Vibhava Chemicals: Pursuit of a cleaner Space

Case Study Analysis Report

Pruthvi raj
80303190021

The case study of “vibhava chemicals: Pursuit of a cleaner Space” talks about the declining
market share of its home cleaning agents (HCA) category and the options available with its
director of marketing, Vithal Gambir for driving the sales up and gaining back market share,
as the HCA category of products contributed to 40 % of its revenue.

Facts given in the case study.

Vibhava Chemicals
 Established in 1990, in Hubli in state of Karnataka, it manufactured and marketed,
Black Belt brand of black phenyl and the Ozone brand of herbal floor cleaners in
cleaning agents market, and the Monkey brand of brooms.
 HCA contributed to nearly 40 % of its revenue while the remaining came from the
Monkey brand of brooms.
 The state of Karnataka accounted for almost 50 percent of the total sales of the
company, out f which, the share of the Bangalore market was 50 percent.
 Having established cities like Mysore, Tumkur, and Shimoga, Vibhava entered
Bangalore market in 1995 with Nagabhushan taking charge of distribution of goods by
introducing brand as “Black Belt” and strong Phenyl.
 By 2003, in order to exploit the emerging market and deal with competition from large
MNC’s, Vibhava introduced pine oil based cleaner product “Ozone” with four different
fragrances of sandalwood, rose, lavender and jasmine and marketed as ‘Herbal floor
cleaners”
 In April 2009, it introduced Kloract, a chlorine based floor cleaner to counter the MNC
onslaught of the similar products in the form of dispersible tablets based on
Trichloroscene, a strong disinfectant. However, the product failed to get the market
share owing to its slow dissolution of the tablet in water.
 Considering all this, Gambir, came up with four different options to gain back the
market share which will be analysed in the following sections.

The Home Cleaning Market in India.

 Sub-category of home cleaning market included; Speciality cleaning products (Cholire
based and pine oil based cleaning agents) and traditional cleaning products (Phenyl,
acid and bleaching powders)
 Speciality cleaning products were available in the form of established national or
regional brands (present in more than one brands). Conversely, many regional brands
and numerous local brands dominated the traditional product space.
 Branded cleaning products accounted for 50 percent of the urban Indian market, 40
percent by national brands and regional brands occupied 5 percent with generic getting
remaining 5 percent.
 By 2010, products (Harpic, Domex and Sanifresh) marketed by big MNC’s (Hindustan
Unileve Limited, Reckitt Benckiser and SC Johnson) and established Indian fast-
 moving consumer goods companies (Dabur and CavinKare) emerged as the leading
brands in India.
 Steadily improving literacy and government-initiated health and hygiene awarenesss
campaigns improved consciousness of India Rural which might open as a new market.
The institutional market (Hospitals, Hotels, Schools, College etc) represented bulk
users of phenyl, bleaching powder and acid representing 65 percent Indian HCA
market.
 South India market reflected a deeper penetration of specialty HCA category,
accounting for 60 percent of the urban market.

Problem Faced by Vibhava Chemicals:

CEO, Nandakumar is concerned about the decline in the market position of Black Belt, from
its leading position in 2000 to an estimated 13 percent of the phenyl category in 2010.

SWOT
Strength: established regional market in Karnataka as a trusted brand know by the customer.
Pine oil based cleaner “OZONE” marketed as herbal cleaner with no copetition in the segment
Weakness: Regional player with limited reach to national market and less capital to engage in
a long standing intense competition against MNC’s.
Opportunity: Expansion to new market in neighbouring regional markets. Opportunity to
move to rural area and capture larger market before the entry of other player. Collaborate with
foreign company to launch a new product of liquid detergent for washing machines.
Threats: Launch of new products with pine based product similar to Vibhava’s “Ozone”
leading to further decline in its products.

Options Thought by Gambir to gain back Market Share.

 Intensify promotional efforts for Ozone floor cleaners: Has Nandakumar, the
company’s CEO had ensured an increase in the promotional for the cleaning agents
category from 30 million INR to 50 million INR.
 Launch chlorine based floor cleaners similar to MNC brands at aggressively low prices
either under the ozone brand name or new brand names.
 Introduce a powerful phenyl-based cleaner and disinfectant for toilet cleaning to
address the phenyl interested customers which was served by competitor in the form of
Domex + phenyl.
 Introduce other product categories like liquid detergents for washing machines by
collaborating with foreign company which was looking for a strong marketing partner
in India.
 Expand the market geographically to include new urban and rural markets instead of
aggressive competition against MNC’s.

Detailed Analysis of the Options available.

Even after being a market leader in the HCA category for about a decade with its BlackBelt
line of phenyl liquid agent in the regional market, Vibhava chemicals was forced to become a
smaller player with the entry of MNC’s such as Hindustan Unilever Limited, Reckitt Benckiser
and SC Johnson with their branded products such as Harpic, domex, sanifrsh etc.
Being a regional player established in the regional market, with limited capital compared to the
large MNC’s operating in the same sector, it cannot practically afford to engage the competitor
with the Frontal attack or an Encirclement Attack. It might turn out to be detrimental to the
company. Considering these aspects, the company is given to pursue flank or bypass strategy
is well suited.

Considering the Frontal Attack strategy in line with the second option available with Gambir,
it will be a riskier option. MNC’s with braded products such as Harpic and Domex have larger
capital and resources to hit back at a regional player such as Vibhava Chemicals through
advertisement battle or through the launch of a new product. This, in turn could be detrimental
to the Vibhava Chemicals.

Considering Flank Attack Strategy to gain the market share, Gambir can choose the third
option available with him and extend geographically to more towns and semi urban markets
by appointing more distributors. An aggressive push beyond the urban market could be more
viable than head on competition against the MNC’s. Considering the government’s intensive
campaign to enhance personal hygiene among the populations in rural India, it provided a great
opportunity to acquire new market share.

As for Bypass Strategy, Gambir can consider the fourth option available with him. He can
collaborate with the foreign company in USA which possessed the required technology and
was look for a strong partner in India to market and launch a completely new product of “liquid
detergent” for washing machine. Even though the initial marketing expenses would be rather
high, he was sure the pricing could be premium considering the product’s novelty and utility.

As for the first option, greater advertising can lead to greater sales. However, it can be short
lived. In account of third option, while introducing a new phenyl based product specific sector
of consumer is a good idea. But, it will not capture a greater market share which might lead to
increased revenue.

While employing these strategies, he should also try to expand its market demand by
developing new customers and increasing more usage by the customers. He should also ensure
that the present customers are satisfied, and does not loose its existing market share. Vibhava
chemicals should also try to find new ways to use its brand and its product with an attempt to
increase the consumer usage.

Conclusions.
Considering the above mentioned options and analysis, it is practical for Gambir to pursue a
mixture of fourth and fifth option where he collaborates with a new partner and launches a
completely new product bypassing the competition completely. At the same time, he should
aggressively push to expand out of urban areas to the new markets such as towns and semi
urban areas. He should also focus on advertising the existing products to be in minds of the
consumers.

Pruthvi Raj
80303190021