5 End Consumer Prices (100 gms.)

% of Sales over Town Categories Cities Take-You-To-The Cleaners 4.71% 35.43% 59.86% 47.22% 55.34% 12.41% 39.17% 48.42% 29.34% 42.32% 28.34% 26.12% 51.23% 22.65% India vs England (Dhulai

Villages Towns Take-You-To-The Cleaners 6.50 29.80% 34.00% 36.20% Wishy-Washy 6.25 Wishy-Washy Eyewash 7.00 Eyewash 7.46% 45.32% Hogwash 6.50 Hogwash 12.32% 32.34% Hath Ki Safai 7.50 Hath Ki Safai Pair Ki Safai 6.60 Pair Ki Safai Wash Out 6.40 Wash Out India vs England (Dhulai) 7.25 ) 55.13% 34.00% 10.87% Exhibit 3 Trial Rates Take-You-To-The Cleaners 0.26 7 Wishy-Washy 48.30% Eyewash 44.90% Eyewash Hogwash 20.97% Hogwash Hath Ki Safai 41.22% Pair Ki Safai 14.43% Wash Out 12.83% India vs England (Dhulai) 0.73 30 Best of Luck!

Exhibit 6 Retailer Margins (in Ps.) per piece Credit (days) 53.62% Take-You-To-The Cleaners Wishy-Washy 0.42 0.33 Hath Ki Safai Pair Ki Safai Wash Out 26.39% 0.27 12 10 0.56 21 0.33 7 0.32 10 India vs England (Dhulai) 7