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MKTG099) click on the button
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Repositioning
The case deals with the restructuring initiatives Dabur took in the early 2000s. In order to cater to a wider audience, Dabur decided to reposition itself as an FMCG company with a herbal plank, moving away from its earlier image of an Ayurvedic medicine manufacturer. In order to convey a new vibrancy, the company has adopted new product offerings and new packaging. Dabur's promotional campaigns includes leading Bollywood actors and sportstars. Dabur moved away from an umbrella branding strategy and went in for individual branding. It pruned products which were not aligned with its brand architecture.
It also took concerted steps towards geographical expansion to international markets, and within India, focused on regions like southern India, which it had earlier neglected. The company's revenues in 2004-05 reveal that the changes
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This case study was compiled from published sources, and is intended
Issues:
The case is designed to help the students to: Understand why a company moves away from its core platform. Understand the strategies adopted by a company to change its core platform. Understand how confusion about a brand sets in in the mind of consumer because of the use of the same brand name for diversification into different areas. Understand how a brand is repositioned. Understand how alignment of product, price, promotion and place is brought about. Understand the marketing activities undertaken to rejuvenate a brand. Understand how changes in demographics and psychographics affect an organisation's vision. Understand how acquisitions can add value to the marketing strategy of a company.
to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
Contents:
Page No. 1 1 3 8 11
Dabur, Brand Repositioning, Brand Architecture, Brand Equity, Umbrella Branding, Brand Management, 4Ps of Marketing, FMCG Industry, Vision, Strategic Intent, Core Values, Vatika, Anmol, Real and Hajmola. Repositioning Dabur - Next Page>>
Our research showed that consumers found it difficult to distinguish Dabur as a corporate brand and as a master brand. The positioning was unclear to the public. So, we decided to embark on a brand recast to identify brands based on their product properties. This essentially means that Dabur is shedding its age-old umbrella brand strategy, where its entire product portfolio was under one roof.
Introduction
In 2004, Dabur India Limited (Dabur) which started as a medicine manufacturer in 1884, was ranked at number four in terms of sales among the Fast Moving Consumer Goods (FMCG) companies in India. The company now has interests in hair care, health care, oral care and foods as well (Refer Exhibit I). Though its spread into various segments has ensured that the company's bottom-line has improved over the years, Dabur's positioning was not clear. In the early 2000s, the company went in for a restructuring which included aligning Dabur's brand architecture2 with Dabur's brand equity3; pruning products that did not align with the brand architecture and launching new products (Refer Exhibit I and II). The company focused on improving its sales revenue from southern India, which contributed only 8 percent of the company's total revenue in 2003. At this time, Dabur identified its ayurvedic platform as a driver of future growth and got its business units better aligned. Moving away from using Dabur as an umbrella brand, the company shifted to individual branding and came out with a new logo. The company tried to bring to its consumers its Ayurvedic legacy with a contemporary feel. All these changes have improved the financial performance of the company in 2004 as compared to 2003.
Background Note
Set up in 1884 by Dr S K Burman in West Bengal as a proprietary firm for the manufacture of ayurvedic drugs, Dabur (an acronym of the name Dr Burman), started off with a direct mailing system to send medicines to villages in Bengal. Repositioning Dabur - Next Page>>
conduct research on Ayurvedic medicines and their manufacturing processes as described in ancient Indian scriptures, and to develop processes utilizing modern equipment to manufacture these medicines without reducing their efficacy. The following year, Dabur set up manufacturing facilities for Ayurvedic Medicines at Narendrapur (near Calcutta) and Daburgram (in Bihar). Dabur also expanded its distribution network in Bihar and the North Eastern regions. In 1936, the company was incorporated under the name Dabur India Pvt. Ltd. In 1940, Dabur launched Dabur Amla Hair Oil, and in 1949, the company launched Chyawanprash in a tin pack making it the first branded Chyawanprash in the country. The company expanded its portfolio by adding oral care products in 1970. Dabur Lal Dant Manjan was the first product to be launched under its oral care portfolio. In 1972, Dabur shifted base from Kolkata to New Delhi and started production from a hired manufacturing facility at Faridabad. In 1978, Dabur launched the Hajmola tablet. Dabur set up 'The Dabur Research Foundation (DRF),' an independent company, in 1979 to spearhead its research needs. In the same year Sahibabad factory became operational and this unit was one of the largest and most modern production facilities for Ayurvedic medicines in India at that time. Dabur became a public limited company in 1986 and launched its first public issue in 1994 (Refer Exhibit III & 1V for the shareholding pattern, Vision, Strategic Intent and Core Values of Dabur). In 2004, Dabur had three strategic business units: Family Products Division (FPD), Health Care Products Division (HCPD) and Dabur Ayurvedic Specialties (DASL) which contributed 45 percent, 28 percent and 27 percent respectively to Dabur's sales revenue in 2003-04... Excerpts >>
personal and healthcare products as growth drivers. But there were gaps in Dabur's product range... Getting the 4Ps Right In 2004, Dabur launched a new range in juices called Coolers which included traditional preparations like Aam Ka Panna, along with others like pomegranate and water melon juice. "Consumers perceive this as the next best thing to having a fresh fruit...
