Do Not Copy or Post RIN DETERGENT: TO POSITION OR REPOSITION

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RIN DETERGENT: TO POSITION OR REPOSITION CASE: M-313A DATE: 02/07/08 In early January 1989, Irfan Mustafa, General Manager, Personal Products and Market Research, Lever Brothers Pakistan Limited, was

1 RIN DETERGENT: TO POSITION OR REPOSITION CASE: M-313A DATE: 02/07/08 In early January 1989, Irfan Mustafa, General Manager, Personal Products and Market Research, Lever Brothers Pakistan Limited, was wondering what action to take regarding the marketing of the laundry detergent bar RIN, which had been introduced to the Pakistani market in April The product was specially formulated and promoted as a fabric washer. Mr. Mustafa felt the sales volumes for RIN had reached reasonably satisfactory levels in However, a recent survey confirmed his suspicion that RIN was primarily being used for dish washing. COMPANY Lever Brothers Pakistan Limited (Levers), a subsidiary of Lever Brothers International, produced and marketed a variety of consumer products in Pakistan. The company s diverse product line consisted of items such as shampoos, skin and shaving creams, edible oils, margarine, toilet soaps, scourers, and laundry detergents in powder and solid bar forms. In 1988, Levers had a profit before tax of Rs 277 million on sales of Rs 3.65 billion. 1 MARKET In 1988, the total fabric wash sales of 263,050 tonnes in Pakistan consisted of 247,000 tonnes of laundry soap, 14,500 tonnes of nonsoap detergent (NSD) powders, and 1550 tonnes of NSD bars. 2 The laundry soap, NSD detergent, and NSD bar markets had grown by 5 percent, 12 percent, and 29 percent respectively, as compared to Laundry soap retailed for Rs 10 to Rs 15 per kilogram (kg), whereas NSD detergent powders had a wider price range, retailing between Rs 20 to Rs 48 per kg. RIN was the only NSD bar in the market, with the standard 125 grams size selling for Rs 3.25 in Lever had no entry in the laundry soap segment, but its two brands of NSD powders Surf and Sunlight had captured 50 percent of the NSD powder market. 1 US $1=Rs in tonne = 1000 kg. Wasim Azhar, Lecturer in Marketing, prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. The case was originally written in 1989, then updated and published in Copyright 2006 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. To order copies or request permission to reproduce materials, the Case Writing Office at: cwo@gsb.stanford.edu or write: Case Writing Office, Stanford Graduate School of Business, 518 Memorial Way, Stanford University, Stanford, CA No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means electronic, mechanical, photocopying, recording, or otherwise without the permission of the Stanford Graduate School of Business.

2 RIN Detergent: To Position or Reposition M-313 p. 2 Total dishwash sales in the country were 60,000 tonnes in These sales were divided primarily between hard soaps (88 percent) and bars (12 percent). Liquid dishwash sales amounted to only 160 tonnes. Hard soaps for dishwashing retailed between Rs 20 and Rs 40 per kg, with sales growing at an annual rate of 5 percent. Bars for dishwashing retailed between Rs 25 and Rs 40 per kg, with sales growing at an annual rate of 3 percent. Levers did not have any formal product entry in the dishwashing marketing since late Levers had introduced Sunlight liquid dishwash in the main cities of Pakistan in early However, the brand could not establish itself and was discontinued in late 1987, after failing to achieve sales of more than 20 tonnes a year. As of 1989, ZIP dishwashing liquid sold by a competitor had sales of around 100 tonnes a year. ZIP was marketed in a 600 ml bottle at a retail price of Rs 23. RIN RIN was a solid, blue NSD bar that Levers introduced in Pakistan in Mr. Mustafa described the product as follows: Rin has superior cleaning efficiency; it gives abundant and instant lather in all water condition and prevents redeposition of dirt on clothes because it contains active detergent and phosphates. RIN also exudes a pleasant fragrance during wash, and its fluorescence imparts brightness to clothes. When it was introduced in April 1984, RIN was priced to sell at retail for Rs 2.95 per pack size of 130 grams. An advertising and promotion budget of Rs 5.7 million supported the introduction of the product in the market (see Exhibit 1). Media advertising showed RIN being introduced from the heavens by thunder and lightning bolts. The lightning was intended to emphasize the brightness attribute of RIN. The key phrase used in the commercial was A little amount of RIN washes a large lot of clothes. For the first three years, sales of RIN were disappointing, never crossing 700 tonnes per year. In March 1985, the price for the 130 gram packing was raised to Rs Several consumer promotion schemes were used for RIN but, according to Mustafa, none of them was successful. A Rs 0.50 price-off campaign from August to December 1984, raised sales by only 10 percent against an expected 50 percent increase. From January to March 1985, a discount of Rs 1.00 was offered to consumers on the purchase of two RIN bars on presentation of a newspaper coupon. The retailer was required to retain the wrappers and give unwrapped tablets to the customers availing the offer. The retailer had to submit the wrappers to Levers as proof of the coupon sales in order to be reimbursed. The promotion was advertised in all the leading Urdu and English daily newspapers. Very few coupons were redeemed. A Rs 0.70 price-off campaign from April to July 1985 was expected to increase sales by 50 percent. However, again only a 10 percent increase in sales accrued. No more consumer promotion schemes for RIN had been used since However, some of Mr. Mustafa s subordinates had suggested introducing different consumer promotion schemes in Levers salespersons delivered free samples of RIN to homes in major cities, and demonstrated the washing properties of the bar at women s association meetings, girl colleges, Juma

