ICMR Case Collection ICFAI Center for Management Research

Repositioning MKTG 099

This case was written by Ajith Sankar R.N, under the direction of Sanjib Dutta, ICFAI Center for Management Research (ICMR). It was compiled from published sources, and is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation.

D o N o t C

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MKTG/099

REPOSITIONING DABUR

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. - Sunil Duggal, CEO, Dabur India Limited in 20041.

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 D Set up in 1884 by Dr S K Burman in West Bengal as a proprietary firm for the manufacture of ayurvedic drugs, Dabur (an acronymo of the name Dr Burman), started off with a direct mailing system to send medicines to villages in Bengal. Initially, the company marketed an allopathic drug, Plagin, to combat the then prevalent epidemic of plague. In 1896, Dr. Burman set up a small manufacturing plant at Garhia near CalcuttaN for mass production of chemicals and Ayurvedic drugs. In the early 1900s, the next generation of Burmans took a conscious decision to focus more on the Ayurvedic medicines market, as they believed that it was only through that the healthcare needs of poor Indians could be met. o t

1 Zachariah, Reeba, Datta, Kausik, “Dabur to do away withC umbrella brand plan,” Business Standard, October 6, 2004.

2 How an organization structures and names the brands within its portfolio.o

3 The sum of all distinguishing qualities of a brand, drawn from all relevantp stakeholders, that results in personal commitment to and demand for the brand. y

Repositioning Dabur

In 1919, Dabur set up a Research & Development laboratory to 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.

FPD looked after products related to Hair Care, Skin Care, Oral Care and Foods. The three leading brands in this division, Vatika, Amla Hair Oil, which is the world’s largest selling hair oil, and Lal Dant Manjan, had a turnover of Rs. 1 billion each in 2003-04. , another constituent of this segment had a 40 percent marketshare in the branded honey market in 2003. HCPD dealt with products related to health supplements, digestives, baby care and natural cures. Dabur Chyawanprash, part of this division had a 64 percent market share and made sales of Rs. 1.27 billion in 2003-04. The brand Hajmola accounted for sales of over Rs. 1 billion in the same year and Hajmola tablets had a 75 percent marketshare in the digestive tablet category. The herbal digestives which formed part of HCPD had a 90 percent market share in 2003. In the category of baby massage oil, Dabur Lal Tail had a 35 percent marketshare in 2003.

DASL managed the Ayurvedic medicines, numbering to 250, which were sold as prescription drugs and OTC drugs. The major categories here included Asav Arishtas,4 Ras Rasayanas,5 6 D Churnas and Medicated Oils. Proprietary medicines developed by the company included the Nature Care Isabgol, Madhuvaani and Trifgol. The company has embarked on a process to combine FPD and HCPD into a osingle strategic business unit known as Consumer Care Division (CCD), which will deal with FMCG products related to personal and health care. DASL would be renamed as Consumer Health Division (CHD). Supported by 13 manufacturing units spread over four countries, Dabur products are marketedN in over 50 countries. In India, the company has the support of 47 C&F agents, more than 5000 distributors and over 1.5 million retail units.

4 o Arishta means naturally fermented herbal supplements. Arishta are made from herbal decoctions, while Asava are from fresh herbal juices. t

5 The word rasayana (‘rasa’ and ‘ayana’) refers to nutrition andC its transportation in the body. Rasayana, one of the eight branches of Ayurveda, do not treat any one specific disease, but restore body functions and balance to achieve the maximum potential of the body.

6 o Churnas are preparations comprising of fine powders of therapeutic drugs and may be simple or compound. Simple churna consists of only one ingredient while a compoundp one consists of more than one ingredient. y 3 Repositioning Dabur

In 2003-04, Dabur had sales revenue of Rs 11.48 billion as compared to Rs 10.49 billion in 2002- 03. The Earnings before Depreciation, Interest and Taxes (EBDIT) was Rs 1.36 billion and Rs 1.1 billion for 2003-04 and 2002-03 respectively. Net Profit increased from Rs 0.72 billion in 2002-03 to Rs 1.01 billion in 2003-04 (Refer Exhibit V and VI).

THE RESTRUCTURING EXERCISE

Though Dabur diversified into number of areas, the image of Dabur was that of an Ayurvedic company. In the public perception, Dabur products were associated with the 35-plus age group. With almost seventy percent of India’s population below 357, it appeared that Dabur would be missing out on this mass market, which also had high disposable income. In the early 2000s, the company tried to reorient its image from being a manufacturer of ayurvedic medicines to that of an FMCG company. Additionally, the company had been pruning its low contribution brands and refocusing on its key brands in family and healthcare products. When the company experienced a downturn in sales and profits in 2001-02 (Refer Exhibit V), and there were indications of slowing growth for the company in 2002-03 it hired Accenture, a consulting firm to recommend some changes in the company’s marketing systems and processes. Sameer Duggal, Director - Sales and Marketing, Dabur said, “Such an initiative is in line with Dabur’s philosophy of constant improvement and is a part of the larger changes to make its approach more professional.”8 Dabur’s internal assessments found that consumers perceived Dabur as an herbal specialist and revealed that Dabur’s reputation in this field was substantial across small towns as well as in big cities. In 2003, the size of the global herbal FMCG market was estimated at $40 billion. The herbal FMCG market is considered to be the fastest growing product category within FMCGs, and these products are patronized by the youth. Herbal products can also encompass a wide area of the FMCG sector, from personal care to health-care products.

