Diaper Market in India

Diaper grocery in IndiaBirth stations pose declined in the developed world and that has become unfavorable for the table napkin manufacturers to expand their businesses. Internationally, birth rates in the developed nations conf role declined by 20% during the put up 30 years and argon now only half the global average.The global mart for diapers was worth $22.2 billion, a 2.9% increase Year on Year. only the major marts of Western Europe, the U.S. and Japan reported decline. As a result, companies like Procter Gamble and Kimberly Clark ar banking more on innovation to their rescue. This has been a major subscriber of success for PG in the one-time(prenominal) few years.There is sorely developed focus on developing country markets, which derives 40% of global diaper revenue. Markets such(prenominal)(prenominal) as Russia and China are providing posts with excellent opportunities for longer term offset.It is also remarkable to see the trend in the developed markets towa rds greener products as shown in the chart be economic crisisDiaper Market in Developing CountryThere is huge arrestth likely for diaper products in emerging markets such as China, Brazil and India, as these markets are still quite underdeveloped and in the nascent stage. While it has taken advanced Western economies some time to cook the environmental price of their development this is non the case for todays emerging nations. In this case even the global recession pull up stakes enable China to have more time to better make arrangements for considering more sustainable and greener options for its growth.Middle-class is at the forefront of environmental awareness as the environmental consequences of fast industrialization and urbanization in countries such as China and India are becoming change magnitudely apparentAlso in countries such as India, the Philippines and Malaysia, levels of consumer awareness regarding hygienics products are very still very low.Indian Diaper Ma rketIn 2009, manufacturers have been now more foc utilise on more categories such as legislateable diapers. With the change magnitude buying power of Indian consumers, companies are looking for options which are more convenient and safe to utilise for the children. Increase in awareness about hygiene is a big factor for thus development.Some of the major development last year is as followsProcter Gamble hygiene Health Care Ltd introduced Pampers Magic NickersKimberly-Clark pry Ltd introduced Huggies red-hot Born, a product specifically targeting the m separates of red-hot born babies.With increasing awareness regarding the advantages of using the use of disposable diapers all over cloth substitutes, Indian parents are now spending more on purchasing such products which in turn led to an increase in gross revenue value for the manufacturers. Convenience has been one of the driving factors in this change. Even in tier 2 towns and cities, parents are willing to spend money on disposable diapers to use when the tike is taken out of the home, for added convenience.Also as babies get older, some young mothers look to go back to work. This encouraged the use of diapers, as they are more convenient, and they do not use up to spend time dampening cloth nappies. Also, as babies become more active, and nappies are a more comfortable and hygienic alternative to cloth nappies. However currently the majority of the sales is restricted to customers in urban India. So the pe terminalration rate of disposable diapers has been increasing, as more young parents are haping it convenient to twitch from cloth nappies to disposable nappies.Sales of disposable pants remained negligible in India in 2009. Procter Gamble hygiene Health Care Ltd introduced Pampers Magic Nickers and Uni-Charm Corp entered India with its brand of Mamy Poko Pants. Disposable pants have seen an increase in activity from the leading(p) brands, but sales have still not become signifi hatf ult.The main factors that inhibit the growth of this category are as followsCultural factors Diapers are a relatively newly concept in India. Indian parents use Diaper only for the sake of convenience during travel.Price When launched, diapers were priced at around Rs. 15 per section which is high priced. The average prices in last few years have dropped to Rs 10 per piece but its still very costly for everyday usage. some other Trends Potty training in India is at around two to two and a half years average. With that taking place at such a young age, the use of diapers is even lower for Indian babies.Also with the easy availability of cheap domestic help in India, it is convenient for Indian mothers to wash and reuse cloth nappies.Some of the important facts and figures are shown as followsMarketing ObjectiveThe penetration of disposable diapers has been increasing, as parents are finding it suitable to switch from cloth nappies to disposable nappies. With the market offering a v ariety of products across several price ranges, use of disposable diapers is expected to grow.Today young mothers are more sensitive about hygiene and health. They will readily utilize disposable nappies from an earlier age. Also, legion(predicate) young working mothers will want to accustom their children to wearing disposable diapers, and thus will start using them early.The forecast of retail sales of Diapers shows strong growth figures, in two digits. And with more consumers modify from traditional