LUX (HUL PRODUCT) – MONOPOLISTIC COMPETITION

Hindustan Unilever Ltd. is a well-known and largest FMCG company in India. HUL has always
revamped its products to meet the changing needs of the consumer without compromising on the quality.
This report deals with one of its premier brands "LUX". HUL leads the market in the toilet soap category
with 54.3% market share. Lux has inched up to be on par with Lifebuoy in HUL's soaps portfolio. The
Lux brand now has an almost equal market share as Hindustan Lever's largest selling soap brand -
Lifebuoy. This report gives an overview of the history of the company and the brand "Lux", the various
strategies adopted to survive in the market for over 75 years and the various competing brands. The
promotional activities adopted, the brand's strengths and weaknesses, threats faced are also analysed. The
FMCG category is always a battleground for all the competing firms and the bathing soap category is no
different. With more firms entering the market, maintaining the customer base is not very easy. Within six
months, ITC's soap products have been able to capture 1.75% of the market share.

Industry analysis

The toilet soaps market is estimated at 530,000 tpa including small imports. The market is littered over
with several, leading national and global brands and a large number of small brands, which have limited
markets. The popular and premium brands include Lifebuoy, Lux, Cinthol, Liril, Rexona, and Nirma.

Toilet soaps, despite their divergent brands, are not well differentiated by the consumers. It is, therefore,
not clear if it is the brand loyalty or experimentation lured by high volume media campaign, which
sustain them. A consequence is that the market is fragmented. It is obvious that this must lead to a highly
competitive market. Toilet soap, once only an urban phenomenon, has now penetrated practically all areas
including remote rural areas. The incremental demand flows from population increase and rise in usage
norm impacted as it is by a greater concern for hygiene. Increased sales revenues would also expand from
up gradation of quality or per unit value.

Soaps form the largest pie of the FMCG Market with bathing & toilet soaps accounting for around 30% of
the soap market, by value. Currently, the soap industry is divided into three segments namely Premium,
Popular and Economy/ Sub popular.
 Major Players

1. Hindustan Unilever Ltd.

With over seven brands — LUX, LIFEBUOY, HAMAM, REXONA, BREEZE, DOVE and PEARS —
has 54.3% share of the overall soap market. The company stirring the lives of two out of three Indians
with over 20 distinct categories in Home & Personal Care Products and Foods & Beverages and also one
of the country's largest exporters. HUL's brands includes Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair &
Lovely, Pond's, Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, Knorr-Annapurna,
Kwality Wall's - are household names across the country.

2. Godrej Consumer Products

GCPL, India’s second largest soap maker after Hindustan Unilever Ltd, has nearly 9.2% market share.
With 11% market share in value terms, it is the second largest soap maker after Hindustan Unilever.
Godrej Consumer Products (GCPL) is a major player in the Indian FMCG market with leadership in
personal, hair, household and fabric care segments. The company is one among the largest marketer of
toilet soaps in the country with leading brands such as CINTHOL, FAIRGLOW, NIKHAR, &
ALLCARE.

3. Wipro

In the Indian market, Wipro is a leader in providing IT solutions and services for the corporate segment
in India. Wipro has made a large acquisition in the Consumer Care business. The presence of Wipro in the
toilet soap industry can be seen through their brands such as SANTOOR and CHANDRIKA.

4. Procter & Gamble India

It changed its name again in 1998 to Procter & Gamble Hygiene and Health Care in order to reflect the
nature and character of the business of the company. During 2004-05 the company has increased its
installed capacity of Soaps & Detergents and Toilet Preparations etc by 36500 Tonnes and 263 Tonnes
respectively.

5. Nirma
 Nirma has a leadership presence in Detergents, Soaps and Personal Care Products. During 1996-97,
Nilnita Chemicals, Nirma Detergents, Nirma Soaps and Detergents, and Shiva Soaps and Detergents were
amalgamated with the company. The company created 'Nirma Consumer Care Ltd.' - a wholly owned
subsidiary on 22nd Aug.'97, which is the sole licensee of the brand name 'Nirma' within India. Nirma
enjoys a share of 6.74% in soaps.

