Surfs Up At Hll

In the ever-engrossing duel between the deadly duo, Hindustan Lever and Procter & Gamble, the suds have begun to fly once again in the detergent market. But even as Surf's newest avataar, Surf with Excel Power, rolls out nationally, market watchers are still trying to understand the larger significance of Hindustan Lever's latest move.

Lever is, of course, hoping that its charge catches its arch rival equally by surprise. On the face of it, HLL's director, detergents, M S 'Vindi' Banga and divisional vice president, marketing, Arun Adhikari the two main architects of the Lever strategy may not be wrong in their assessment.

 

Their logic is simple. But the route is daring; the intended outcomes even more fascinating. "We are trying to segment the market before anyone else does," affirms Adhikari. Ever since its launch in October '96, International Surf Excel had successfully completed its "image correction" exercise for Lever. With its top-end position fortified, Lever is now using the same tool-kit that it used for International Surf Excel with great effect to repair brand perceptions for its mother brand, Surf with Wash Boosters.

At one stroke, the mother brand, Surf will undergo a radical transformation. For one, Surf will no longer play the mid-market game. By entirely replacing Surf with Wash Boosters with Surf with Excel Power, Lever hopes to vacate the mid-price segment and regain its rightful place as a top-performance brand by moving to the premium segment.

Is it a move fraught with risk? To put it mildly, yes. At Rs 85-90 a kg, Surf with Excel Power is a good Rs 20-25 more than the price Surf with Wash Boosters commanded. In a volume-driven, price-sensitive market, Surf's new avatar has the ominous task of upgrading consumers with a hefty 30 per cent premium.

What lit the spark? Lever managers aver that its latest gambit is based on a logical outcome of future "scenario-building". Shorn of jargon, that means the Lever team has a good grip on P&G's gameplan for the ensuing year. Its new strategy is a smart way to change the rules of the game, so that P&G is denied any opportunity to dictate terms.

As a company, P&G loves to keep Lever guessing. Yet today, Ariel's brand strategy has come a full circle. Today, under the stewardship of laundry category manager, India, Alex Howson, and the eagle eyes of new CEO, Helmut Miexner, P&Gs laundry marketing team has now completely junked its local strategy to fall in line with Ariel's global positioning as the top performance detergent. That makes things easier and predictable for Lever, particularly since P&G is then likely to use one of the routes that it successfully used world-wide.

So after Ariel completely withdraws support for its value-for-money line extensions, Ariel Super Soaker and Ariel bar, the moot question is: what will P&G do to garner volumes? Realising that the premium segment of the detergent market is barely 10 per cent of the market and looks unlikely to grow beyond 15 per cent in the next five years, P&G must find a way to penetrate the mass market.

Will it bring in Tide to do the job? As P&G's second tier brand globally, Lever expects P&G to use Tide to attack Rin. By coming in at a price point just above Rin and below Surf, Tide could weave its whiteness story to unsettle Rin consumers. And together, Ariel and Tide could take a pincer grip on Surf.

Is it a logical scenario? In China, Egypt and markets in the Middle East, P&G has used the two-brand strategy to keep Lever brands at bay. While Ariel typically remains the reference brand in the category, receiving the best in technology, the brand manager's task is to find new ways to communicate stain removal the highest need in the consumer's hierarchy of needs. On the other hand, Tide picks up volumes by addressing the consumer preoccupied with whiteness by dramatising the felt need.

Second-guessing P&G is a bit like climbing a mountain through a dense fog. But Lever is not taking chances in protecting its Rs 1,193 crore franchise in the detergent market.

To be sure, the ingredients of Lever's surprise package are daring. In the last five years of its joust with P&G, Lever's flagship brand, Surf has consistently lost market share from 8 per cent to about 4-5 per cent currently. Much of the damage was because Lever allowed Ariel to grab the top performance slot, a position that Surf had temporarily vacated in its bid to stem the Nirma flood.

Through the late eighties, Lever got so carried away with its successful tactical move, it lingered with its Lalitaji campaign for a wee too long. For a long time, this Janus-faced strategy took its toll on Surf, even after it launched Wheel, its low-cost flanker to ward off the Nirma threat. So when P&G's Ariel attacked Surf at the top end of the market, Lever realised it had to shed its value-for-money garb.

For a long time, the brand stewards at Levers tried to grapple with the urgent task of making a clean departure from Surf's value-for-money moorings, and thereby restoring its top-performance brand values. It tried to climb back into reckoning with Surf Ultra. But while Surf Ultra's by-now-famous campaign, Dhoondte Rahe Jaoge was a big hit, the brand fortunes didn't look up, as the sub-brand consistently lost 1 per cent share every year.

But by October 1996, the marketing team had finally cracked the problem. If leadership in volumes had to be balanced with leadership in image, Banga's men had found the answers with Surf Excel. With Project Swap the code name for the Surf Excel initiative Lever went into overdrive, carefully managing brand perceptions to cement its "complete clean, complete care" image.