Outlook
Dabur's repositioning exercise seemed to have achieved some success with a perceptible increase in sales and net profit margin of the company in 2004 (Refer Exhibit IX). Nikhil Vora, Vice President, Research, SSKI Securities commented, "What the company had done is pretty positive and credible; it continues to innovate and renovate. However, the company needs to keep the growth momentum in the categories in which it leads like Chyawanprash, honey and herbal digestives."...
Exhibits
Exhibit Exhibit Exhibit Exhibit Exhibit Exhibit Exhibit Exhibit Exhibit I: Products of Dabur in 2004 II: Products of Dabur in 2000 III: Shareholding Pattern for Dabur India Ltd. IV: Vision, Stratgic Intent and Core Values of Dabur V: Summary of Financials from 1998-99 to 2002-03 for Dabur (Fmcg + Pharma) VI: Financials for Dabur FMCG for 2002-03 and 2003-04 VII: The old and New Logo of Dabur VIII: What the New Logo Stands for IX: Earnings for Dabur for 2004-05
A Real twist to health & wealth? After food & personal care, Dabur is betting high on health & beauty
(column by Angshuman Paul) The impending arrival of March spells anxiety for a number of business houses, for the corporate honchos are busy taking stock of their companys financial performance over the past fiscal year. Come March 31 and on this date the destiny of a number of stakeholders is re-written. However prophets opine that a single years performance does not decide the fate of a corporation, but is just linked to the overall strategy of an organisation. Set a target for a year, achieve it and then start the next year with a fresh set of targets. Thats the mantra that the homegrown Dabur India has applied for its growth strategy. The past few years has seen the company exercising a constant surge in its profits. And FY07 was not an exceptional for the FMCG behemoth. The net profit of the company stood at Rs.2.52 billion as against Rs.1.89 billion for FY06, recording an incredible growth of 33%. Dabur India almost made it to the list of 100 Most Profitable Companies, registering a rank of 101 on the list. So what exactly attributed this growth and how was the year 2006-07 diferent as compared to other years? Sunil Duggal, CEO, Dabur India told B&E, The fact that Dabur India grew faster than category growth rates in some key and highly competitive segments like oral care & hair care, particularly shampoos, drove growth in 2006-07. Definitely
Sunil Duggals strategic game plan is to aggressively expand and build a comprehensive product portfolio for Dabur in the FMCG sphere. The New Age Dabur The restructuring of the Dabur Group is truly unique, since the core business is now being run by non-family professionals; while the Burmans have given up executive positions in the core company to take charge of the new growth businesses. While talking about such a strategic management restructuring, V. C. Burman, Chairman, Dabur India told B&E, It was in response to the changing dynamics of business... the family has a trusteeship role to follow, both for perpetuating the family business and in preserving & growing the business. Amit Burman, who has taken charge of Dabur Foods told B&E, New, high growth businesses require entrepreneurial zeal and are better suited to members of the family. The restructuring exercise did wonders for Dabur as they ventured into new areas through acquisitions and went on a massive expansion spree. States Duggal, Inorganic or acquisition is a key strategy for growth at Dabur India. The growth can come both from the domestic as well as international markets. But one must look at strategic fit of the target in order to add value to the company. For instance, Daburs acquisition of Balsara (a homegrown herbal company) for Rs.1.43 billion in January 2005 fitted very well with Daburs core competency of herbal flank. Rajan Varma, CFO, Dabur India told B&E, Balsara on a standalone basis contributed 19% of total turnover (of last year). And in FY06 Balsaras home products recorded revenues of Rs.1,685 million, a growth of 42% over last year. The period 2002-06 is heralded to be the most crucial for Dabur. At a time when the FMCG sector as a whole was experiencing sluggish growth and