cloth nappies to disposable diapers, the category is expected to burgeon in the coming years.Godrej Consumer Products Limiteds main brand under Tissues and Hygiene category, Snuggy Dry has witnessed several changes in ownership in the Indian market. The joint venture between Godrej Consumer Products limited and SCA Hygiene Products which manufactured and distributed Snuggy Dry dis cut acrossd. This led to SCA Hygienes exit from India.The brand Snuggy Dry, which was the third larges t disposable diapers brand in 2009, is now cosmos marketed and distributed by Godrej Consumer Products Ltd. Over the years, the diaper market in India has been dominated by existing players Kimberley Clark and Procter and Gamble as crapper been seen in the graph below.Godrej is moving strong in FMCG sector currently standing second to HUL and being fiercely competitive to HUL. Although Hindustan Unilever enjoys market leadership in several shares in India, it is slowly losing its ground to Godrej, which has relatively competitively priced products. Moreover, profit margins of Godrej products are signifi lowlifetly high than those of HULs. found on this background, the selling objective is to gather on the above mentioned conditions and increase the market cope of Snuggy Dry diapers from the current 8% level to 10% in short term and substantially continue gaining higher market share.5Cs Situation digestGodrej CompanyGodrej Consumer Products (GCPL) is deals in manufacturing, merchandise, and distributing fast moving consumer goods. The company offers various products such as soaps, toiletries, cosmetics, hair care, household care, stuff care and indulge care products. It also markets products under Cinthol, Fairglow, Godrej No 1, Nupur and Ezee brand names. The company primarily operates in India and some overseas market. It is headquartered in Mumbai, India.The company put down revenues of INR13,929.7 billion ($303.9 billion) in the financial year ended March 2009 (FY2009), an increase of 26.3% over FY2008. The companys operating profit was INR1,881.6 million ($41.1 million) in FY2009, a decrease of 4.8% compared to FY2008. Its net profit was INR1,732.5 million ($37.8 million) in FY2009, an increase of 8.8% over FY2008. (Source EuroMoniter)In Diaper plane section, Godrej Products Ltd offers Snuggy Dry. This has around 10% market share accounting for the third position in Indian Diaper market. Godrej Consumer Products Ltd regained share in 2009, as the joint venture between Godrej Sara Lee and SCA Hygiene (Godrej SCA Hygiene Ltd) was discontinued. The brand Snuggy Dry is now being marketed and distributed by Godrej Consumer Products Ltd exclusively.The company has five factories in India, at Baddi, Guwahati, Katha, Malanpur and Sikkim. Apart from Snuggy Dry, all the other products of GCPL are produced in-country. Snuggy Dry was part of the Godrej SCA Hygiene Ltd joint venture, which was imported into India, and by and by the discontinuation of the joint venture, the brand was distributed by GCPL.CompetitionHuggies (by Kimberly-Clark) is the leader in the Indian market with a value share if 60 % share.Pampers from Procter and Gamble Hygiene and Health Care Ltd. is at number 2 spot followed by Snuggy from Godrej Consumer products Ltd. Wipro Ltd and BellePremier Happy HygieneCare Pvt. Ltd. also have their own brands competing for the market share.Huggies and Pampers controlled 84% of the market in 2009 according to a Euro mon itor International report. These brands have invested heavily in advertising and hence have a dominating market share.Kimberly Clark launched a new product called Huggies New Born in 2009, which was diaper targeted towards new mothers. The product has been a moderate success as penetration of disposable diapers remains low in India, with mothers often using cloth nappies for young boys.New brand Mamy Poko Pants has been using extensive television advertising, with its adverts highlighting the comfort of the products and the ease with which they tail assembly be put on a child. In a market in which the leading players advertise a great deal by dint of television, these advertisements will help it to increase its brand presence.It can be said that the products compete against each other based on the price. Teddy and Wipro are considered as miserliness brands. Pampers, Huggies and Snuggy have price points in all trio price segments. Disposable pants have a more support price poin t deep down diapersPantaloon Retail India Ltd entered this category with the launch of its brand Caremate in 2009. former(a) private labels have not yet emerged in India.Diapers/Pants Retail Company Shares 2005-2009CustomersWith the increasing income levels in India, parents are spending more on purchasing disposable diapers instead of reusing cloth nappies at home. In addition, awareness is increasing finished the media about the different brands and the benefits of using disposable diapers over cloth versions, manufacturers saw an increase in value sales. Even in smaller towns and cities, parents are willing to spend money on disposable diapers to use when the baby is taken out of the home, for added convenience.This has make Indias nascent baby care market transforming into worlds fastest growing baby market. A vast population of population in age group 0-4 years is a boon to the market. Aggressive marketing strategies and consumer acceptance of branded premium baby care produ cts (especially in baby food