Harvard Case - Marico Bangladesh: Meeting the Value-Added Hair Oil (VAHO) Challenge
"Marico Bangladesh: Meeting the Value-Added Hair Oil (VAHO) Challenge" Harvard business case study is written by Seshan Ramaswami, S.N. Venkat, CW Chan. It deals with the challenges in the field of Marketing. The case study is 21 page(s) long and it was first published on : Sep 22, 2019
At Fern Fort University, we recommend that Marico Bangladesh implement a comprehensive strategy focusing on product innovation, targeted marketing, and strategic partnerships to capture the growing VAHO market in Bangladesh. This strategy will leverage Marico's existing brand equity, tap into the evolving consumer preferences, and address the competitive landscape.
2. Background
Marico Bangladesh, a subsidiary of the Indian FMCG giant Marico Limited, faces a significant challenge in the burgeoning Value-Added Hair Oil (VAHO) market. While Marico enjoys a strong presence in the traditional hair oil segment with brands like Parachute, the VAHO segment presents a unique opportunity for growth. This segment is characterized by consumers seeking hair oils enriched with additional benefits like anti-dandruff, hair growth, or hair fall control. The case study highlights the increasing demand for VAHO products, driven by rising disposable incomes, growing awareness of hair care, and a preference for natural ingredients.
The key protagonists in this case study are:
- Marico Bangladesh: The company seeking to expand its market share in the VAHO segment.
- Consumers: The target audience with evolving needs and preferences for hair care solutions.
- Competitors: Other FMCG companies already established in the VAHO market.
3. Analysis of the Case Study
Marketing & Consumer Behavior Analysis:
- Market Segmentation: The VAHO market can be segmented based on age, income, hair type, and specific hair concerns (e.g., dandruff, hair fall).
- Target Market Selection: Marico should focus on the young, urban, and increasingly health-conscious consumers who are willing to pay a premium for VAHO products.
- Consumer Behavior Analysis: Consumers are seeking natural ingredients, visible results, and value for money. They are also influenced by social media and online reviews.
Competitive Analysis:
- Direct Competitors: Marico faces strong competition from established players like Dabur, Unilever, and local brands offering a variety of VAHO products.
- Competitive Advantage: Marico can leverage its existing brand equity, strong distribution network, and understanding of the Bangladeshi market to gain a competitive edge.
Product Lifecycle Management:
- Product Innovation: Marico needs to develop innovative VAHO products that cater to specific consumer needs and address the growing demand for natural ingredients.
- Value Proposition Development: Marico should clearly articulate the unique benefits of its VAHO products to differentiate them from competitors.
SWOT Analysis:
Strengths:
- Strong brand equity in Bangladesh
- Established distribution network
- Expertise in the hair care market
Weaknesses:
- Limited experience in the VAHO segment
- Potential lack of innovation in product offerings
Opportunities:
- Growing demand for VAHO products
- Increasing awareness of hair care
- Potential for new product development
Threats:
- Intense competition from established players
- Potential for price wars
- Changing consumer preferences
PESTEL Analysis:
- Political: Stable political environment in Bangladesh.
- Economic: Growing middle class and disposable income.
- Social: Increasing awareness of health and wellness.
- Technological: Advancements in hair care technology and digital marketing.
- Environmental: Growing demand for natural and sustainable products.
- Legal: Regulations regarding product labeling and advertising.
Marketing Mix (4Ps):
- Product: Develop innovative VAHO products with natural ingredients and targeted benefits.
- Price: Offer competitive pricing strategies based on value proposition and target market.
- Place: Leverage existing distribution network and explore new channels like e-commerce.
- Promotion: Implement a multi-channel marketing strategy that includes digital marketing, social media, and influencer marketing.
4. Recommendations
1. Product Innovation & Development:
- Focus on Natural Ingredients: Develop VAHO products with natural ingredients like herbs, oils, and extracts.
- Targeted Benefits: Offer products addressing specific hair concerns like dandruff, hair fall, and hair growth.
- Product Differentiation: Develop unique product formulations and packaging to stand out from competitors.
- Product Range Expansion: Introduce a range of VAHO products catering to different price points and consumer needs.
2. Targeted Marketing & Branding:
- Market Segmentation: Identify and target specific consumer segments based on demographics, psychographics, and hair care needs.
- Brand Positioning: Position Marico's VAHO products as natural, effective, and value-for-money solutions.
- Digital Marketing: Leverage social media, search engine optimization (SEO), and influencer marketing to reach target audiences.
- Advertising Campaigns: Develop creative advertising campaigns highlighting the benefits and unique selling points of VAHO products.
