From THE HINDU group of publications
Thursday, November 22, 2001


Extending Margo's soap saga

Sravanthi Challapalli

A brand with a hoary heritage, the herbal tag with neem as the major starrer, a one-year old variant on the road to popularity, German collaboration, some modernisation, talc, cream, lotion and face wash as line extensions - the Rs 75-crore Margo brand wants to go a long way. Henkel SPIC India Ltd, the company which owns the brand, acknowledges brand extensions and their success are no cakewalk but is upbeat. The reason? The 80-year old brand equity.

Last year, Henkel SPIC introduced a translucent version of Margo soap, which still had neem as the main ingredient but added glycerine for moisturisation. And to draw youth into its consumer profile. And its met with reasonable success, says Managing Director A. SatishKumar. Not only did it not take away from the existing consumer base for the original soap, it achieved its goal of attracting youth, that too from the North and the West, where the brand was not well-represented earlier. Margo and its variant now have an 8.5 per cent market share in the Rs 4,500-crore soap market and is claimed to have a growth of 5-6 per cent even as the market has declined by 10 per cent. The company found the confidence to launch its line extensions in this conquest, as well as from the brand history, but whether that will suffice to make them a success is another issue.

Satishkumar says that Henkel SPICs decision to invest in nurturing the brand, after acquiring it from Shaw Wallace two years ago, has paid rich dividends. The soap and its variant are selling 7,500 tonnes now as against 5,000 tonnes then. The brand is expected to contribute 20-25 per cent of Henkels turnover in 2002-03.

The companys strategy, besides hoping that history and heritage will work their magic on the new toiletries, is to advertise, price right and be selective and focused about where they launch these products. The talc has been launched in the South and in some pockets in the East; the moisturising lotion and all-purpose cream nationally, but only in the major towns and cities. The face wash is due for a launch early next year. SatishKumar says that the relevance the brand has to skincare, and the fact that the various brands in the cream and lotion category are based on similar concepts, and competitive pricing will differentiate herbal Margo from the rest.

While the 50 gm cream is priced at Rs 40, the lotion costs Rs 42 for 100 ml. Henkel SPIC has used technology from its German parent to ensure that they are rich but not greasy. Aloe vera has been used as the moisturising agent. According to Ranju Kumar Mohan, General Manager (Marketing - Cosmetics), the brand stands a good chance because there is no real national player in the herbal category. This is the first time in 80 years that the brand has been extended and while it is not really the right season to say how the offshoots are doing, the three-month-old talc seems to be doing okay.

Actually, SatishKumar admits they lost some time developing the talc and thus launched it a little later than summer, the right season, but that they are gearing up for a national launch next summer. The other products have been in the market only for a month.

However, independent observers are not so gung-ho about the extensions. An FMCG analyst, who does not wish to be identified, wonders whether the company will be able to leverage Margos brand equity to the extent it wishes. Margo is seen as an old brand which hasnt changed its image, and its customer is aging. It is important to grow the brand and get good market share, he says. He discounts the success of the glycerine variant (which, the company says contributes to 30-35 per cent of the brands volumes) as the natural, initial excitement over a new product. Another analyst says the extensions have good prospects so long as they dont take the form of more soaps. The creams are a good idea, they might work. Most FMCG majors are introducing herbal products, or highlighting the herbal element in them, be it composition or packaging. And the users mindset is such that she will not want to use any chemicals on her face, so it makes sense to leverage the Margo brand name, she says.

While she believes pricing has a role to play, the FMCG analyst does not. I dont know if theres a class of customers waiting for a herbal product at this price level. There is something for everybody already, he says, referring to other players in the category such as CavinKare, Biotique and Ponds. Also, new launches take time and money. In a recessionary period like now, when even big companies are reducing ad spends, trying to rationalise their portfolio and consolidating, how successful would Margo be, he questions. However, the company sets great store by the brand, as also its success with the re-engineering of its image. Says Ranju Kumar, The brand has become younger in age, with new packaging and milder fragrances, which are not so neem-intensive. Acceptability has improved. Another factor that seems to strengthen their belief in the extensions is that the ideas for them came from the consumers themselves. In a market where most brand extensions are known to disappear off the shelves quite rapidly, but not before diluting the main brands equity, it will be interesting to watch how the Margo brood fares.

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