Aligning the Brand Architecture

Dabur was looking for growth drivers which could leverage the herbal brand equity of the company. “We decided to set the scale high, targeting at least a strong double-digit growth,” said Sunil Duggal (Duggal), CEO, Dabur speaking about the growth plans the company set in 2003.9 In order to achieve the targeted sales of Rs 200 billion by 2006, which translated to annual growth of 15-20 percent for three years from 2004 to 2006, the company identified personal and healthcare products as growth drivers. But there were gaps in Dabur’s product range. Its skin care range was growing very slowly, and its products in this segment like Gulabari10, did not hold a strong appeal for the youth. Dabur was a marginal player in the oral care market as it had no presence in the toothpaste market. The company needed to fill these gaps by coming out with new products. D Prior to new product development, Dabur realigned its brand architecture. “Our first priority was to get our brand strategy right,” said P D Narang (Narang), Director, Dabur.11 Initially, Dabur followed an umbrella brandingo strategy. The company decided to change that strategy and reassigned all its FMCG products to its five power brands - Dabur, Vatika, Anmol, Real and Hajmola. “Realizing that one brand cannotN straddle so many categories we decided to adopt a key

7 Census Data of India, 2001. o

8 “Accenture to pen Dabur’s sales reform,” Business Standard,t February 23, 2002.

9 Bhandari, Bhupesh, Radhakrishnan-Swami, Meenakshi, “Dabur’sC elixir,” Business Standard, September 14, 2004.

10 Rose water. o

11 Bhandari, Bhupesh, Radhakrishnan-Swami, Meenakshi, “Dabur’s elixir,”p Business Standard, September 14, 2004. y 4 Repositioning Dabur brand strategy,” said Duggal.12 Dabur became the umbrella brand for all healthcare products such as Chyawanprash and honey, while Vatika became the herbal beauty brand with a slightly upmarket image. Anmol was offered to the value-for-money segment of the personal care market. Real became the master brand for foods, while Hajmola represented digestives. The strategy was to restrict Dabur to healthcare items, and gradually distance it from other product categories. “In the next two years, we plan to establish these five brands as stand-alone entities with clear roles and functions,” said Duggal.13

Dabur found that its oral care brand, Binaca was non-core to its business; hence, after valuing Binaca for a floor price of Rs 200 million, the company decided to sell the brand and appointed PriceWaterhouseCoopers14 to look for a buyer. Dabur stated that it would sell the brand only if it got the desired price; otherwise it would use Binaca toothbrushes for promotional purposes. Dabur had bought the Binaca brand from Reckitt Colman15 in 1996 and revived it in 2001 to make an entry to the white toothpowder category. But in the restructuring that followed soon, the company decided to focus on brands which had a herbal connection, and Binaca did not fit in to its herbal strategy. The company was not able to find a buyer at a suitable price.

Dabur’s earlier logo of banyan tree conveyed the message of healthy life. The image of Dabur invoked different things to different people as Dabur operated at three distinct levels: the corporate brand, the mother brand for a range of products, and also percolated to individual product names. As the company realized the need for congruence between Dabur’s brand equity and the brand architecture, the company went in for a change in its logo. “We began the process of contemporarisation last year (2003) by simplifying the brand architecture. As per this plan, Dabur signifies the healthcare initiatives of DIL. But with the word having several different meanings, this message was not going across clearly to the end consumers. The logo change exercise is aimed at conveying the healthcare platform of brand Dabur,” said Duggal.16 The new logo (Refer Exhibit VII and VIII), designed by DMA17, created a new identity with its key line being ‘Celebrate Life.’ The company decided to follow-up the logo change initiative with a complete redesign in packaging for Dabur products. With the brand architecture in place, Dabur launched new products and fresh variants for existing brands.

Getting the 4Ps Right

In 2004, Dabur launched a new range in juices called Coolers which included traditional preparations like Aam Ka Panna18, along with others like pomegranate and water melon juice. “Consumers perceive this as the next best thing to having a fresh fruit. Convenience is no longer the selling point, the naturalness is,” said Sanjay Sharma (Sharma), Head of marketing, Dabur Foods.19 Dabur also plannedD to launch a jamun variant in 2005. Dabur had a 55 per cent market

12 Ananthanarayan, Ravi, D'Silva, Jeetha, “Power Brands: It pays to stay with your core, ‘marginally,’” The Economic Times, November 15, o2004.

13 Chakravarty, Chaitali, “Dabur to rejig productN portfolio,” The Economic Times, July 7, 2003.

14 PricewaterhouseCoopers provides assurance, tax and advisory services.

15 o Now Reckitt Benckiser; engaged in household cleaning business.

16 t Sindhu, Bhattacharya, “What Dabur does,” The Hindu Business Line, December 2, 2004.

17 C Division of Aliagroup, a Mumbai based company specializing in the branding space. Its global associates include JDK in the US and FutureBrand and Design Motive in the UK.

18 o A green mango drink. p 19 Sharma, Arti, “The fruits of success,” Business Standard, July 31, 2004. y 5 Repositioning Dabur share in the packaged fruit juice market20 in 2003-04 and wanted to launch more Indian fruit flavors, as well as combinations of fruit and vegetable juices. Coolers was 15 per cent cheaper than Real21 because of its lower pulp content. A one-litre bottle of a Cooler was priced at Rs 50. By setting up a food processing plant in Siliguri, West Bengal, Dabur sourced fruits directly from farmers, which cut its raw material costs.