6. ITC

ITC, the country’s largest cigarette maker, entered the segment last year and has made a strong headway
in a short time. According to AC Nielsen, its share has grown to 1.75% in just five months despite the fact
that many of its brands such as Superia, Fiama Di Wills and Vivel are currently sold in only six states.

HINDUSTAN UNILEVER LIMITED (HUL)

Company profile

Hindustan Unilever Limited (HUL), a 52%-owned subsidiary of Anglo-Dutch giant Unilever, has been
working its way into India since 1888. Formerly known as Hindustan Lever Limited. The Group's
principal activities are to manufacture and market consumer products. Hindustan Unilever Limited
(HUL), a subsidiary of Unilever, is a fast moving consumer goods (FMCG) company based in India. The
company focuses on efficient delivery to consumers with an improved supply chain, brand building
initiatives and innovation, which has helped the company to sustain its leadership position in the overall
FMCG category in India.

Present stature

Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods company, touching
the lives of two out of three Indians with over 20 distinct categories in Home & Personal Care Products
and Foods & Beverages. They endow the company with a scale of combined volumes of about 4 million
tonnes and sales of nearly Rs.13718 crores.

HUL's brands - like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's, Sunsilk, Clinic,
Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, Knorr-Annapurna, Kwality Wall's – are household
names across the country and span many categories - soaps, detergents, personal products, tea, coffee,
branded staples, ice cream and culinary products. They are manufactured over 40 factories across India.
The operations involve over 2,000 suppliers and associates.

Group operates through seven segments: Soaps and Detergents, Personal Products, Exports, Beverages,
Foods, Ice Creams and Other. The products include home and personal care products, foods and
beverages, industrial and agricultural products. Home and personal care products consists of personal and
fabric wash, household, oral care, skin and hair care, deodorants, perfumery, colour cosmetics and baby
care. Foods and beverages includes tea, coffee, cooking fats and oils, bakery fats, ice creams, tomato
products, fruit and vegetable products, rice, salt, atta and rawa, marine products and mushrooms.
Industrial and agricultural products includes specialty chemicals, bulk chemicals, fertilisers, animal feeds,
seeds, plant growth nutrients, processed-tri-glycerides and agri commodities, yeast, leather, footwear and
carpets, thermometers and plantations.

New Products introduced by HUL in recent years:

 Lux strawberry and cream

 Clinic plus multi sachet
 Ponds age miracle
 Axe shock and recover
 Paddle pop
 Wheel active Green

Divisions

1. Home and Personal Care

The HPC business is made up of Fabric Wash, Household Care, Personal Wash and Personal Care
categories.

 Personal Wash: Lux, Lifebuoy, Liril, Hamam, Breeze, Dove, Pears, Rexona
 Laundry: Surf excel, Rin, Wheel
 Skin care: Fair and Lovely, Ponds, Vaseline, Aviance
 Oral care: Pepsodent, Close up
 Deodorants: Axe, Rexona
 Colour cosmetics: Lakme
 Ayurvedic personal and health care: Ayush

2. Foods

The Foods Division of your Company comprises Beverages, Processed Foods, Ice-Creams and Modern
Foods businesses. The Division recorded strong growth in 2007.

 Tea: Brooke Bond, Lipton

 Coffee: Bru
 Foods: Kissan, Annapurna, Knorr
 Ice cream: Kwality walls
3. Exports

Today, HUL is one of India’s Largest exporters of branded Fast Moving Consumer Goods. It has been
recognized by the Government of India as a Golden Super Star Trading House.

Over time HUL has developed into a viable & competitive sourcing base for Unilever world wide in
Home and Personal Care & Foods & Beverages category of products. HUL is also a global marketing arm
for select licensed Unilever brands and also works on building categories with core country advantage
such as branded basmati rice.