3 RIN Detergent: To Position or Reposition M-313 p. 3 Bazars, 3 and other special gatherings of women. Leaflets explaining RIN s superiority over soaps were distributed at these congregations. In addition, promotional shows were arranged in which prancing horses and decorated elephants were used to promote RIN. In June 1986, RIN s package size was reduced to 125 grams, and a new 250 grams size was also introduced. The 130 grams size was discontinued. The 125 grams size sold at retail for Rs 2.50 whereas the 250 grams bar sold for Rs 4.75 (see Exhibit 2 for RIN price-weight chronology). Production efficiencies reduced the variable cost of RIN by Rs 1 per kg. Promotional shows and demonstrations were discontinued, and future promotional efforts concentrated on media advertising and trade discounts. A new media communication campaign targeted against laundry soaps was launched in which a well known middle-aged movie star endorsed RIN. Mr. Mustafa felt that the old advertising theme confused consumers as they linked thunder and lightning to rain, and clothes could not be washed outdoors in rainy weather. The new advertising copy had a comparative theme that directly attacked laundry soaps. In the new theme, the movie star, who had a matronly image, endorsed RIN as being a superior fabric washing product as it lathered more profusely and gave a cleaner, brighter and more economical wash than soaps. In addition to the key phrase used in previous commercials, the movie star asserted that you get much more out of RIN than you pay for. The relaunch of RIN was successful, and sales crossed the 1000 tonnes mark in 1987 (see Exhibit 3 for targeted and actual sales volumes). The 1987 sales volume was still well short of the 5000 tonnes production capacity of the RIN plant. The retail prices were raised to Rs 2.80 for the 125 gram pack and Rs 5.30 for the 250 gram pack in April In August 1988, the prices were further raised to Rs 3.25 and Rs 6 for the 125 gram and 250 gram pack respectively. Exhibit 4 shows the proportions of RIN sales from the two pack sizes. Since RIN was launched, trade promotion for the product was limited to the offer of one free bar for every dozen bars ordered. These trade promotions lasted for 2 to 3 weeks each and were offered two to three times a year. The volume of retailer orders for RIN during these promotions was 40 to 60 percent more than orders during regular price periods. Leaflets explaining the superior fabric wash properties of RIN were given to the distributors and retailers by Levers salesforce. In a few cities, salespersons organized trade meetings to promote the product. RIN was distributed through 315 distributors to 60,000 retail outlets in the country. This represented almost 100 percent coverage in retail outlets selling detergents. When RIN was launched in 1984, the distributors received a margin of 2.91 percent on the retail selling price. The margin was increased to 3.30 percent in January Distributors could also claim reimbursement of traveling expenses up to 0.20 percent of the retail value of goods ordered. The retailer margin had remained at 7.4 percent of the retail price since RIN was introduced to the market. THE COMPANY S DILEMMA In September 1988, Mr. Mustafa asked the Domestic Research Bureau (DRB) of Levers to conduct a consumer survey to ascertain consumer perception and usage of RIN. The survey cost Rs 50,000 and was conducted in 12 sample cities and towns in Pakistan using questionnaires 3 Juma Bazars were weekly congregations of merchants where products were offered at discount prices to consumers.

