Colgate Palmolive has recently launched Axion, the world's leading dishcare paste, in India. Can it gain a competitive edge in an undeveloped market that is dominated by a combative rival?
Colgate Palmolive's launch of Axion diswashing paste in November last year was unusual by any standards. Unlike most fast-moving consumer good roll-outs, it was decidedly low-key. For a project that had been on the drawing boards for some two years, there was none of the saturation sampling, the prime-time TV blitzkreig, massive trade merchandising that one has witnessed in the past.
Look closer at the product and it is easy to see why. Axion, priced double the competition, was an offering in a market that has barely progressed beyond rudimentary home-made scourers. Even today, almost 70 per cent of housewives prefer free-to-use proxies like charcoal, ash and even foil medicine wrappers. And among the remaining 30 per cent the penetration of branded scouring powders is very low.
If that is one aspect of the market, the other is the low weight to volume ratio, which has created huge logistical hurdles for national brands. It took years before Hindustan Lever, the national market leader by a long chalk, was able to find a way to extend the Vim franchise beyond its powder when it launched its best-selling bar in 1993. And because of the product form, the bar was far more amenable to logistical economics.
Is CP making a crucial strategic error? It is early days to judge whether the world's best number one dishpaste will succeed in India. But initial reports suggest that the brand is progressing smoothly. Market Pulse, IMRB's Consumer Panel data, indicates that in November, Axion had achieved a pentration of 0.2 per cent in Bombay city, which shot up to 1.73 per cent the next month.
Most of the trials appear to have come from households that used Vim. That has been reason enough for Hindustan Lever (HLL) to hurriedly push through the launch of Vim in a new paste form in the first week of February this year.
The battle lines, then, have been clearly drawn. Will HLL's brand extension scuttle Axion's gameplan of offering a clearly differentiated product? The answers could lie in the nature of the market.
Globally, the dishcare market is predominantly hand dishwash in nature. Even in other advanced markets, the penetration of dishwashing machines is as low as 10 per cent. Of course, in India, the dishwashing machine penetration is minuscule.
As a run-up to the Axion launch, Colgate Palmolive began looking at a product that would come into actual contact with the user's hand. The brief was to devise a formulation that would be convenient, more powerful than what was currently available and, at the same time, safe on hands.
With the introduction of the paste in mind, it was continuously tracking the scouring habits of middle-class households to pinpoint possible areas of discontentment with dishcare products currently available in the market.
An extensive study of Indian households threw up two important issues. For one, about 70 per cent of the Indian households did not buy a separate dish scourer they generally use proxies like charcoal, ash, mud, or even detergent powder and bars for clothes. The use of such proxies was rampant because housewives associated them with low or no cost but acceptable cleaning standards.
Second, even among the 30 per cent that actually go in for a separate dish scourer, the penetration of branded scouring products was very low. That was because most housewives preferred to delegate the task of dishwashing and, therefore, price and economy were the critical determinants.
There was also another distinct trend a majority of households bought cheaper scourers and preferred to mix it with detergents like Nirma, Rin, Surf or even Ariel, in the mistaken belief that they were guaranteed a cost-effective and better cleaning quality. (CP's research showed that utimately, however, the housewife ended up paying much after the amount spent on the washing powder or the bar was factored in.)
Looking for the gaps
So where were the gaps in the market? Till CP entered the fray, the 1,56,000-tonne market had seen three delivery forms powders, that constituted about 87 per cent, bars about 12 per cent and the liquid form which has just about picked up 1 per cent in volume. It was the bar segment, which had grown the fastest since the launch of Vim bar in 1993-94, that alone constitutes about 95 per cent of the total bars market.
All these different delivery forms were associated with unique benefits the powder is associated with abrasiveness, the liquid with the attribute that it is good for the hand and the bar which combined the benefits of both.
As CP saw it, the market was ready for a more advanced form that would represent a dramatic improvement in terms of greater abrasiveness and higher detergency.
All the same, price, as always, was a major driver of consumer buying patterns. In terms of price, the structure of the dishcare market resembles a pyramid with low or discount priced scourers (under Rs 5 per kg) constituting the large base. Most of the scourers in this segment had almost zero detergent content in them but sold on the plank of their abrasiveness. The mid-priced segment ranging between Rs 5 and Rs 10 per kg was dominated by regional brands like Sabena (Rs 6 per Kg) and Odopic (Rs 8 per kg). At the top of the pyramid were premium brands that retailed at over Rs 10 per kg and the segment was almost monopolised by the two national brands, Vim from HLL and Biz from Procter & Gamble.
Vim, with its six variants two powders, a bar, a liquid, a scrubber pad and the recently launched paste was the market leader with a value share of 45 per cent. All the other players were regional Odopic powder, bar and liquid from Balsara Hygiene Products (west and east India), Shinet powder and bar from Sole Enterprise (predominantly Mumbai), Nip powder and bar (north India) and Sabena powder (south and east India).
The scourer market was skewed towards regional players mainly because of two reasons. For one, the weight and volume made it difficult to transport the products across the country without adding on to the costs. As a result, most marketers had preferred to restrict their operations to a maximum limit of 180 km. Second, the sheer bulk of scourers mainly bars made it difficult for scourers to display and tended to dump them on the floor. That meant, to push volumes, sales coverage had to be intensive and product visibility had to be pumped up, which in turn hiked costs.