The hurry was understandable. Lever's superb MIS picked up news that P&G was preparing to launch a new, improved version of Ariel in October 96, which would support a stronger, superior care for clothes claim and take Ariel's technology platform one notch higher. With the new technology, patented as Carezyme, P&G claimed it could actually enhance the value of the clothes by keeping them looking new longer. The benefits of the new technology went beyond conventional cleaning to actually extend the wearable life of clothes.

It was a threat that Lever could not choose to ignore. But as it turned out, the launch of Ariel Microshine was delayed by problems at the plants, although all the elements of the launch had been ready including time on Doordarshan.

That gave three clear months for Lever to go hammer and tongs on Surf Excel. It concentrated its media weight entirely behind Surf Excel, with almost no support behind the mother brand, Surf with Wash Boosters.

The big emphasis was on the product itself. Product cues its look, perfume, tub packaging and communication were carefully scrutinised to support its superiority claim. The orchestration of the launch, too, was meant to strike home the difference. To raise the level of involvement, a direct response ad invited consumers to write for a free offer: a detergent that was better than anything they had used before. Besides, Lever switched to testimonials, where consumers echoed the positive experiences of the brand. Also, every piece of commu- nication played up the distinctive tub packaging.

Its ad spends drummed up close to 1000-1400 gross rating points (GRPs), ending up with a huge up front trial as well as 88-90 per cent brand awareness in urban towns.

Realising that Lever was running away with the battle, P&G resorted to a tactical campaign of 10-second commercials that sought to dramatise the consumer's boredom with the launch of yet another "international detergent", content with her trusted brand: Ariel Supersystem.

But the post-advertising research showed that the tactical response simply didn't wash with Ariel consumers, who were looking for a stronger reassurance from their brand.

Finally, Ariel came back with a more decisive response in January 1997. It took care to see that Microshine did not introduce a complete discontinuity in the branding exercise, so that its current consumers were not alienated. At the same time, it also had to unsettle the core Surf user, and make her re-evaluate her choice. The packaging and branding ensured that the new avatar did not take existing consumers by surprise, yet the newness of the technology sunk in too.

Around the same time that Microshine was launched, Lever was once again back to ward off the challenger, by quickly incorporating the same anti-bobbling agents that helped clothes stay bright for longer. Its advertising too went to town tom-tomming the benefits of the new technology.

That blunted the Ariel attack effectively. Post launch research showed consumers hadn't quite registered the benefits of Ariel's new technology. For one, it was difficult for consumers to perceive the benefit of longer life for clothes, through a single trial. All the while, P&G had placed considerable emphasis on promoting sachet usage, so that low unit price sachets allowed an easier entry point for the consumer to enter the Ariel franchise. But as P&G realised with Ariel Microshine, a large sachet base could be a Catch-22 situation.

While sachet users helped widen the brand's franchise, it proved almost impossible to translate these occasional users to the more profitable larger packs. Besides, with Microshine, the big problem was that almost 40 per cent of the Ariel franchise was built through sachets users. This occasional usage pattern made it even more difficult to demonstrate the efficacy of the new technology.

Lever, on the other hand, was virtually running circles around Ariel. It reduced its media weights on Surf Excel over time, but continued advertising with a new set of testimonials, where actual International Surf Excel consumers reinforced their belief in Surf Excel. Tracking studies also confirmed that consumers had picked up the newness and the discontinuity that International Surf Excel had deliberately sought to convey.

Most consumers felt International Surf Excel was a top-of-the-line brand, clearly different from the Surf mother brand. At the grocery stores, housewives typically asked for Excel, rather than Surf Excel. Interestingly, although the 1 kg tub packaging was played up in the Excel communication, it was the 500 gm refill bag at Rs 58 that cornered almost all the volumes. (That meant that Lever had cleverly deviated consumer buying to the bag, instead of the tub, which was expensive to manufacture). Together with that, at Rs 2.50 a sachet, Lever garnered trials by undercutting the Ariel sachet by 50 paise.

Within a year, Lever's blitzkrieg had ensured that International Surf Excel's market share was within striking distance of Ariel Microshine. And together with Surf and International Surf Excel, Lever's share of the premium market was a healthy 65 per cent, while Ariel's market share was pegged at 35 per cent.

Pressing on the gas

When Lever managers sat down to study the source of business for International Surf Excel, it found an interesting trend. Nearly, 75 per cent of users were upgraders from mid-price brands, particularly Surf, with a small percentage of users coming from the Wheel and Nirma franchise, indicating that consumers were willing to upgrade. How could it find a stable platform for these upgraders?

That the mother brand, Surf, too was losing share consistently was indicative of the fact that consumers were gradually moving towards a top performance detergent, but at Rs 120 a kg, the high unit price of the concentrate was deterring greater frequency of usage. As a result, the low unit sachets had resulted in a large base of occasional users, who typically used International Surf Excel for special washes. Lever too, like P&G, realised that a large sachet base was also a double-edged sword, because, while it widened usage, it also allowed consumers to switch brand loyalties easily.