HUL’s key focus in the exports business is on two broad categories. It is a sourcing base for Unilever
brands in Home & Personal Care (HPC) and Food and Beverages (F&B) for supplies to other Unilever
companies. It also focuses on becoming a preferred supplier to both non-Unilever and Unilever clients in
three categories in which India, as a country, has competitive advantage – Branded Rice, Marine Products
and Castor and its Derivatives . HUL enjoys international recognition within Unilever and outside for its
quality, reliability and speed of customer service. HUL's Exports geography comprises, at present,
countries in Europe, Asia, Middle East, Africa, Australia, North America etc

LUX
Lux soap was first launched in 1916 as laundry soap targeted specifically at 'delicates'. Lever Brothers
encouraged women to home launder their clothes without fear of satins and silks being turned yellow by
harsh lyes that were often used in soaps at the time. The flake-type soap allowed the manufacturer some
leeway from lye because it did not need to be shaped into traditional cake-shaped loaves as other soaps
were. The result was a gentler soap that dissolved more readily and was advertised as suitable for home
laundry use.

Lux in step with the changing trends and evolving beauty needs of the consumers, offers an exciting
range of soaps and Body Washes with unique elements to make bathing time more pleasurable. One can
choose from a range of skincare benefits like firming, fairness and moisturising.

From the 1930s right through to the 1970s, Lux soap colours and packaging were altered several times to
reflect fashion trends. In 1958 five colours made up the range: pink, white, blue, green and yellow. People
enjoyed matching their soap with their bathroom colours.

.In 2004, the entire Lux range was re-launched in the UK to include five shower gels, three bath products
and two new soap bars. 2005 saw the launch of three exciting new variants with dreamy names such as
“Wine & Roses” bath cream, “Glowing Touch” and “Sparkling Morning” shower gels.

Lux has recently launched its two fruit extract variants – New Lux Strawberry & Cream and Lux Peach &
Cream contain a blend of succulent fruits & luscious Chantilly cream. The most recent addition in the
brand is Lux Crystal Shine.

Study of LUX with respect to 4 P’s

1. PRODUCT

A product is anything that can be offered to a market to satisfy a need or want. Products that are marketed
include physical goods, services, experiences, events, persons, places, properties, organizations,
information and ideas.

Product Classification

 LUX is a Tangible, Non Durable Good on the basis of this classification.

 LUX and other soaps fall into the category of Convenience Good

Product Life Cycle

Some of the prominent variants

1.Lux Almond 2.Lux Orchid 3.Lux Fruit 4.Lux Saffron 5.Lux Sandalwood 6.Lux Rose 7.Lux
International 8.Lux Chocolate 9.Lux Aromatic Extracts 10.Lux Oil and Honey Glow 11.Lux Provocateur

LUX Beauty Soap- Form, Features, Style

With icons of beauty endorsing the brand, the offerings made by Lux have always been superior and have
always led the market, setting benchmarks for competition.

Lux has beauty offerings in two of the four market segments – popular and premium, spanning the needs
of varied consumers.

Lux Toilet Soap in the popular segment has in the past years offered its consumers a range of soaps
enriched with the goodness of a variety of nourishing ingredients – rose extracts, almond oil, milk cream,
fruit extracts and honey which are known to harbour the secrets of incredibly perfect skin.

At the upper end of the market is the premium range which continues to offer specialised skincare to its
consumers in the form of International Lux – a range of moisturising, deep cleansing and sunscreen
soaps.
Logo

Labeling

The LUX Trade Character or Logo is present prominently on the package. A novel metallic substrate
packaging showcases the ingredients, and a female model is shown on the pack. Also displayed
graphically are the key ingredients.

Packaging

The colors are different for different variants such as saffron for the saffron variant, pink for the rose
extracts etc.The Bars come in package sizes of 100g, 120g, 150 g

Lux has also launched a 45 g variant called Mini Lux priced at Rs. 5.

