DABUR INDIA LTD.

BUSINESS STRATEGY

RASHI KAUSHIK

26/032

PGDM: 2018-202
 TABLE OF CONTENT

1. Company Introduction
2. Mission and Vision Statement
3. Component of Mission
4. External Analysis
5. Internal Analysis
6. Strategies Identified in Organization
7. Strategy Analysis
8. Conclusion/Recommendation
 ORGANIZATION INTRODUCTION

Dabur India Limited is the fourth largest FMCG Company in India with interests in Health care,
Personal care and Food products. Building on a legacy of quality and experience for over 100
years, today Dabur has a turnover of Rs.1232 Crore with powerful brands like Dabur Amla,
Dabur Chyawanprash, Vatika, Hajmola & Real.

The story of Dabur began with a small, but visionary endeavor by Dr. S. K. Burman, a physician
tucked away in Bengal. His mission was to provide effective and affordable cure for ordinary
people in far-flung villages. With missionary zeal and fervor, Dr. Burman undertook the task of
preparing natural cures for the killer diseases of those days, like cholera, malaria and plague.

The company is also a world leader in Ayurveda with a portfolio of over 250 Herbal/Ayurvedic
products. They operate in key consumer products categories like Hair Care, Oral Care, Health
Care, Skin Care, Home Care and Foods. The company's FMCG portfolio includes five flagship
brands with distinct brand identities, Dabur as the master brand for natural healthcare products,
Vatika for premium personal care, Hajmola for digestives, Real for fruit juices and beverages
and Fem for fairness bleaches and skin care products.

The company operates through three business units, namely consumer care division (CCD),
international business division (IBD) and consumer health division (CHD). Their CCD business
is divided into four key portfolios: healthcare, personal care, home care and foods. Their CHD
business offers a range of healthcare products. Their IBD business includes brands, such as
Dabur Amla and Vatika.
 MISSION & VISION STATEMENT

VISION STATEMENT:

Dabur’s vision is to satisfy the health and well-being of all its customers. The organization would
achieve its vision by offering high quality natural products that will improve the customer’s
health and personal care.

MISSION STATEMENT:

The mission is maximizing the value offered to the shareholders.

 COMPONENTS OF MISSION STATEMENT

1. Customers: Who are the enterprise's customers?

Just like any other FMCG company, Dabur products are consumed by all sections of the society,
but the middle class mass customers forms the major group of buyers.
2. Products or services: What are the firm's major products or services?

 Personal Care Segment: Hair care oil and Vatika Shampoo, Skin Care (Fairness, Face
pack), Oral Care (Dabur Red, Gel and Toothpaste)
 Food Product Range: Juice (Real/Real Active), Dabur Honey, Homemade (packaged
soups)
 Ayurvedic Health Products: Digestive Segment (Hajmola), Dabur Chawanprash, Pudin
Hara.
 Ayurvedic Drugs
 Pharmaceuticals

3. Markets: Where does the firm compete?

Dabur is competing in the FMCG sector. This market is expected to reach US $103 Billion by
the year 2020. FMCG is the fourth largest sector of the Indian Economy.
4. Philosophy: What are the basic beliefs or core values of the firm?

Core values of Dabur:

Ownership: This is our company. We accept personal responsibility, and accountability to meet
business needs

Passion For Winning: We all are leaders in our area of responsibility, with a deep commitment
to deliver results. We are determined to be the best at doing what matters most

People Development: People are our most important asset. We add value through result driven
training, and we encourage & reward excellence
Consumer Focus: We have superior understanding of consumer needs and develop products to
fulfill them better

Team Work: We work together on the principle of mutual trust & transparency in a boundary-
less organization. We are intellectually honest in advocating proposals, including recognizing risks

Innovation: Continuous innovation in products & processes is the basis of our success

Integrity: We are committed to the achievement of business success with integrity. We are
honest with consumers, with business partners and with each other.
5. Concern for public image: What is the firm's public image?

Dabur has highly differentiated brands in the market, and its products are based on natural and
ayurvedic ingredients. While a lot of companies today offer Ayurvedic and herbal products,
Dabur enjoys the customer’s trust because of its herbal heritage. Consumers feel that if a product
comes from the House of Dabur, it is truly natural.
6. Concern for employees: What is the firm's attitude/orientation towards employees?

For Dabur, employees are the most important asset. Dabur adds value to its employee
engagement initiatives through result driven training and encourages & rewards excellence. At
Dabur an open-door policy is followed, whereby any employee having any kind of grievance
may approach any senior manager for redressal.
 EXTERNAL ANALYSIS

OPPORTUNITY

 Renew and re-connect the brands through initiatives like “700 se 7 kadam” and “Brave
and Beautiful”.
 Reconnect with urban demography through innovative smart products for home and
offices.
 Shift from unbranded products to branded products in urban and rural market alike.
 Increase in per-capita consumption of an average Indian.
 Mergers and Acquisitions to strengthen the brand.
 Increasing purchasing power of people thereby increasing demand.