Moving this base of potential switchers upwards wasn't easy, particularly since there was a large gap in prices between Surf and International Surf Excel. Consumers would have to take a price hike of over 90 per cent to graduate to the top-priced concentrate.

Besides, in a bid to introduce a discontinuity in the Surf franchise with International Surf Excel, Lever had ended up ensuring that the mother brand, Surf had weakened over time. As a result, there was little in common between the mother brand, Surf with Wash Boosters, and the extended brand, Surf Excel. Not only was the packaging, and advertising dissimilar, consumers could not find a strong reason to buy the mother brand. Advertising research also showed that Surf with Wash Boosters cued a process breakthrough, that did not materially affect the consumer's motivation to buy. A housewife could not relate to a 'process' claim that she could not verify.

The success of International Surf Excel had offered Lever an opportunity to leverage the power of its sub-brand to strengthen the mother brand's franchise. With Surf with Excel Power, Lever is simply reducing the discontinuity. "Surf now stands for a coherent set of values," says Adhikari. There is now a greater convergence of packaging, advertising and branding, while ensuring that the two entities are perceived as distinct yet synergistic.

At Rs 85 a kg, Surf with Excel Power is priced a shade below Surf's top end concentrate powder, Surf Excel, which at Rs 120 a kg competes with Ariel Microshine. Lever's hypothesis is that its core Surf housewife is keen to move to a top-performance detergent. But she is unwilling to graduate to a concentrate power, as it meant a major change in her in-use habits.

As a fluffy powder (full-blown powder in technical parlance), Surf users were typically used to using, on an average, two handfuls of powder for a bucketful of clothes. So when concentrates entered the market, not many housewives were willing to believe that just a spoonful of concentrate was enough to remove the toughest stains. Research showed that when she used a concentrate, she tended to measure the spoonful of powder in her palm, before mixing it in water.

As a result, that meant that the 'lower cost per wash combined with greater effectiveness in stain removal' story that concentrates typically ran in the developed markets simply would register with Indian housewives. It required nearly eight years and tremendous marketing investment by P&G and then by Lever for the concentrate market to reach 4 per cent by volume and 17.5 per cent by value.

Lever's belief was that housewives would be willing to buy a top-performance detergent if it was in a form they were familiar with and also at a price that they could afford. That's why Surf with Excel Power tries to marry the physical form of a full-blown powder that Surf consumers are comfortable with, with International Surf Excel's performance standards. Not only is the powder in its familiar blue colour, Surf with Excel Power has enzymes that have been added to the formulation.

While the branding is similar, the packaging is distinct. While Lever will continue to advertise the tub to signal the concentrate, for Surf with Excel Power, it is using a 1 kg new cartoon pack, which also has an element of distinctiveness built into it, in the form of a spout that makes it easier to pour out the powder. The size of the spoons inside the pack is of different sizes, so that the difference is apparent even after the powder is subsequently poured into a jar. That way Lever hopes it will make it easier for consumers to figure out the differences between the two variants.

Based on its experience in developed markets like UK, Surf's two-variant strategy helps to accelerate the upgradation process. But is there a danger of cannibalisation? Unilever's experience shows that the market segmentation happens naturally as younger and more discerning housewives, who have a higher level of comfort with the concentrates typically buy into the lower cost per wash story, while the slightly older and more traditional housewives settle for the more familiar fluffy powder.

Having achieved its objective of shoring up the Surf franchise with the launch of Surf with Excel Power, Lever hopes to neatly sew up the premium market and effectively negate Ariel's drive to pick up volumes by leveraging its top performance standards. It would ensure that Ariel's growth would get stymied, since now Surf users would have a very good reason stay with their trusted brand and not migrate to the Ariel fold.

The way Surf has tried to announce the new, improved Surf is interesting, because it obvious parallels with its earlier attempt with International Surf Excel. First, print ads told housewives that Lever was interested in manufacturing a detergent that would be even better than Surf. So housewives were invited to write in to say what they expected of a detergent that was even better than Surf. To give the programme more credibility and keep the consumer involved, which carried the consumer responses in the subsequent set of print ads. Most of these responses were in the area of stain removal and care for clothes, areas where the original Surf franchise lacked and its competitor Ariel dominated. Finally, on January 7 this year, it unveiled the product that was the answer to actual consumer's need.

But by upgrading Surf to a higher price point and vacating the Rs 65 a kg price point, Lever knows it is likely to leave a gap in the price continuum, which a competitor like Nirma Super or even Tide could exploit later. Decades of experience in developing markets like India has taught Lever that sealing up the market with different brands at various price points makes eminent sense.

What then does it have up its sleeve? Its mid-market brand Rin will be the next target for a brand overhaul, as Lever looks at sprucing up the brand to enable it to move up a few notches higher in the price continuum. Sources say that in the last six months, Rin's functionality has already been strengthened with the introduction of a Whiteguard. The process of upgradation and strengthening of Rin's brand values will continue further in the months to come. That way it will effectively block Tide's likely entry in the future.