2. PROMOTION

The first ambassador, Leela Chitnis featured in a Lux advertisement which flagged off the Lux wagon.
She gave way to a galaxy of stars which includes Madhubala, Nargis, Meena Kumari, Mala Sinha,
Sharmila Tagore, Waheeda Rehman, Saira Banu, Hema Malini, Zeenat Amaan, Juhi Chawla, Madhuri
Dixit, Sridevi, Aishwarya Rai and Kareena Kapoor. The last frontier for most actors aspiring to stardom is
becoming a Lux ambassador.

Advertising

Advertising is any paid form of non-personal presentation and promotion of ideas, goods and services by
an identified sponsor. Ads can be a cost effective way to disseminate messages, whether to build a brand
preference or to educate people.

LUX ADVERTISEMENTS THROUGH THE AGES

 USP or the common thread through all the advertisements is the Presence of Movie Stars through
the ages.
 The product has been positioned on the basis of REFERENCE GROUP by using a celebrity popular
at that point in time.
 Some amount of attribute positioning by mentioning the various ingredients has also been done.

From the beginning Lux, by using a leading film star of the time, has fulfilled the consumers’ aspirations
of using beauty soaps via the rationale ‘if it’s good enough for a film star, it’s good for me. This later
moved into a transformation role of having a bath with Lux, which transports the user into a fantasy world
of icons, film stars and fairy lands.

Sales Promotion

Sales promotion, a key ingredient in marketing campaigns, consists of a collection of incentive tools,
mostly short term, designed to stimulate quicker or greater purchase of particular products or services by
consumers or the trade.

Whereas advertising offers a reason to buy, sales promotion offers an incentive to buy.

Sales promotion includes tools for

Prominent Sales Promotion Schemes Used By LUX

 Lux presented 30 gm gold each to the first three winners of the Lux Gold Star offer from Delhi.
According to the promotional offer that Lux unveiled in October 2000, a consumer finding a 22-
carat gold coin in his or her soap bar got an opportunity to win an additional 30 gm gold.

 Lux Star Bano, Aish Karo contest: All one needed to do was buy a special promotional pack of
Lux soap. The pack comes with a special scratch card. The 50 lucky winners and their spouses
were flown down to Mumbai to live a day like Aishwarya Rai would.

 Lux celebrated 75 years of stardom with the Har Star Lucky Star activity.
All wrappers of Lux had a star printed inside them. If the consumer found written inside the star,
any number from “1” to “5”, she would get an equivalent discount (in rupees) on her purchase
from her shopkeeper. If the consumer found “75 years” written inside the star, she will get a
year’s supply of Lux free.

Public Relations:
Not only must the company relate constructively to customers, suppliers and dealers, it must also relate to
a large number of interested publics. A public is any group that has an actual or potential interest in or
impact on a company’s ability to achieve its objectives. PR involves a variety of programs designed to
promote or protect a company’s image or its individual products.

LUX PR Activities

 Press relations:
Lux has been maintaining constant communicating with its customers and potential customers, of
the various developments taking place in the brand by using press relations.

 Events:
Lux celebrated 75 years of existence in a grand way by unveiling Shahrukh Khan as their latest
brand ambassador. Kareena Kapoor, Juhi Chawla, Sridevi and Hema Malini graced the event and
made it special. All the stars have endorsed Lux in the past. The event was held at the grand
Intercontinental in Mumbai.

Limited edition:

Coming up with limited edition of the brand is also a way of attracting attention towards the brand. It
creates a buzz and a feeling of urgency to try out the product and helps in promotion of the brand. This
strategy was also implemented by Lux by bringing out limited editions like Chocolate Seduction,
Aromatic Glow, Festive Glow and Haute Pink.

3. PRICE

If price is too high then a company may never sell a single item of it. If price is too low then one can lose
money on every sale once all of costs of doing business are considered. Therefore the key is to price it in
such way that it appears attractive to the customer as well as profitable to the company. HUL seems to
have mastered this idea. Prices of HUL are considered the most competitive in Indian market. The main
fact for this huge success story is the strategic pricing decision the company has adopted from time to
time.