Unearthing the gap
The first hint that there was actually a place for another new scourer was the fact that the existing scourers could not tackle the problem of burnt vessels or stubborn grease which mirchi, haldi and other kinds of masala housewives used tended to leave behind. More so because, as an analyst puts it, As a matter of habit, we usually don't wash utensils immediately after washing, which makes the task of scrubbing off the grease even more difficult later.
As CP saw it, after Vim bar went national in 1993, the dishcare market grew by 7 per cent in the very next year itself after having grown at a modest rate of 3 per cent. For the company, this was a clear indicator that the housewife was, in fact, looking for a more efficacious product, which was convenient to use and that she was prepared to shell out a few more bucks for the extra shine.
Another trend that appeared encouraging to the company was that these middle-class households had started paying more and more for better fabric wash and that the market had evolved into different delivery forms.
Though there were inherent differences between the two markets, what appeared as an encouraging sign was that the housewife was becoming much more conscious about the quality of wash rather than the price she was paying and that the marketers had taken the initiative to experiment with new products and formulations.
On the other hand, since only a handful of branded products were available in the dish care market with most of the players unwilling to take on the risk of innovation the housewife was left to dabble with only the three delivery forms the branded products market offered the bar, powder and the liquid form and use the permutations and combinations of the myriad branded and unbranded products along with proxies like mud and ash.
That was fine as long as the housewife was using copper or brass utensils. But when she graduated to more sophisticated utensils like enamelled cook-and-serve utensils and non-stick crockery, or, for that matter, glass and chinaware the need for a more sophisticated dish washing medium arose, which, at the same time, would ensure that the housewife gets a better wash for the money she was prepared to spend. This gave us the go ahead to introduce Axion in India, whose success is clear in other South Asian markets like Philippines and Malaysia, say company sources.
As the first paste dish washer in India, Axion is also CP's first product in the dish care category in India. What CP has essentially tried to address with Axion is the most pricky issue before the middle- and upper-middle class housewife today a convenient way to take care of all her utensils with minimum wastage in terms of both time and money.
The functional discriminator comes with its unique ingredient, Dissolvex, which attacks the most important quality that the housewife looks for in her washing medium its abrasiveness. To cement its product plus in the consumer's mind, Axion's positioning too, is specific as "the grease stripper." The brand claims it is almost three times more effective than any other dishwashing powder available in the market and the least fussy way to the most common household problems of scrubbing grease marks or burnt vessels.
Thus, convenience and good value for money are the twin planks on which the product has been positioned. When it tracked category usage, CP found an interesting insight every second household had a peculiar problem. The container the tin or the tub in which they are kept became soiled and the powder soggy over time. And that led to wastage. If the housewife could switch to the paste form, she could conveniently avoid this problem.
To ensure that trials were not impeded by the premium pricing, CP is attempting to reinforce value. It has thrown in a scrubber worth Rs 6 free. But more importantly, as the company sources keep emphasising for each dab of the paste the user can wash three times as many utensils as she can with any other dishwasher the paste therefore lasts longer and provides more units of washes.
The biggest adversary currently seems to be the all-encompassing presence of Vim in all delivery forms and across all price bands. That is where we needed to be different, and that is why we are so sure that once the housewife uses our product and experiences the benefits first hand, they will buy it again and again, says the company source. That again could be the reason why CP's dishpaste comes in the same colour as the reference brand Vim from which the company expects the largest converts to come.
Apart from a low-key advertising campaign with spends concentrated on outdoor media, Axion has also been sampled among middle and upper-middle class women. Apart from house-to-house sampling, sample packs of Axion has been distributed at offices, and also in the Kelvinator bus that shuttles between Churchgate station and Nariman Point and, more recently, at the Institute of Secretaries.
Trade sources say that the response over the last three-and-a-half month has been encouraging and CP's first task will be to take the brand national.
Galvanised by the Axion launch, CP's biggest competitor, HLL which has recently extended the Vim line, priced almost at par with Axion. Rolled out in the first week of February, Vim Ultra Paste is supposed to contain the powder of lime and claims to be 10 times more concentrated than ordinary powders. It is currently available in a 200-gm tub for Rs 16 and a 200-gm refill pack for Rs 12. The product plus: it does not leave behind any residue, either as grease or powder. Besides since it is 10 times more concentrated, one needs very little Vim paste to remove tough grease and stains.
Has the speedy rebuttal from Lever rattled CP? As the company source puts it, "As equity guardians, sooner or later, HLL would have launched a counter-offensive. But for all that, we
still think, they accelerated the process of the launch which only goes to prove Axion
has, in fact, made a dent in the market." The hurried launch of Vim Ultra Paste is clearly intended to stall Axion from taking off
as the single player in a niche
market and the first thing we are looking at now is to take Axion national."
Incidentally, this is the second coming for Vim paste. In 1990 HLL had test- marketed Vim Ultra Paste in Bangalore. That time round they were not able to hit the right formulation and had to withdraw the product from the market in three/four months time.
But this time HLL has to contend not just with a fickle consumer but an aggressive and determined competitor as well.