The branded packaged soups market saw a 20 per cent growth in 2003 and Dabur has been trying to make its name in this Rs 400 million market through its Hommade brand.22 In 2003, Dabur launched tomato soup which was priced at Rs 16 for a 200 gm pack in the soup market, where Nestle’s Maggi, Hindustan Lever’s Knorr Annapurna, MTR Foods and Amul were the major players.23

Dabur has been looking to develop the oral care market as 30 percent of the population in India do not use toothpowder or toothpaste, but rely on neem or ash. Dabur anticipates that this consumer segment will switch to toothpowder and then from toothpowder to toothpaste. Dabur Lal Dant Manjan and the Dabur Red Toothpaste have been targeted at this segment. The company has also extended the Dabur Red Toothpaste brand to gel toothpaste. Dabur scanned the toothpaste market for a possible acquisition, and in early 2005, it acquired the Mumbai-based company Balsara Hygiene and Home Products.24 This gave Dabur access to Balsara's oral care products like , and . “The Babool and Meswak toothpaste brands will be a good strategic fit for Dabur as they, too, are positioned as herbal products,” said Duggal.25 The acquisition pushed Dabur's marketshare in the Rs 19 billion toothpaste market, which is dominated by Hindustan Lever and Colgate Palmolive, up to nearly 8 per cent from a market share of 1.8 per cent.

Analysts say that the ayurvedic tag helps Dabur to charge a premium on its products. But to be a formidable player in the FMCG segment, Dabur has had to keep the prices of its products competitive in relation with other players in the market. To increase demand for its products, Dabur engaged in selective price reduction and introduction of smaller packs at the Rs 5 price point in the segment. These included its baby massage oil, toothpaste, shampoo and hair oil. In 2004, Dabur slashed the price of its Vatika shampoo by 20 percent. “The decision to cut prices was carefully planned, taking into account the competitive landscape, product costing and our own brand strategy,” said Duggal.26 In 2004, the company also launched one-rupee sachets of Vatika shampoo in order to double volumes in the rural markets.

20 As per an article posted inD www.indiainfoline.com, the two national level players in the juice segment are Tropicana and Real. Real is the market leader with 55-60% market share while Pepsi’s Tropicana has an estimated share of 30-35%. Several local/ regional brands also exist, besides a huge unorganized sector. The category charted a growth rateo of 20-25% per annum in 2004.

21 Packaged fruit juice brand from Dabur. N

22 The company was already selling ginger-garlic paste, tomato puree, coconut milk and chutneys under the Hommade brand. o

23 Nestle’s Maggi, which pioneered the branded packagedt soup, is the market leader followed by Hindustan Lever’s Knorr Annapurna.

24 C The Balsara group had a turnover of Rs 2 billion in 2003-04, with a loss of Rs 80 million.

25 “Dabur snaps up Balsara in Rs 143 cr deal,” Business Standard, Januaryo 28, 2005.

26 Bhattacharya, Sindhu J., “ Dabur to join shampoo price wars — To launchp one-rupee sachet to drive volumes,” The Hindu BusinessLine, Aug 11, 2004. y 6 Repositioning Dabur

Dabur is well known for the innovativeness of its promotions. In 1999, in order to reach the rural consumer, it send three mobile bowling alleys to a cluster of 300 villages in Banda district27 with the bowling pins representing the various germs that Dabur Chyawanprash protect against. Dabur also decided to utilize the popularity of Indian films in the domestic and global markets to promote its brands. In Feb 2004, Yash Raj Films28 Ad cell made 20 commercials for Dabur Chyawanprash and Hajmola with Amitabh Bachchan (Big B/Bachchan). Dabur signed on Bachchan for a sum of Rs 80 million, making this the most expensive advertising campaign undertaken by Dabur. Besides endorsing Dabur Chyawanprash, Bachchan also endorsed Hajmola. While McCann-Erickson29 was responsible for Dabur Chyawanprash, Lowe30 was looking after the Hajmola brand. The new campaign was in tune with the company's brand positioning of Hajmola as an ‘Anytime, Anywhere tasty fun-filled digestive.’ “Unlike the Chyawanprash ad where he (Bachchan) was projected in a serious manner, for Hajmola, we have shot him in fun and mischievous mood,” explained Arjun Sablok, Head of operations at Yash Raj Films Ad cell.31

Dabur capitalized on Bachchan's popularity in Bangladesh, UAE, Saudi Arabia, Kuwait, Oman, Bahrain, Riyadh, Egypt and Nigeria, as well. “Amitabh Bachchan is at present not allowed to advertise in Pakistan, but we will use him in GCC,32 Bangladesh, Egypt and Nigeria,” said Arvind Kumar, CEO, Dabur International Limited. In 2004, the company signed cricketer Virender Sehwag and his wife Arti Sehwag as brand ambassadors for select oral, hair and healthcare products. “This is the first time that we have decided to sign a celebrity brand ambassador for our oral care category, which has a turnover of Rs 100 crore,” opined Duggal.33

Dabur’s 100 percent subsidiary, Dabur Foods, had its own marketing team, while sharing a number of services with its parent. Dabur Foods marketed fruit juices, cooking pastes, sauces and tea. In 2002, the company’s flagship product Real juices emerged as the leader in the natural fruit juices market with a 50 percent share of the market and a turnover of Rs 650 million. In year 2002, the company increased its advertising spend for the brand Real by nearly 40 percent in order to expand its consumer base in the pure juice market in India, which is estimated at Rs 1000 million (1200 million in 2003). “We will organize various promotional activities from time to time mainly to increase sampling, and educate the consumers about packaged fruit juice that it is as pure and nutritious as fresh juice,” said Sharma, Head of marketing, Dabur Foods.34 In order to increase in- home consumption, the company targeted mothers and children. To redesign the packaging of Real, Dabur hired DMA. The advertising capsules of Real communicated the idea that drinking Real was equivalent to eating a fruit. In 2002, Real Activ, a fruit drink targeted at young consumers and positioned on the health plank was launched. “We wanted to tap the fitness-crazy young consumers,” said Sharma.35

27 Located in the state of UttarD Pradesh, India.

28 Yash Raj films produces and distributeso Hindi films in and out of India. The entertainment company is led by the famous Indian film director Yash Chopra.