HUL always gives value for money to their consumers. It is known for its competitive pricing. It has the
advantage of quoting a reasonable price due to its economies of scale. HUL also can quote a very
competitive price due to its superior technology and optimum utilization of inventory. It has the product
range that meets the needs of all classes of consumers. It has the products that are categorized as premium
and mass products. HUL matches its prices with the competitor who is operating in the same category.
HUL also gives price offs on its products to reward consumers who are using it for a long time and also to
attract new consumers.
The price of the premium segment products is twice that of economy segment products. The economy and
popular segments are 4/5ths of the entire soaps market.

Price segments of toilet soaps

Segment Price/weight
Premium > Rs. 15 / 75 gms
Popular Rs. 8-15/75 gms
Economy < Rs. 8 /75 gms

However, recently HUL has been forced to hike its price by one rupee, to Rs17 (for 100 gm), giving in to
the pressures of inflation. This paves the way for competing soap makers like Godrej Consumer Products
(GCPL) to take price increases.

Lux has versions in all the three price segments:

Recent pricing of Lux (100 g)

Lux Crystal Shine Rs 17

Lux Festive Glow Rs 15

Mini Lux Rs 5

4. PLACE

Cutting-edge distribution network

HUL’s distribution network is recognized as one of its key strengths -- that which helps reach out its
products across the length and breadth of this vast country. The need for a strong distribution network is
imperative, since HUL’s corporate purpose is “to meet the everyday needs of people everywhere.”

At Hindustan Unilever Limited, distribution network is one of the key strengths that help them reach their
products across the length and breadth of this vast country. It has 2000+ suppliers and associates 7,000
stockists and direct coverage in over 1 million retail outlets across India.

To meet the ever-changing needs of the consumer, HUL has set up a distribution network that ensures
availability of all their products, in all outlets, at all times. This includes, maintaining favourable trade
relations, providing innovative incentives to retailers and organizing demand generation activities among
a host of other things. HUL boasts of placing a product across the country in less than 72 hrs.
The first phase of the HUL distribution network had wholesalers placing bulk orders directly with the
company. Large retailers also placed direct orders, which comprised almost 30 per cent of the total orders
collected.

Recently HUL has changed its traditional way distribution and came out with a new strategy of
distribution. It‘s because of the change in buying pattern of the consumer due to more disposable income.
There are different channels of distribution like Modern Trade, which covers all chains of super markets
like Food World, who get the stocks directly from the company. Wholesalers and second leg of big retail
outlets called Super Value stores come under the surveillance of the distributor along with the mass retail
outlets. There is also this new concept in the HUL distribution channel called Kiosk. Kiosk is a small
shop that sells only sachets and low priced items (below Rs.10/-). Kiosk also does not come under the
surveillance of the distributor.

Competitor analysis
Internal competitors

Lifebuoy:
Born: 1895
History: Owned by Unilever Plc., the parent company of Hindustan Unilever Ltd.
Status: Has 18% market share in the bathing soaps category, worth Rs6,000 crore
Lifebuoy landed on Indian shores in 1895, when the country was in the grip of a plague epidemic. With
its positioning as a powerful germicidal and disinfectant, and with a strong carbolic smell, it was what the
nation was looking for. But the health advantage waned over time as competitors came out with soaps that
promised both health and beauty.

External Competitors

Santoor:
Amongst the first brands in the Country to launch an offering with the twin ingredient benefits of Sandal
and Turmeric, Santoor has over the years moved from a purely natural ingredient based appeal, to one of
the most preferred beauty soaps of the day. Today, Santoor is one of the fastest growing soap brands in
India. Santoor is available in three variants – Santoor (Sandal & Turmeric), Santoor White (Sandal &
Almond milk) and Santoor Chandan which is a premium soap manufactured with extracts of Sandalwood
oil – a favourite of discerning consumers.