and scrape care segments) will enable the industry to register a CAGR of more than 11% during 2010-2013.The major market players have used television based advertising to their full advantage and have raised the awareness of Baby care. With the increased awareness and increasing purchasing power, customers are fast shifting from cloth nappies to baby diapers. The Decision makers in this market are parents with mother being the dominant decision maker.The market has used extensive retail channels with super markets, traditional grocery stores etc. This use of extensive channels has also resulted in the increasing demand.The rapid development of modern retail infrastructure is luring consumers for convenient shopping experience and transforming into high retail spending. Baby care companies are optimally utilizing this trend and carrying out strong product positioning strategies to maximize their market returnsAccording to recent research, the Indian bab y care market has grown substantially over the past few years and caught the attention of international players. However, there is still a relatively large and untapped market in the rural sector. This market is evaluate to witness concrete market developments which will also give impetus to the baby care market.CollaboratorsMost diaper brands in India are imported and so is the case with Snuggy. The production for Snuggy is carried out by a Chinese manufacturer.BroadVision, Inc. announced that Godrej Group of India has successfully implemented two new sales portals for its business and consumer channels.The new portals, built using BroadVisions multi-channel sales portal and content solution, have streamlined and enhanced customer service for two Godrej Group subsidiaries-Godrej Industries Limited (GIL), which provides industrial supplies to businesses, and Godrej Consumer Products Limited, a manufacturer of consumer productsAccording to the companys analyst and investor meet repo rt, rural dispersal is essential for a sound growth. In 2009, reach in rural field of honors has increased by 40-50% in terms of small towns and villages. Rural now measures about quarter of GCPLs sales. It accounts for 45% of the growth. Going forward it is expected to be a continuous growth driver.ContextSocial/CulturalIn general, in India the diaper is met with resistance. And diapers are perceived as status symbols.One of the major concerns of diapers is rash it causes. Indians are not tolerant of rash and insist that the baby move around bare bottomed.TechnologyCompanies are heavily investing for bringing about innovations in this field. They are offering new products to boost consumer confidence and increase their market shares. Huggies Dry Diaper currently available in India is particularly designed for new users in new markets. The product employs high technology super absorbent materials (SAM) to deliver super dryness to the user which results in dry and healthy skin. SAM can absorb up to 100 times its weight. Also high leg cut design is one more innovation for hot climate from Kimberly- Clarke.It is a capital intensive industry and is associated with high costs. This is one of the major reasons why Godrej diapers are not manufactured in India but imported from China.SWOT Analysis(S)trengthsGodrej brand name is an asset, well known to Indian consumerLeveraging on the distribution channel by using Operation Big C.Cost benefit obtained by product import from china(W)eaknessesLack of marketing focus coupled with moderate success of Snuggy Happy Baby contest.Unavailability of RD facilities(O)pportunitiesStrong Market Growth expected at 16%Growing disposable income of Indian parents ( both parents working)Increasing hygiene and health awareness of preferring diapers over clothes.(T)hreatsPresence of many competitors in the marketNewer indigenous brand targeting the economic segment of the marketMarketing StrategiesThe below graph shows the number of new born babies born per inhabitants, though the number of new-born babies are decreasing but still the market is huge. Diaper is competing with the traditional way of using Clothes which has the advantages of reuse, inexpensive and to a certain goal healthier for the babies. Healthier in the sense, diapers used to cause rashes while clothes didnt. Diapers have the advantage of convenience and cleanliness.In order to increase the market share for Godrej diapers we intend to implement a progressive marketing strategy. In terms of marketing we intend that our name and products are marketed on an extensive basis to retard that customers are aware of our existence. In price, we intend to offer reasonable and competitive prices in comparison to other competitors and we need to be able to sustain that. sectionalisation ProfilesDividing a market in to distinct groups of buyers with different needs, characteristics, or behaviour who might require separate product or marketing mixes.We can seg ment the market for the diaper market based on the disposable income of the parents. Regular use of disposable diapers remains more restricted to parents in urban India. Based on the stage of the new-born baby , the number of diaper to be used per month can be found Godrej should launch the diaper in three segments Premature when the baby is less than 6 months , New born when the baby is less than 2 year and Mini pack when the baby is 2-4 year.We can segment the market based on the Tier-1, Tier-2 cities. The disposable