29 An advertising agency network. N 30 An advertising agency.

31 Sinha, Ashish, “Big B to endorse Dabur's Hajmola,”o The Economic Times, March 2, 2004.

32 The Gulf Cooperation Council seeks to strengthen cooperationt in areas such as agriculture, industry, investment, security, and trade among its six members: Bahrain, Kuwait, Qatar, Oman, Saudi Arabia, and the United Arab Emirates. C

33 “Mr & Mrs Sehwag to endorse Dabur products,” PTI, July 13, 2004. o 34 “Dabur Foods to hike ad spends for Real brand by 40%,” Business Standard, January 14, 2002. p 35 “Dabur Foods to hike ad spends for Real brand by 40%,” Business Standard, Januaryy 14, 2002. 7 Repositioning Dabur

Dabur positioned Real Activ as its premium juice brand, while Real was targeted at consumers belonging to SEC B and C.36 Dabur promoted Real Activ by organizing a health run with athlete Sunita Godara37 in New Delhi, to create the association between health and Real Activ. Tropicana, from the stable of Pepsi, was Dabur’s major competitor in the real juice category. In order to gain market share, Dabur adopted an integrated marketing communication programme in 2003, which included ground promotions, sampling exercises, mass media advertising, institutional promotions, public relation activities and marketing tie-ups. The company has decided to popularize ‘Real’ in hotels and restaurants in major cities. As part of this, Dabur held bartending events titled ‘Real Juice Jockey’ contests in cities like Mumbai and Delhi. Dabur Foods also launched Real Junior, a 125 ml pack of apple and mango drinks, aimed at children below the age of six, in 2004. Dabur also tied-up with Discovery Channel38 to promote another variant, Real Schoolpack.

Dabur Foods targeted the institutional market which included hotels and airlines, through Nature’s Best, an exclusive brand for institutional sectors. “We see the institutional segment as a major contributor to our growth,” said Amit Burman, CEO, Dabur Foods.39 The institutional market for food stands at Rs 270 billion annually. The company put out advertisements in several trade magazines to push sales. Dabur partnered with a number of institutional clients to provide value added services to this segment. The company conducted training sessions and workshops for food and beverage professionals, and worked with the product development teams of many hotels and restaurants to help them create new recipes.

Though Dabur tried to rely on sales promotions to increase its revenue, it realized that it should increase its geographic spread. Southern India accounted for just 8 percent of Dabur’s sales revenue in 2003. “A clear way to grow for us was to focus on the southern states,” Duggal pointed out.40 In order to increase sales from southern India to 15 percent by 2006, Dabur set up a special cell for boosting sales, with a core marketing team focusing on point-of-sales promotions, better stocking practices, etc. Dabur also planned to customize the labels of its products as well as the commercials for the region. Following this, the company plans to customize its products to suit the tastes of customers in South India. The company has met its target of improving the sales from the region to 10 percent of its total sales in 2004.

Dabur has identified international markets as a thrust area for the future. After the decision to position itself as an herbal specialist, Dabur decided to enter new markets across the globe by leveraging its herbal tag. Its moves abroad would be facilitated by the fact that the Indian diaspora41 was familiar with Dabur and the rising awareness across the world about the superiority of herbal products over synthetic products. Dabur decided to take market development into its own hands. In 2003, for $ 5 million,D Dabur acquired the business of its franchisee for the Middle East, Redrock Ltd. Redrock Ltd, engaged in manufacturing and selling and export, of various cosmetics and toiletries and healthcare products, had entered into a licensing agreement with Dabur in 1991. o 36 The National Readership Survey analyses the Indian households across SocioEconomic Classifications (SECs). The classifications, SEC A, SECN B, SEC C, SEC D and SEC E, is done based on the education and occupation of the chief wage earner. SEC A stands for the most affluent and SEC E stands for the least affluent.

37 o Sunita Godara holds the record of running the maximum marathons run by an Indian.

38 t An infotainment television channel.

39 C Begg, Yusuf, “Dabur Foods eyes institutions,” Business Standard, September 22, 2004.

40 Bhandari, Bhupesh, Radhakrishnan-Swami, Meenakshi, “Dabur’s elixir,”o Business Standard; September 14, 2004. p 41 Estimated to be over twenty million. y 8 Repositioning Dabur

The acquisition gave Dabur control over Redrock’s manufacturing facilities at Dubai42 and Sharjah43. The acquired company was subsequently renamed Dabur International Ltd, and this company was made responsible for investments in all Dabur’s global ventures.