Cinthol:
Cinthol the popular and much-loved brand of Godrej Consumer Products Limited (GCPL) has been a
favourite of people for many years. All different soaps in its range are having feel-fresh fragrance and
high TFM index. Cinthol’s range covers an economic Lime-fresh, the medium deo-soaps (spice,
lime,cologne and the new ’sport’) and a slightly expensive “Cinthol-Original”. For decades, Cinthol-
Original is one of the best soaps made in India. It had a simple red-cover which attracts none! But was
still able to sustain itself in the market .

Vivel and Superia:

The Vivel Di Wills range is available in two variants. Its unique carton pack has been developed by ITC's
design team to provide a novel consumer experience. Vivel Di Wills Sheer Radiance is enriched with
Olive Oil, to provide skin lustre to make it radiant. Vivel Di Wills Sheer Crème is enriched with Shea
Butter, to moisturize skin to make it soft and supple.
The Vivel range of soaps is available in four variants:-

a) Vivel Young Glow is enriched with Vitamin E and Fruit Infusions which help in providing
youthful glow to the skin.
b) Vivel Satin Soft is enriched with Vitamin E and Aloe Vera which help the skin feel beautifully soft.
c) Vivel Sandal Sparkle is enriched with Sandalwood Oil and Active Clay which helps in providing
clear skin.
d) Vivel Ayurveda Essence is enriched with multiple Ayurvedic Ingredients which help protect skin
from germs and harsh environment, keeping it healthy and beautiful.

Market segmentation of Lux

As mentioned above, market segmentation is done so as to satisfy the customers more efficiently. For a
brand like Lux, which has a broad customer base, this factor becomes absolutely critical.

The segmentations are done basically on the basis of factors like:

Gender :

Lux has been, since its introduction seen as a soap for women. Lux as a brand symbolises beauty. The
Lux ads has hosted a bevy of film stars such as from Madhubala, Babita, Hema, Karisma to Kareena all
endorsing the goodness of Lux over generations. This was done in order to attract women who wanted to
look and feel like the stars they idolised.

Age :
Lux is seen to mainly attract customers that fall within the age group of 16 to 35. In order to cater them,
Lux comes up with new and interesting variants. One of the latest entrants, Lux Crystal Shine is mainly
targeted at the youth. So is the Black Provocateur which symbolizes boldness. Another example is the
chocolate variant lux which was a novel idea. All these are introduced to catch the attention of the youth.

Income :

One of the essential characteristic of an FMCG product is an affordable price which is very important for
its fast sales. It’s the meeting point of demand for a product and its price that decide whether the product
will sell or not. And the demand for a product is highly dependent on the income of the customer. Lux is
not very costly toilet soap. Its price varies from Rs.15 to rs.20.Therefore its target market starts from the
middle income group.

Recommendations

Lux has been following a trend of constant product development and improvement since its inception.
This has always proved to be successful for the brand. Therefore a similar strategy can be followed in the
future: Lux can go for a high end Ayurvedic variant. In the present day consumers are into naturopathy
and believe in natural treatments like the Ayurveda. Keeping with this trend, Lux can foray into
Ayurvedic variant. HUL already has Hamam soap in this category. But it is a low priced soap whose
target audience is quite different from Lux. This new variant can provide the current customers of Lux
with a blend of both class and natural goodness.

Today’s children are tomorrow’s customers. Children have a major share in the decision making process
of consumers. Therefore it will be a viable decision to launch Lux Kids Special soap. By doing this Lux
can “catch them young” and get a loyal customer base from them. This variant can be in vibrant colours
as opposed to the soft colours used currently. Lux has high penetration in the urban and semi urban areas.
However, it has only 19.8% penetration in the rural areas. The rural market has great untapped potential,
which HUL has not concentrated on till now. Consumers are becoming more and more aware and
undergoing a surge in disposable income. What is needed here is a change in the communication strategy
to reach out to the rural customers. The various channels of communication should be made more
appealing to this rural segment of customers