income of the parents has been increasing not just in Metro cities but also in tier-1 and tier-2 cities as well.But we find that number of working mother is less in these cities when compared to metropolitan cities. So the diaper usage will be less when compared to metropolitan cities. So we need to use a elevate marketing strategy for this segment of population without altering the pricing mix.Target SegmentDemographic DistributionAGE GROUPSPERSONSMALESFEMALES6 year s and Below163,819,61484,999,20378,820,411rustic-URBAN POPULATION DISTRIBUTIONPOPULATIONPERCENTAGERURAL742,490,63972.2URBAN286,119,68927.8Percentage of Children below 6yrs to total rural/urban populationRURALURBANNumber of children(0-6 yrs)117,950,12245869491Percentage of Population15.816The target market will obviously be mothers to be and current mothers. Indians are not used to this product. This category is concentrated on urban market. The Indian mother is a cost-conscious woman and would like to recycle most of the products used for her household. The same applies to the products used for her baby too.Moreover, large population base in 0-4 years and parents increasing preference to spend more on baby products will drive the market to new horizons in near future.Apart from penetrating deep into urban market, rural market will also provide growth opportunities to companies.Indian demographic distribution shows that 72 percent of the population live in rural areas while the rest 28 percent live in urban or semi-urban areas. discover of the total population mix both in rural and urban areas approximately 15 -16% population is below 6 years which form the potential market share for the diaper market. With the average purchasing power of the Indian population increasing and the with increased hygiene awareness the rural market is the market of the future.When the purchasing power parity reaches threshold, India will be the largest customer of diapers within the next 15 years which and is expected to explode in next 3 to 5 years. It has been found that with the present birth rate 24 million babies are born in India every year. If we typically calculate 25% of these infants in the period birth and 24 months use at least 28 diapers a week, theoretically the available market is 8.7 billion pieces per year. It is estimated that the diaper market would grow at a rate of around 5-10%.This proposed market segmentation will help building strong position in specialized diaper market segments. It will allows Godrej to focus on target customer specific needs. It will help them to understand the customer need and make improvement in marketing mix for each segment. It will help Godrej to compete with Huggies and Pamper brand diapers.The TV and print media can reach the diaper buyers. These two media forms the potential to cook the brand awareness among the buyers through various advertisements and promotional campaigns.PositioningThe Godrej diaper should be positioned as a value-for-money brand, one thatReasonably pricedSoftnessEase of useComfortable, good fitManufactured with bacteria resistant technology, with clean and highly absorbent cotton lapEnvironment friendlyNo irritation to the skinQuicker AbsorptionSuper Absorbent core keeping the baby dry for long hoursIt should be positioned as a product which is a itty-bitty package of joyMarketing MixProductDesignDisposable diaper is made of an absorbent pad sandwiched between two sheets of theoret ical account. The diapers are made by a multi-step process, viz.The absorbent pad is made and attached to a permeable top sheet and impermeable bottom sheetThe other accessories are then sealed together by application of heat or ultrasonic vibrations.FeaturesThe function of the pad is to absorb and retain body fluids, and the non-woven fabric gives the diaper a comfortable shape and prevents leakage. The main features of diapers would includeAbsorb body fluid.Retain body fluid inside the absorbent core. confiscate wetness from the babys skin.Isolate other excretion from babys environment (clothes, bed, etc).VarietiesThe following major varieties of diapers and tissue hygiene products are predominantly present in the Indian marketRegular diapersNew born nappiesDisposable pantsAdult diapersJunior diapersGodrej primarily focuses on regular diapers, junior diapers and new born nappies. The company markets a narrow portfolio of products within retail tissue and hygiene. It has only two b rands, Snuggy Dry and Protekt, but there are some variations in terms of fragrances under the Protekt brand umbrella.Most of the diaper brands continue to be imported, including Snuggy. Godrej is currently outsourcing its diapers from a Chinese company and will continue to do so until the piles pick up.PriceGodrej has positioned its brands Snuggy Dry and Protekt in the regular price segment in the market. A regular Godrej diaper pack of 6 costs Rs. 50. Currently, the Snuggy brand of diapers has a retail price of Rs 85 for a pack of 10. Smaller pack sizes have also been introduced and there are more product innovations being considered within the diaper category in the area of nappy pads much along the same lines of its competitor Huggies from Kimberly Clark, which has also introduced nappy pads. However, the current prices are a result of 2% price hike in March 2010, by Godrej.In the retail tissue and hygiene market in India, Godrej diapers held just above 2% value share and were ranked 6 in 2009. Within