In 2003, subsidiaries were established in Nepal, Nigeria, Bangladesh and Pakistan, and international business added Rs 1.28 billion to Dabur’s turnover in 2003-04. Dabur had a manufacturing base in Karachi, Pakistan - a joint venture partnership with Muller and Phips, a local distribution company to make Vatika shampoo, Dabur Amla hair oil and Hajmola. “The only way the company can touch the Rs 2500 million export target (for 2006-07) is through JVs in countries where consumer behavior is similar to India’s or where there is a strong Ayurveda platform to be tapped. If herbal shampoo and hair oil can sell in India, it can sell in Pakistan too,” said Narang.44

The company plans to focus on Russia and other CIS countries as well as Afghanistan, West Indies and the Asia Pacific region. Dabur has launched some export specific brands, like ‘Dr Burman’, which have been launched in 2003 through multi-level marketing channels in Russia. In 2002-03, Dabur Boro Glow was introduced for the Russian market, and Vegecaps in the naturecare range for the European markets. The company has been exporting hair oils, shampoos and Hajmola candies to Afghanistan.

In 2002-03, the company entered the North American markets by appointing distributors and initiating marketing of products to the ethnic Indian segment. In 2003-04, Dabur entered discussions with retail outlets in Russia and other states of CIS, and in the UK, to have its products stocked. In 2004, Dabur International Ltd acquired a 90 percent stake in Nigerian company African Consumer Care Ltd (ACC) for an outgo of $80,000. The local partner, Funtuna Ventures, kept ten percent of the equity. ACC made personal care products like toothpaste and soaps, which catered to the needs of the Nigerian market and neighboring countries like Ghana.

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 Securities45 commented, “What the company had done is pretty positive and credible; it continuesD 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.”46 o

42 Dubai, the second largest emirate out of theN seven emirates that make up the United Arab Emirates on the Arabian Peninsula, is located southwest of Sharjah and northeast of Abu Dhabi, and reaches into the interior.

43 o The Emirate of Sharjah extends along approximately 16 kilometres of the United Arab Emirates's Gulf coastline and for more than 80 kilometres into the interior.t

44 Chakravarty, Chaitali, “Dabur lines up manufacturing unit Cin Karachi, forms alliance,” The Economic Times, September 29, 2003.

45 SS Kantilal Ishwarlal (SSKI) Securities Pvt. Ltd, is a Mumbai obased brokerage firm which owns sharekhan.com. p 46 Bhattacharya, Sindhu, “What Dabur does,” The Hindu Business Line, Decembery 2, 2004. 9 Repositioning Dabur

Dabur Foods’ Real and Hommade grew at a pace of 36 per cent and 25 per cent respectively in 2003. Dabur Red Toothpaste, launched in April 2003, became a Rs 400-450 million brand within a year of its launch, and captured one percent of the oralcare market. The new product to complement Dabur Lal Dant Manjan, i.e. its toothpowder of the same name, grew by 9.6 percent in 2003-04 when overall toothpowder sales in India decreased by 8.1 percent. This ensured that Dabur maintained a strong presence in the toothpowder and toothpaste category. Lal Dant Manjan had a marketshare of 27 percent in the tooth powder segment.

Improvements in packaging and promotions made Vatika Dabur’s fastest-growing brand. Dabur plans to extend the Vatika brand to new categories like skin care and body wash, a market worth Rs 450 billion, and the largest segment in the FMCG market. Dabur has decided to bring out Vatika soap and two products in skin care under the Vatika brand. In the soap market, Dabur proposes to launch both beauty and medicated soaps in the domestic market. It is expected that these soaps will target the premium end of the market. Dabur already exports soaps.

The company has shelved plans to enter the packaged water business. Dabur also has plans to launch several OTC healthcare brands to push up its growth rates over the next few years. Products on the anvil include a new shampoo, hair oils, a herbal toothpaste, a gel toothpaste, a malted drink, and variants of Hajmola. New products are also planned in the categories of cough and cold remedies, pain relief, stress management aids, digestives, women’s health care, etc. The company has decided to merge the family products and healthcare products divisions into one. “We discovered that these two sets of products (family and healthcare) have considerable overlap and commonalities in marketing, distribution, retailing and sales. The company's management has therefore decided to integrate these two SBUs into one,” said V. C. Burman, Chairman, Dabur.47 The company has set up a corpus of Rs. 20 billion, for acquisition of brands in both domestic and overseas markets in order to enter new products and categories. Dabur also plans to create a dedicated production line for healthcare products to feed the overseas market.

With the launch of its new products, Dabur expects to compete with established players in the market like Hindustan Lever, Proctor and Gamble, Glaxo Smithkline Beecham, Godrej Consumer Products, etc. Dabur’s earlier growth was restricted to markets where the established FMCG companies had a limited presence. In the pain relief category the company will have to compete with established brands like Zandu, Amrutanjan and Vicks. The toothpaste segment is dominated by Colgate and Pepsodent from the stables of Colgate Palmolive and Hindustan Lever, respectively. Dabur was aware that aspiring for market leadership in categories with well entrenched players would not be a realistic proposition, and hence is looking for stable, long term and profitable growth in these categories. “We are not making a bid for leadership in the soap market. We are a bottomline-drivenD and not a topline-driven company,” said Narang.48

For a long time, the only category where Dabur was in direct competition with HLL was shampoos. In 2003-04, the company’so market share in this category in value terms was 3.7%. Industry analysts have been watching Dabur’s new product rollouts with great interest. According to Smith Barney,49 “Slow offtake or failure of new products may hamper Dabur’s growth.”50 Analysts have opined that entering the soapN market does not carry much hope in the long term as the category is well penetrated and players have large bases. Market leader Hindustan Lever has

47 o “Vatika, Hajmola, Anmol & Real to be Dabur growth drivers,” PTI, July 15, 2003.