3. Strategic Partnerships:
- Collaborations with Salons & Hair Care Professionals: Partner with salons and hair care professionals to promote VAHO products and gain credibility.
- E-commerce Partnerships: Collaborate with online retailers and e-commerce platforms to expand reach and access new customer segments.
- Distribution Partnerships: Explore partnerships with local distributors to strengthen market penetration.
5. Basis of Recommendations
These recommendations are based on a comprehensive analysis of the VAHO market, consumer behavior, competitive landscape, and Marico's strengths and weaknesses. They align with Marico's core competencies in the hair care market and address the evolving needs of consumers in Bangladesh. The recommendations are also supported by the following:
- Market Attractiveness: The VAHO market in Bangladesh is growing rapidly, presenting significant opportunities for Marico.
- Competitive Advantage: Marico's existing brand equity, distribution network, and expertise in the hair care market provide a strong foundation for success.
- Customer Focus: The recommendations prioritize meeting the needs and preferences of the target consumer segment.
- Innovation: The focus on product innovation and development will ensure that Marico remains competitive and caters to evolving consumer demands.
6. Conclusion
By implementing a comprehensive strategy that focuses on product innovation, targeted marketing, and strategic partnerships, Marico Bangladesh can successfully capture the growing VAHO market and achieve sustainable growth. This strategy will leverage Marico's existing strengths, address the competitive landscape, and cater to the evolving needs of Bangladeshi consumers.
7. Discussion
Alternative Options:
- Focusing solely on price competition: This could lead to a price war and erode profit margins.
- Ignoring the digital marketing landscape: This would limit reach and engagement with the target audience.
- Failing to adapt to changing consumer preferences: This could result in declining market share.
Risks:
- Lack of innovation: Failing to develop innovative products could lead to market share loss.
- Insufficient marketing investment: Underfunding marketing activities could limit brand awareness and reach.
- Competition from established players: Intense competition could make it difficult to gain market share.
Key Assumptions:
- The VAHO market will continue to grow in Bangladesh.
- Consumers will remain receptive to natural ingredients and targeted benefits.
- Marico can successfully develop and launch innovative VAHO products.
- Marico can effectively implement its marketing and distribution strategies.
Options Grid:
| Option | Advantages | Disadvantages |
|---|---|---|
| Product Innovation & Development | Strong competitive advantage, caters to consumer needs | High investment, potential for failure |
| Targeted Marketing & Branding | Effective reach, builds brand loyalty | Requires significant investment, potential for ineffective campaigns |
| Strategic Partnerships | Access to new markets, increased reach | Potential for conflicts, dependence on partners |
8. Next Steps
Timeline:
- Quarter 1: Conduct market research, develop product prototypes, and finalize marketing strategies.
- Quarter 2: Launch initial VAHO products, implement digital marketing campaigns, and establish strategic partnerships.
- Quarter 3: Monitor market response, adjust marketing strategies, and expand product range based on consumer feedback.
- Quarter 4: Evaluate performance, refine strategies, and explore new opportunities for growth.
Key Milestones:
- Launch of first VAHO product
- Achievement of targeted market share
- Development of a strong brand presence in the VAHO segment
- Establishment of successful strategic partnerships
By implementing these recommendations, Marico Bangladesh can successfully navigate the VAHO challenge and establish itself as a leading player in the growing hair care market.
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Case Description
Even as Parachute oil is the clear brand leader in the branded regular coconut oil market, having rapidly taken away share from the loose oil market, there is a threat emerging. The fastest growing segment in this category is the Value Added Hair Oil (VAHO) market which is further divided into four sub-segments - perfumed, cooling, Coconut Oil + and non-coconut oil. In each of these four categories, Marico's offerings are laggards. Not only are their shares a lot lower than the individual brand leaders in these four categories, some of these brands are actually directly comparing themselves (in television advertisements) to the flagship Parachute coconut oil brand. Shome thus has to balance maintenance of the leading position in the coconut oil market, to minimise cannibalisation in promoting the various VAHO offerings of Marico, and to gain on the leaders in these other categories. At Kobe, Leong and her team provided end-to-end influencer marketing services for clients including consultation on marketing strategies for realising brand objectives, assisting clients in identifying KPIs, execution and monitoring of campaigns, analysis of campaign results and providing recommendations. In addition, Kobe's AI driven influencer platform allowed clients to choose the most suitable influencers from a database of over 5000 influencers. Millennials in Singapore were social media savvy and often-brought products based on recommendations of influencers they trusted. Targeting this customer segment through social media was therefore a viable option. However, the Jia Jia campaign had a few limitations including a small budget and a short timeframe. Another constraint was that herbal tea was not popular with millennials.
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