4 RIN Detergent: To Position or Reposition M-313 p. 4 having the format shown in Exhibit 5. The number of usable completed questionnaires analyzed was 4,328. Half of these respondents were on DRB s regular Consumer Panel. Mr. Mustafa received the survey results in January Only 15 percent of the respondents surveyed were using RIN solely for fabric washing as compared to 65 percent that were using it only for dish washing. The rest of the respondents were using RIN for both fabric and dish washing. These results confirmed his suspicion that RIN was being used primarily for dishwashing despite the communications campaign and package inscription clearly promoting its use for washing fabrics. DRB estimated that the sales of RIN were divided in roughly the same proportion as the distribution of survey responses, and hence about 75 to 80 percent of RIN sales were for dishwashing. Mr. Mustafa felt that the blue color of the soap created this confusion as consumers associated this color with dishwashing bars. The very first dishwashing bar introduced in Pakistan was blue in color, and all the current ones on the market were bluish in color. Even the packaging of RIN was dark blue with red and white inscriptions. Levers salespersons informed Mr. Mustafa that retailers shelved RIN with wrapped personal soaps or completely separate, rather than in the laundry soap section where most of the soaps were unwrapped and yellow or white in color. Hindustani Levers in India had been successfully marketing RIN as a fabric washing bar for the last eight years and Levers Pakistan had positioned it similarly under the assumption that customers and market structures were similar. However, in India a popular fabric washer was blue in color and there was no other blue dishwashing bar. The R&D department had informed Mr. Mustafa that elimination of the special fabric wash ingredients in RIN would reduce its total variable cost by 33 percent without affecting its dishwashing performance. Exhibit 6 provides the 1988 income statement for RIN. Mr. Mustafa wanted to identify and evaluate the various alternatives available to him in order to decide what action to take regarding the marketing plan for RIN.

5 RIN Detergent: To Position or Reposition M-313 p. 5 Exhibit 1 RIN Advertising Budget Year Total Advertising Budget Rs (000) , , , , ,700 Budget Allocation Television 70 percent Print 20 percent Other 10 percent Exhibit 2 RIN Price/Weight History Weight 130 g 125 g 250 g 1984 April Rs 2.95 August January 2.95 March 3.15 April July June Discontinued Rs 2.50 Rs April Rs 2.80 Rs January Rs 3.00 Rs 5.65 August Rs 3.25 Rs Operated as a Rs 0.50 price-off consumer promotion. 5 Operated as a Rs 0.70 price-off consumer promotion.

6 RIN Detergent: To Position or Reposition M-313 p. 6 Exhibit 3 RIN Sales Volume Year Targeted Sales Volume (Tonnes) Actual Sales Volume (Tonnes) , , , ,600 1, ,300 1,550 Exhibit 4 RIN Packwise Sales Breakdown Year Standard Size 6 (%) Large Size 7 (%) Standard Size Tablet 130g till June 1986; 125g from June 1986 onwards. 7 Large Size Tablet 250g introduced June The percentages are in terms of packs sold (and not in terms of Rupee Sales). For example, in 1987 the number of standard size packs sold was three times the number of large size packs sold.

7 RIN Detergent: To Position or Reposition M-313 p. 7 Q. 1 Is RIN being used in your household? Exhibit 5 RIN Study on the Use of RIN Yes = 1 (verify and continue) No = 2 (close interview) Q. 2 For what purpose is RIN being used in your household? For fabric wash only = 1 For dish wash only = 2 For both fabric and dish wash = 3 Other (specify details) = 4

8 RIN Detergent: To Position or Reposition M-313 p. 8 Exhibit 6 RIN 1988 Income Statement Net Proceeds from Sales (NPS) 9 31,070 (Rs 000) Raw Material and Direct Labor Cost 19,040 Advertising Cost 2,464 Selling and Transportation Cost 896 Fixed Cost 10 (20% of NPS) 6,214 Profit (before income tax) 2,456 28,614 9 NPS was calculated by subtracting excise and octroi taxes and costs of consumer and trade promotion schemes (in terms of forgone revenue) from the manufacturer selling price. In 1988, excise and octroi taxes were 5% of the retail selling price. 10 Fixed costs were apportioned as 20% of NPS, and included factory overhead and machinery depreciation.

ROAD MARKING MATERIAL

Profile No.: 16 NIC Code: ROAD MARKING MATERIAL 1. INTRODUCTION Road marking materials are substitute for conventional oil paints used for marking on the roads such as dividers, zebra marking, bumps, etc.