48 t Chakravarty, Chaitali; Sayed, Javed; ‘Turf war: Dabur's all set to take on FMCG biggies,’ The Economic Times, November 13, 2004. C

49 Smith Barney, a division of Citigroup Global Markets Inc., is a financial firm which provides brokerage, investment banking and asset management services. o

50 Chakravarty, Chaitali; Sayed, Javed; ‘Turf war: Dabur's all set to take on FMCGp biggies,’ The Economic Times, November 13, 2004. y 10 Repositioning Dabur met with eroding market share in the personal wash segment from 58.5% in January-March ’04 to 56.5% in July-September. The overall skincare market has also witnessed downturn between 2002-04.

QUESTIONS FOR DISCUSSION

1. Analyse the reasons that impeeled Dabur to refine its Ayurvedic image to that of a herbal FMCG company?

2. What were the action plans Dabur undertook as part of its restructuring? How did they help close the chinks in its marketing armour?

3. Dabur targeted sales of Rs 200 billion by 2006. Hence it needed to grow annually at a rate of 15-20 percent in years 2004, 2005 and 2006. Comment on the growth strategies adopted by Dabur?

D o N ot C o p y 11 Repositioning Dabur

EXHIBIT I

PRODUCTS OF DABUR IN 2004

Oil - Amla Hair Oil, Amla Lite Hair Oil, Vatika Hair Oil, Anmol Sarson Amla. HAIR Shampoo - Vatika Anti-Dandruff Shampoo, Vatika Henna Conditioning CARE Shampoo, Anmol Natural Shine Shampoo. Health Supplements – Dabur Chyawanprash, Glucose D. Baby Care - Dabur Lal Tail, Dabur Baby Olive Oil, Dabur Janma Ghunti. Digestives - Hajmola Mast Masala, Anardana, Hajmola, Hajmola candy, Hajmola HEALTH Candy Fun2, Pudin hara, Pudin hara G, Dabur Hingoli. CARE Natural Cures - Nature Care, Sat Isabgol, Shilajit, Ring Ring, Itch Care, Back- aid, Shankha Pushpi, Dabur Balm, Sarbyna Strong. Skin Care – Gulabari, Vatika Fairness Face Pack. ORAL Red Toothpaste, Binaca Toothbrush, Lal Dant Manjan. CARE FOODS Real, RealActiv, Honey, Hommade, Lemoneez, Capsico.

The pharmaceutical products of Dabur are now sold through a new company, Dabur Pharma Ltd. Dabur also has over 260 ayurvedic medicines for treating a range of ailments and body conditions. This range is handled by Dabur Ayurvedic Specialties Limited division, which contributed 7% of Dabur's total revenue in 2003-04.

Source: www.dabur.com

D o N ot C o p y 12 Repositioning Dabur

EXHIBIT II

PRODUCTS OF DABUR IN 2000

DIVISION PRODUCTS/BRANDS HAIR & SKIN CARE Dabur Amla Hair Oil, Dabur Special Hair Oil, Vatika Herbal Hair Oil, Vatika Herbal Shampoo, Gulabari, Dabur Lal Tail, Anmol Coconut Oil, Kewra Water. ORAL CARE Dabur Lal Dant Manjan, Binaca Tooth Brushes, Binaca Toothpaste. FOOD PRODUCTS Real Fruit Juices, Dabur Honey, Dabur Hommade Pastes, Nutra Salt, Lemoneez, Capsico Sauces, Le Bon Cheese, Le Bon Milky Jam Spread, Delicia Shreekhand. AYURVEDIC HEALTH Dabur Chyawanprash, Hajmola (Candy/Tablet), PRODUCTS Hingoli, Pudin Hara (Liquid/Pearls), Dabur Janam Ghunti, Sunova Spirulina, Sunova Bioslim, Restora, Madhuvani. AYURVEDIC DRUGS/MEDICINES Asav Arishtas (Lohasava, Drakshasava, Dashmularishta, Parthadyarishta and Ashokarishta), Ras Rasayanas, Chumas, Medicated Oils. PHARMACEUTICALS New Livfit, Ulgel, Honitus, Oncology Drugs (Intaxel, Docetaxel etc.), Bulk Oncology Drugs.

Source: ICFAI Center for Management Research

EXHIBIT III

SHAREHOLDING PATTERN FOR DABUR INDIA LTD.

Particulars September 2003 September 2004 Indian Promoters 78.34 78.19 MFs/UTI 1.85 1.10 Banks/ FIs D 7.00 5.61 FIIs 2.48 3.61 Public Corporate Bodieso 1.40 1.83 Indian Public 8.02 8.60 NRIs/OCBs 0.88 0.92 Others N 0.03 0.13 No. of shares 285749934 286259154 Source: Bombay Stock Exchange (BSE) o t C o p y 13 Repositioning Dabur

EXHIBIT IV

VISION, STRATGIC INTENT AND CORE VALUES OF DABUR VISION Dedicated to the health and well being of every household

