Shedding The Premium Tack

But J&J has been quick to block it with Stayfree Secure. A close-up of the ensuing battle

In its three decade long existence in India, the Rs 600 crore American health care giant Johnson & Johnson had never shown the kind of alacrity and intent as it did, when it launched Stayfree Secure in October'97. With the launch of Stayfree Secure, it had begun to challenge the market perception that it was slow and that it was only prepared to dabble in high-margin, low volume markets.

J&J claims it took barely a month to develop and launch Stayfree Secure sanitary napkins. Aimed at the lower end of the Rs 162 crore sanitary product (sanpro) market, it marks the company's first foray in mass marketing.

J&J's new-found aggression is understandable. Last month, Kimberly-Clark Lever (KCL), the 50:50 joint venture between Hindustan Lever and the $7 billion US paper products major Kimberly-Clark Corporation relaunched Kotex. After an aborted attempt to attack the premium end of the sanitary napkin market two years ago, Kotex is now making an equally aggressive bid to expand the market at the lower end.

But while the two launches have remarkable similarities, it is obvious that the task of market expansion is by no means easy. Both players agree that it will take time, money and above all, an astute understanding of value, before the traditional non-user of sanitary napkin begins using a branded sanitary napkin.

So what prompted the market leader and the challenger to converge on the same opportunity?

The battle so far

The sanitary napkin market in India had been J&J's preserve, till P&G decided to prise open the market with Whisper six years ago. Even until three years ago, P&G had emerged as the market leader with 51 per cent share, with J&J lagging behind at 43 per cent.

But by September 1996, J&J began to make amends. At that time, J&J's flagship brand, the belted Carefree which had a share of 40 per cent was down to 24 per cent. That was when it launched Stayfree Silky Dry, which once again tilted the scales in its favour. Today, in the 330 million unit sanpro market, J&J has overtaken P&G. Whisper continues to be the leading brand with a 44 per cent stake, but the J&J portfolio has pushed shares up to 48.6 per cent.

To hold on to the lead, the J&J team embarked on product development. With a clear benefit of a clean dry feel, Silky Dry had the most distinct brand equity compared to the other J&J brands. Silky Dry, launched in 1992, was a growing brand and extending it was a safe bet. Whisper already had a wings variant which was priced at a premium over the mother brand. So eight months later, J&J introduced Stayfree Spirit with channels to prevent side staining. But unlike Whisper wings, Spirit had a price parity with Silky Dry.Even so, the activity was in the middle and the top end of the market. Both Carefree and Stayfree were priced at Rs 33 compared to Silky Dry and Whisper which cost Rs 42 and Rs 44 respectively.

The Whisper variant came at a hefty Rs 60 for a pack of 10.The players were all concentrating at the top end, even as overall penetration levels were pathetically low. With an estimated women population of 300 million, penetration in urban India was only 20, while the overall penetration was a mere two per cent. This fact was constantly highlighted by J&J's ongoing research. In comparison, penetration levels of sanpro in the Philippines stood at a whopping 65 per cent and 41 per cent in Indonesia.Besides, the category had a mere five to six per cent growth. This was unlike other personal care segments like shampoos which grew by 30 per cent last year, with penetration was up from 22 per cent to 30 per cent.

Clearly, there were a host of barriers which did not encourage conversions from indigenous cloth protection. Firstly, it was the belief that sanitary napkins did not offer the same degree of protection and security as cloth. In many cases, it was the outcome of unpleasant experience of using sanpro (largely unbranded) during childbirth. And this experience was passed on from mothers to daughters.Another major issue was price. As a protection device, cloth was easily available in the house and it could also be reused at no additional cost. "Price is a critical variable in this category," says Shripad Nadkarni, vice-president marketing of J&J's consumer products division.

These insights were not new to J&J. But the findings were reinforced with the launch of Kotex in March 1996. At Rs 33 for a pack of 10, Kotex was a premium brand on par with J&J's Silky Dry (it cost Rs 37 then) and P&G's Whisper (at Rs 40). The other brands include J&J's Carefree and the beltless Stayfree, which was introduced in 1979.

Kotex came in with a big bang. To induce trials, Kotex carried a 50 per cent off introductory offer. For the first time, a premium sanitary product was being sold in the market for as little as Rs 16.50 for 10. The move prompted the others to follow suit. J&J halved its Rs 37 MRP for Silky Dry and P&G gave a 50 per cent discount on their 20s pack costing Rs 72.As expected, the offtake for all the brands was excellent. Both J&J and P&G sales increased by 30 per cent. At that price, consumers, according to the trade, were buying up anywhere from six to ten packs each reinforcing the price-benefit pact.

The offer was too good to last. While consumers stocked up on the new brand Kotex, reports began trickling in on the quality of the product. The napkin was said to be disintegrating when in use. "It was only one batch in Mumbai which was faulty," asserts Dalip Sehgal, marketing controller, personal products at Hindustan Lever.

So when Kotex was finally withdrawn two months after the launch, both P&G and J&J were visibly relieved.

Kotex's aborted launch was a big blow for the HLL-Kimberly Clark combine. HLL's interest in the market had been largely to squeeze P&G's Whisper, so that its arch rival's cash flows from the paper business dwindled. According to a leading agency which conducted research for Kotex, HLL had looked at the top end of the segment. The research which was exploratory in nature was more to detect the triggers and barriers existing in the category. The objective was simple: find the need gaps and the problems that consumers faced with the existing brands.

Armed with the research, KCL firmly believed it had a superior product in Kotex. As staining was always an issue with both the conventional and modern sanpro users, the original Kotex tackled this head on. Which why it came out with side seals and the a wider napkin, whose width KCL claimed was 25 per cent more than the leading brand. But what was to have been the key discriminator, did not live up to the product promise. Kotex not only failed on absorbency, the product disintegrated when in use. And with the dry feel offered by both Whisper and Silky Dry, Kotex which was a me-too was withdrawn from the market.

Removing the stains

KCL had learnt a good deal from its debacle. As the number three sanpro company, Kotex had be distinct from competition. It also had to do something more fundamental to break open the market. "We needed to do more work to understand the consumer. We needed a different paradigm as our positioning was that Kotex understands women," explains Sehgal.

Thus began the modifications. In its first garb, Kotex had failed to deliver its product promise