diapers/pants, the company held a share of 8%, and was in third position after Procter Gamble Hygiene Health Care Ltd and Kimberly-Clark Lever Ltd.PromotionBeing the first brand of diapers in the country, Snuggy enjoys high-brand loyalty as one of the three leading players in the Indian baby diaper market. Godrej benefits from the brand loyalty which Snuggy commands in the consumers mind.The following table shows the ranking of nappies and hygiene products in the sales of Godrej in 2009.AdvertisingDiaper ads typically are earnest, fawning over babies and remaining steadfastly euphemistic about function, typically pouring blue liquid into diapers to demonstrate absorbency.The major two brands focus on heavy marketing and advertisement in mass media and television. This has led them to capture around 90% of the market share.A commercial titled SNUGGY HAPPY BABY CONTEST was through with(p) by Madison Media advertising agency for GODREJ diapers. The campaign was moderately successful and helped Godrej to keep its 10% market share.PlaceThe company has national coverage through wide marketing and distribution channels. Supermarkets and malls, especially large(p) BAZAR and Reliance Fresh have considerable self coverage of Godrej Diapers, though majority of the hygiene shelf space is still taken up by the two major players.ChannelsOTC Sales Godrej intends to push various OTC (over-the-counter) products and brands and the primordial inclusion in this category is Snuggy diapers. It feels that coupled with a consumer pull strategy through the marketing campaign SNUGGY HAPPY BABY CONTEST, this aggressive dealer push strategy will help it to gain sales.Operation BIG C Godrej looks at revamping distribution network and re-staging of brands. As a part of Operation BIG C, it intends to use the Chemist network in the country as a retail outlet for Snuggy diapers. The chemist margin for Godrej Diaper sales has consequently been kept higher. Follo wing the success of Operation B, which involved the saloons of the country for Godrej Beauty product outlets, Godrej hopes to achieve as high as 20% market share through Operation BIG C.Financial ProjectionsThe baby diaper market in India is fairly underdeveloped and is approximately Rs 4479.8 million.Source Official statistics, Euromonitor International estimates, condescension associations, craftiness press, company research etc.The overall growth of the market is projected to be around 15% per annum.Source Official statistics, Euromonitor International estimates, trade associations, trade press, company research etc.The current share of Godrej diapers under the brand name of Snuggy diaper is approx 8% of the overall share. That means the market share of Snuggy diaper is approximately Rs 371 million.Source Official statistics, Euromonitor International estimates, trade associations, trade press, company research etc.Diapers/Pants Retail Company Shares 2005-2009Financial projecti ons of Snuggy diaper marketing 7.5 million units of diaper at Rs 6 each will achieve the marketing objective of godrej Snuggy diaper. To achieve targeted revenue, Godrej diaper needs to generate revenue of INR 126 million (as given in above table, point 15). With the potential price and sale of the diapers in a quarter Godrej can expect to generate revenue of Rs cxxxv million (point 9 mentioned in given table above).As per the financial projections annual revenue of Snuggy diaper is Rs 371 million in 2009 which will grow to approx Rs 504 million in 2010 which comes to around 35 % growth in revenue.Budget Analysis and ImplementationIn view with the financial projections, please find the below work out analysisParticularsCostCommentsGross Profit1.2 INR per diaperProfit from sale of one diaperQuarterly sales targets23 MillionQuarterly sales expectedQuarterly profit27 Million INROverall profitBudget AllocationAdvertisement10 million INRBudget allocation from advertisement and awareness spreadingCollaborators margin7 Million INRRetailers need to be given additional margins to promote Snuggy DiaperImplementationAs the sales volume starts increasing, Godrej can open up the manufacturing unit at one of its already existing factory unit locations. Below is the approximate cost of building up the net manufacturing unit.ParticularsCost (INR in crore)CommentsLand Required(1200 sq mt)0.6Rs 5000 per sq/mtBuilding0.5Rs 5000 per sq/mtTotal Plant and Machinery for diapers3.5Industry averageInstallation of Electricity0.015130 KVA transformerOther preliminary expenses0.05Total Expenditure5approximatelyThe brand Snuggy is distributed by GCPL and currently not manufactured locally. The company is well positioned in diapers/pants in India, which is seeing an increase due to more Indian parents using diapers for their babies. Experts believe that since Snuggy is imported into India after the discontinuation of the joint venture with SCA Hygiene Ltd, there is a strong case to save c osts by manufacturing the product locally.Available in pack sizes of 2s, 5s and 10s, for all age groups including new born, standard and junior, the brand can be affordably priced alongside mainstream brands, and supported by aggressive advertising.GCPL requires not just building distribution and trade relations in the fragmented retail landscape, but also investment in terms of advertising and promotions. The revenue model will be on the lines of Operation Big B, with chemist shops being offered higher margins.