STRATEGIC INTENT *We intend to significantly accelerate profitable growth. To do this, we will: *Focus on growing our core brands across categories, reaching out to new geographies, within and outside India, and improve operational efficiencies by leveraging technology *Be the preferred company to meet the health and personal grooming needs of our target consumers with safe, efficacious, natural solutions by synthesizing our deep knowledge of ayurveda and with modern science *Provide our consumers with innovative products within easy reach *Build a platform to enable Dabur to become a global ayurvedic leader *Be a professionally managed employer of choice, attracting, developing and retaining quality personnel *Be responsible citizens with a commitment to environmental protection *Provide superior returns, relative to our peer group, to our shareholders CORE VALUES Ownership: This is our company. We accept personal responsibility, and accountability to meet business needs. Passion For Winning: We all are leaders in our area of responsibility, with a deep commitment to deliver results. We are determined to be the best at doing what matters most. People Development: People are our most important asset. We add value through result driven training, and we encourage & reward excellence. Consumer Focus: We have superior understanding of consumer needs and develop products to fulfill them better. Team Work: We work together on the principle of mutual trust & transparency in a boundary-less organisation. We are intellectually honest in advocating proposals, including recognizing risks Innovation: Continuous innovation in products & processes is the basis of our success Integrity: We are committed to the achievement of business success with integrity. We are honest with consumers, with business partners and with each other. Source: www.dabur.com

D EXHIBIT V

SUMMARY OF FINANCIALSo FROM 1998-99 TO 2002-03 FOR DABUR (FMCG + PHARMA)

(Million Rs) N 1998-99 1999-2000 2000-01 2001-02 2002-03 Sales 9147.7 10425.9 11664.7 11631.9 12323.0 Earnings Before Depreciation, Interest & 976.5o 1277 1372.9 1204.5 1346.5 Taxes (EBDIT) Profit Before Tax 516.0 t 812.9 851.7 755.1 955.3 Profit After Tax 501.0 774.3C 779.2 644.4 851.0 EPS (in Rs) 1.76 2.72 2.73 2.26 2.98 DPS (in Rs) 0.50 1.00 1.00 0.50 1.40 Source: www.dabur.com o p y 14 Repositioning Dabur

EXHIBIT VI

FINANCIALS FOR DABUR FMCG FOR 2002-03 AND 2003-04

(Million Rs) 2002-03 2003-04 Sales 10485 11479.8 Earnings Before Depreciation, Interest & Taxes 1096.4 1360.9 (EBDIT) Profit Before Tax 799.9 1134.4 Profit After Tax 719.7 1012 EPS (Rs) 2.51 3.54 DPS (Rs) 2.00 Source: www.dabur.com

EXHIBIT VII

THE OLD AND NEW LOGO OF DABUR

Source: www.dabur.com D o N ot C o p y 15 Repositioning Dabur

EXHIBIT VIII

WHAT THE NEW LOGO STANDS FOR

The tree trunk The tree trunk which mirrors the form for three people with their arms raised is meant to convey exultation in achievement. The branches The multiple branches are meant to represent growth. The roots The rootedness of the tree is meant to imply stability. The leaves The abundant canopy suggests growth, vitality, rejuvenation and renewal; it can provide amply for those who seek its produce and shade. The tree is constantly renewing its leaf cover, which signifies endurance, power and longevity. Color The soft orange colour selected for the trunk suggests warmth and energy. The leaves are divided into two colours: a light green that implies a young leaf, and a darker green that represents an older and mature leaf. By juxtaposing these two colours in each leaf, the brand indicates that it blends the old and the new, and also offers a product that is suited for both the young and the elderly. Font The new font is an echo of the earlier font to preserve the company’s distinctive and established identity. But it is more contemporary. The tip of the “D” emulates the apex of a leaf thus infusing the alphabet with a form and flow that suggest the effect of a leaf. Dabur defined the gentle curve of “D” formed as an arc of trust, caring and support. Overall The well-proportioned image is meant to evoke harmony. Adapted from www.dabur.com

EXHIBIT IX

EARNINGS FOR DABUR FOR 2004-05 D Rs Million 2Q FY 04 3Q FY 04 4Q FY 04 1Q FY 05 2Q FY 05 Net Sales o 2554.7 3359.3 2879.3 2859.9 2895.5 % change (yoy) (56.4) (4.4) 13.3 15.6 13.3 Advertising and 317 540.4 343.4 417.7 338.3 Promotion N Total Expenditure 2,136.0 2,955.0 2,588.5 2,600.1 2,384.7 Operating Profit 418.7 o364.3 290.8 259.8 510.8 OPM % 16.4 10.8 10.1 9.1 17.6 PBT 373.6 331.0t 301.8 233.6 478.8 PBT% 14.6 9.9 10.5 8.2 16.5 PAT 336.5 298.1 C265.9 205.3 431.3 NPM% 13.2 8.9 9.2 7.2 14.9 % change (yoy) (19.5) 11.6 47.1o 84.1 28.2 Adapted from SSKI Report on Dabur, October 2004. p y 16 Repositioning Dabur

ADDITIONAL READINGS & REFERENCES:

