CASE STUDY RIN IN PAKISTAN
Submitted by Ruchika Sinha (179278001) Ronak Kamdar (179278002) Reila Chakraborty (179278003) Kshitij (179278069) Parag Zade (17928074) Sanya Takhtani (179278080)
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1. Evaluate Lever’s marketing planning and implementation regarding RIN from 1984 through 1988. What would you have done? RIN entered in the market in 1984 in Pakistan as the only NSD bar in the market. It was solid blue NSD bar introduce in market in 1984. Media advertised it as thundering and lighting bolt. Sales of RIN for the first 3 years never crossed 700 ton. Its sales were not as expected and did not follow the pattern that was observed in India. The current situation insights were obtained by the analysis of market mix - Product, Price, Place and Promotion. Product: The product was introduced as a NSD bar of weight 130gms initially. Since all the dishwashing bars existing in the market in Pakistan were blue in colour, the colour blue was mistaken to be a dishwashing bar. This was done similar to the blue RIN soap in India launched by Hindustan Unilever which was having considerable good response as NSD bar. Lever applied similar strategy considering that the cultures of both the countries are similar. The major change brought was introduction of smaller 125gms and a larger 250gms bar on replacement of the 130gms size which increased the number of SKUs for the company, this also reduced the fixed cost by ensuring its spread over a larger quantity of soap. This also ensured that RIN cut costs and could advertise using a celebrity directly highlighted the RIN’s better features as laundry soaps. This was encouraged by the consumers and there was rise of consumption of 250g bars. The growth rate of NSD bar segment is 29% in 1988. Price:
Sales of RIN BAR 2000 1500 1000 500 0 1984
1985 Target Sales volume
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1986
1987
Actual Sales Volume
1988
There were changes made in the price. The price has gone up possibly due to rise in cost of raw materials. There were large discounts as an a ttempt to attract the customers by improving the Customer Perceived Value. When it was realized that discounts were not working, it was stopped. From the above-mentioned graph, it is reflected that the target sales volume was higher than the actual sales for first four years. This is majorly because of the wrong positioning of the RIN. Later in 1988, after improvement in promotion strategy the actual sales improved compared to targeted sales.
Place (Distribution): The distribution strategy used were trade meetings, 100% coverage in retail outlets – 315 distributors to 60,000 retail outlets. Initially, RIN was not trying all out to get new distributors and retailers, the retailers size was large but the retailers did not have enough incentive to promote the brand, later giving good incentive for distributors like increase in margin from 2.91% to 3.33%. A) Current Scenario Current Retail Price Retailer Margin Retailer Cost Price Wholesaler Margin Wholesaler Cost Price Manufacturer Selling Price Octroi and Excise tax
Rs 26.00 /kg 2.08 (8% of Retail Price) Rs 23.92 1.17 (4.5% of Retailer Price) Rs 22.75 Rs 20.05 Rs 2.60 (10% of Retail Price, 11.4% of MSP)
B) If 33% content is removed, the Variable cost will decrease and profitability will increase NPS Total Valuable Cost (TVC) Margin Extra Margin Available
Promotion:
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Rs 20.05 Rs 14.45 (72%) Rs. 10.37 / kg (52%) Rs 4.77/kg OR Rs 4,770 / tonne (14.45 - 9.68)
Expensive and flashy advertisements confused people about the usage of the product and delivered wrong message to the customers. They were not able to relate lightning and thunder with laundry detergents. Funds were improperly utilized and should have been diverted to other forms of advertisements like media advertisements and bulk discounts. Thus, we need proper forms of advertisements that deliver correct message in correct form. The reasons behind failure of the product were improper positioning and advertisements. Also, lack of market research and ability to have emotional connect with customers were missing despite high quality and features of product. Focus was on demonstrations instead of digital advertisements. Certain methodologies that could have been adopted are as follows: · Conducting proper market research and survey. This will help in identifying desirable characteristics and target groups which will help in proper positioning of the products. · Designing proper advertisements will help to position the product well. Advertisements like thunder and lightning don’t associate well with fabrics, and hence should be avoided. This will establish emotional connect with brand. · Also, funds should be effectively managed by investing in digital media advertisements, trade discounts and surveys rather than demonstrations and related expenses. · Much more optimized and effective advertisements and awareness campaigns should be created to make people aware of the difference and harmful effects of negligent behaviour. 2. Identify and evaluate the alternatives available to Mr. Mustafa. What would you do? Why? The different alternatives available to Mr. Mustafa are mentioned below: 1. Discontinue Rin as a NSD bar and relaunch it as a dishwashing bar This strategy can be the easy way out to continue without much extra expense as strategy can help Mr. Mustafa with the problem of the positioning of the product. Launching it as a dishwashing bar can also lead to cost savings by eliminating of the special fabric wash ingredients in RIN would reduce its total variable cost by 33% without affecting its dishwashing performance. The company would also save on the expense of creating the brand perception as majority of the market already believed it to be an amazing dishwashing bar but the customers who used Rin as a detergent would be left confused and would lead to bad mouth-to-mouth publicity as well as loss of those customers. 2. Relaunch Rin This strategy would involve many changes in the product, the way it is marketed and the way it is placed in the market place. Firstly, the colour of the bar must be changed so that the consumers do not perceive it to be a dishwashing bar. pg. 4
Secondly, the packaging must also be changed so that there is no resemblance with any existing dishwashing soaps in the market. Thirdly, an advertising campaign must be introduced such that it showcases the product attributes describing it as a detergent rather than a dishwashing bar. This strategy would involve major changes in the production of Rin and it would also be a long-term project as it would require to change the existing mindset of its customers. 3. Launch an Awareness Campaign An awareness campaign can be launched in selected places where the product is mainly being used as a dishwashing bar. The campaign would not only involve the end consumers but would also involve educating the retailers so that they can place the product properly in the store as well as help the customer while they are shopping. The campaign can include distribution of small SKUs of the product along with demonstration in public places. This strategy would be time consuming and would require a lot of manpower in the field. 4. Launch Rin detergent and Rin dishwashing bar The company can launch a Rin dishwashing bar similar to the current product and change the Rin detergent bar in certain aspects such as colour and packaging as described above. This way the company would not be losing on the customers that used Rin for dishwashing and it would also encourage these customers to try Rin deteregent as they already trust the brand. The production facility can be shared as only elimination of one ingredient from the existing product can help in cost reduction and not af fect the dishwashing quality of Rin. Both the products can share the brand name but the packaging and promotion of both the products can be done very differently and the promotion must be focused specifically on the product usage. After reviewing all the alternatives the fourth alternative of launching Rin detergent and Rin dishwashing bar both seems to be the best one because this alternative can attract most customers without loss of any existing customers. This alternative is also economical compared to other options because it saves on the production facility and customers already trust the brand for one product which can be leveraged to encourage them to buy the detergent.
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