FICCIs FMCG survey claiming that in FY06, the sector will grow at a miniscule 2%. The survey also pointed out that only segments that will stand out are food & personal care. Realising the potential of the two segments, the FMCG players in the country started to strengthen their portfolio with these two cash cows. Dabur was not an exceptional too! So on March 29, 2006, Dabur unveiled its Vision 2010, wherein by 2010 the main focus areas will be expansion, acquisition and a product portfolio comprising of food & personal care products. The Final Scorecard Once Dabur drove headlong into the two high potential segments of food and personal care, the company immediately catapulted to the top league, competeing with the likes of HLL, P&G and ITC. Dabur unleashed oodles of personal care products under its flagship brand Vatika and backed up with massive marketing activities, enabled Vatika hair care registered a growth of 31%, as against the category growth of 12.3% (according to AC Nielsen). While speaking to B&E about the performance of this lucrative personal care segment, Duggal said, Dabur brands were the fastest growing in the toothpaste category with volume growth of 29% as compared to category growth of just 12%. Key drivers of growth in this category were Babool, which grew by 49%, and Dabur Red Toothpaste, which recorded growth of 16%. And we will continue to build these growth drivers aggressively and capture the opportunities as the market evolves and changes. 'Real from the stable of Dabur, has 57% share of the food segment market (as per CMIE) and this year too Dabur strengthened this golden goose through product innovation & massive retail presence. Adds Amit Burman, We are growing faster than Tropicana as we havevariety in juice to cater to a larger segment of society. But that was not all, Dabur Foods Ltd., a 100% subsidiary of Dabur India, also targeted institutional buyers to enhance their presence. Sanjay Sharma, GM, Sales & Marketing, Dabur Foods told B&E, This year, we dealt with 3,500 such food services accounts and we covered 80% of the 5-star hotels with our supply of juices. We also segmented the food business into two main verticals food as FMCG & food as retailing. A brilliant strategy, as the institutional segment is contributing 25% of total sales and generating business worth Rs.400 million and also giving stiff competition to players like HLL, ITC & Nestle. Little wonder that among all the businesses, Daburs presence in food recorded the highest growth of 29% in revenue. Daburs Destiny Dabur India has recognised a clear need gap that exists in health & beauty (H&B) retail space in India, thereby enabling the company to have an early mover advantage in the market. We feel there is a growing need for quality service and store environment in the health & beauty retail market in India today and no major player has entered this space so far. We believe there is a lot of value creation possibility in this venture, Duggal shares his business plan to B&E for FY08. The company has already lined up investment to the tune of Rs.1.40 billion in H&B segment
and will have a pan India presence by 2010. It targets to earn revenue of Rs.17 billion in 2012 through 350 stores. But with Fortis HealthWorld (a H&B retail venture of Ranbaxy Group), investing a whopping Rs.8 billion to open 1,000 stores by 2011, the company think tank might have to go back to the drawing boards to chalk out new strategies. Even on the M&A front, Dabur is eyeing organisations in Middle East, Africa & India. Adds Duggal, Various proposals are under consideration and the company has the right balance sheet to fund a large acquisition at short notice. We have also got our shareholders approval for raising $200 million to fund acquisitions. And come March 2008, the big honchos of Dabur India, sitting in the posh green colour building of Dabur in Sahibabad, will look back and rejoice at the year passed by and then don their thinking caps to strategise for the next year. And with the promise of future growth, Dabur might just be looking at its best shot at going global and in the bargain secure a place for itself in the B&E list of 100 Most Profitable Companies.