1. Bansal, Shuchi, Joseph, Sandeep, Bhattacharjee, Pallavi, Rural Markets, Who is winning and how, Businessworld, October 11, 1999. 2. Competition forces Dabur to reposition brands, Business Standard, December 14, 2001. 3. Dabur Foods to hike ad spends for Real brand by 40%, Business Standard, January 14, 2002. 4. Accenture to pen Dabur’s sales reform, Business Standard, February 23, 2002. 5. Dabur lines up portfolio reallocation drive, Business Standard, February 26, 2002. 6. Dabur lines up sales blitz for Real Activ, Business Standard, March 28, 2002. 7. Dabur pours out Coolers in summer drink market, The Economic Times, May 26, 2004. 8. Dabur eyes 100% growth by '05-06, PTI, May 28, 2003. 9. Sehgal, Arshdeep, Dabur plans board recast, to split co into 2 divisions, The Economic Times, June 04, 2003. 10. Dabur merges FMCG divisions, The Economic Times, June 11, 2003. 11. Dabur India to re-enter skincare, Business Standard, June 14, 2002. 12. Dabur plans recast to boost profitability, Business Standard, June 15, 2002. 13. Dabur to rejig sales, distribution network, Business Standard, July 5, 2002. 14. Kelkar, Rajas, Dabur plans 3 new units, to undertake Rs 40-cr capex, The Economic Times, July 9, 2003. 15. Dabur Foods plans portfolio expansion, Business Standard, January 13, 2003. 16. Chakravarty, Chaitali, Dabur to rejig product portfolio, The Economic Times, July 7, 2003. 17. Vatika, Hajmola, Anmol & Real to be Dabur growth drivers, PTI, July 15, 2003. 18. Dabur draws up brand blueprint, PTI, July 18, 2003. 19. Dabur to buy UK firm Redrock in $5m deal, Business Standard, July 24, 2003. 20. Anand, Byas, Dabur to acquire UK-based Redrock, The Economic Times, July 24, 2003. 21. Jacob G, Anil, The Real Picture, Business Standard, June 24, 2003. 22. Chakravarty, Chaitali, Dabur puts Binaca brand on the block, The Economic Times, September 8, 2003. 23. Chakravarty, Chaitali, Dabur lines up manufacturing unit in Karachi, forms alliance, The Economic Times, September 29, 2003. 24. Arjun Singh, Jai, Juicing up the market, www.rediff.com, October 18, 2003. 25. Choudhury, Gaurav, No plan to enter soft-drinks market, says Khambatta, Tribune News Service, October 19, 2003. 26. Saxena, Neeraj, Sinha, Ashish, Now, Big B sells , www.economictimes.com; October 22, 2003. D 27. Krishnan S, Gina, Another revamp, Businessworld, February 2, 2004. 28. Kohli-Khandekar, Vanita, Ads in the Big picture, Businessworld, February 23, 2004. 29. Dabur to rope in Big B to tapo international markets, PTI, May 2, 2004. 30. Dabur Foods eyes Rs 500 crore turnover, Business Standard, May 11, 2004. 31. Leader Speak, www.indiainfoline.com, N May 12, 2004. 32. Sharma, Arti, Taking a big sip, Business Standard, May 15, 2004. 33. Dabur Foods launches Real Junior for kids below 6 years, www.indiantelevision.com, May 18, 2004. o 34. Dabur plans to stir up soup mart, Business Standard, May 29, 2004. 35. Dabur lines up new products to spur growth; tlaunches Coolers, www.domain-b.com, June 16, 2004. 36. Dabur launches new campaign to promote Real fruitC juice, The Economic Times, July 2, 2003. 37. Kaul, Pummy, Dabur’s National Launch on Slow Burner,o The Financial Express, July 06, 2004. 38. Mr & Mrs Sehwag to endorse Dabur products, PTI, July 13, 2004.p y 17 Repositioning Dabur

39. Dabur acquires Nigerian company African Consumer Care, PTI, July 24, 2004. 40. Dabur India net soars 84%, Business Standard, July 27, 2004. 41. Sharma, Arti, The fruits of success, Business Standard, July 31, 2004. 42. Bhattacharya, Sindhu J., Dabur to join shampoo price wars — To launch one-rupee sachet to drive volumes, The Hindu BusinessLine, Aug 11, 2004. 43. Dabur Foods eyes Rs 200 cr sales by 06-07, Business Standard, August 18, 2004. 44. Bhandari, Bhupesh, Vivek T. R, Dabur set for image makeover, new logo, Business Standard, August 31, 2004. 45. HC restrains Colgate on toothpowder TV ad, Business Standard, September 11, 2004. 46. Bhandari, Bhupesh, Radhakrishnan-Swami, Meenakshi, Dabur`s elixir, Business Standard, September 14, 2004. 47. Begg, Yusuf, Dabur Foods eyes institutions, Business Standard, September 22, 2004. 48. Branded food market on a roll, says survey, Business Standard, September 27, 2004. 49. Dabur Pharma enters NSE, BSE, Asian CERC, October 1, 2004. 50. Zachariah, Reeba, Datta, Kausik, Dabur to do away with umbrella brand plan; Business Standard; October 6, 2004. 51. Dabur India on an acquisition spree, Press Trust of India, October 27, 2004. 52. Dabur Q2 profit up 28%, Business Standard, October 28, 2004. 53. Vivek, T. R, Advertisements are back in the soap opera, Business Standard, October 30, 2004. 54. Chakravarty, Chaitali, Sayed Javed, Turf war: Dabur's all set to take on FMCG biggies, The Economic Times, November 13, 2004. 55. Ananthanarayan, Ravi, D'Silva Jeetha, Power Brands: It pays to stay with your core, ‘marginally,’ The Economic Times, November 15, 2004. 56. Bhattacharya, Sindhu, What Dabur does, The Hindu Business Line, December 2, 2004. 57. Malini Menon, http://www.exchange4media.com/e4m/interview/dialogue_detail.asp?id=181, December 3, 2004. 58. Bhatnagar, Mohini, FMCG sector set to revive, www.domain-b.com, January 7, 2005. 59. Dabur snaps up Balsara in Rs 143 cr deal, Business Standard, January 28, 2005. 60. Real Junior...Dabur Foods launches nutritious drink for kids below 6 years, http://www.indiainfoline.com/bize/laer.html, 2004. 61. Research Reports: IL&FS Investmart, August 2004, SSKI, October 2004. 62. Annual Reports of Dabur. D o N ot C o p y 18