THREATS

 Intense and increasing competition amongst other FMCG companies means burden of
Dabur’s market share.
 FDI in retail thereby allowing international brands.
 Competition from unbranded and local products.
 Sluggish demand across global markets with low signs of revival.
 Other fields of medicine – Allopathic and Homeopathic.

PORTER’S 5 FORCES MODEL

 Threat of Competitors: The competitors of Dabur are a highly diversifies business,

hence it leads its competitors to a less risky profile. Dabur spends around 13% to 15% of
its sales in advertising, they have tie ups with many and hence they adopt for celebrity
endorsement, like Mr. Amitabh Bachchan as it is easy for them to cater to the lower
segments of the market. It achieves a sustainable competitive advantage through
improvisation.
 Threat of New Entrants: Brand equity of Dabur can be judged by the Brand Asset
Valuator Model. The four key components are: Differentiation, Relevance, Esteem and
Knowledge. As Dabur is a well-established brand all the four components are high.
 Herbal has been Dabur’s brand equity since centuries. A slowdown in rural demand due
to lower government spending could impact Dabur revenues significantly. The
company’s products such as Dabur Chyawanprash and Dabur Lal Tel are prominently
sold in the rural areas, and hence depend on growth in rural demand. It has a network of
1.5 million retail outlets in urban and semi-urban areas.
 Threat of Substitute Products: The pricing of Dabur products is very competitive
without compromising on the quality hence the relative price performance of substitutes
is low as compared to Dabur. For instance Dabur Amla Hair Oil has been the largest
selling hair oil brand in India for more than 2 decades. Dabur products have generally
strong Herbal and Natural profile, also second by a more than 100 years of experience in
Ayurveda which leads to high product differentiation. Dabur has and esteemed
performance in the Herbal digestives sector acquiring a market share of 95%.
 Threat of Buyer’s Bargaining Power: Due to high consciousness of consumers in for
health, the Ayurvedic and Natural products have gained more requirements, but is has a
strong dependency on its existing channels of distribution which makes it easy for
penetration in the rural market. Buyers switching cost relative to firm switching costs.
Buyer information availability is large. The substitute products are kept right next to the
Dabur products depending upon the strategies that the category captain decides for a
particular segment. Since market share of Dabur is high in hair care and herbal digestives
hence it has a strong bargaining power.
 Threat of Supplier’s Bargaining Power: Supplier switching costs relative to firm
switching costs. Degree of differentiation of inputs. Presence of substitute inputs.
Presence of substitute inputs. Threat of forward integration by suppliers relative to the
threat of backward integration by firms has been taken care of. Production facilities to
increase in-house production and to get maximum benefits. The company believe in cost
and quality leadership through technology. Cost of inputs relative to selling price of the
product.

EXTERNAL FACTOR EVALUATION:

It consists of the following macro factors:

 Opportunities
 Threats
 Technology: In marketing mix strategy where there is local manufacturing being done
and to manage supply chain we assume ARS (Automatic Replenishment System) is being
used there are high chances of technology failure.
 Decision Processes: There can be issues such as resource allocation in diversification
strategy as the organization has a lot of divisions which need to be expanded at the same
time as it had a lot of categories in it or it can be to focus on rural market which will give
long term sustainable advantage in depth and width of distribution or urban market where
sales revenue can increase.
 INTERNAL ANALYSIS

STRENGHTS:

 Strong R&D system for over 10 decades.

 Focus on product development catering to new market development.
 Established brand quality for some of its products like Hajmola, Real, Vatika, Fem
among others.
 High over all rural penetration at about 24% across consumer products category.
 Strong overseas presence.
 Localized manufacturing and supply chain processes.

WEAKNESS:

 Profitability is uneven across product line.

 Low categorical penetration in rural markets as compared to urban.
 Perception as an old school brand. Not Gen Y friendly.
 Herbal raw materials are demising.
 Fake products sold under their brand name.
 Stiff competition from big domestic players and international brands.

INTERNAL FACTORS EVALUTATION:

It consists of the following micro factors:

 Strengths
 Weaknesses
 Organizational Structure: In diversification strategy organization structure can be a
problem because company need to expand and in order to do that there will be a lot of
expenditure on intense training and research. Actually acquisition strategy fits in better
here as the investment can be used wisely in advertisement.
 Resistance to change: New strategy like diversification may attract rigidity or hesitance
of employees to accept the change.
 STRATEGIES IDENTIFIED IN THE ORGANIZATION

1. Corporate Strategy :
 Strengthen presence in existing categories and markets as well enter new
geographies.
 Maintain dominant share in categories where we are category builders like Health
Supplements, Digestives etc. and expand market shares in other categories.
 International expansion- local manufacturing and supply chain to enhance
flexibility/reduce response time.
 Focus on R&D to develop new variants to cater to newer markets.
 Target opportunities in focus markets and categories through horizontal
acquisitions to develop scale in existing markets and vertical diversification to
enter new ones we don’t have that much expertise.

2. Business Strategy:
 The urban-middle class has been gradually shifting towards branded organized
markets for consumer discretionary given the growth in per-capita income.
Newer, more contemporary variants should be developed specifically to cater to
this segment.
 Rolling out new variants and products such as Babool (salt variant), Gulabari
(Moisturizing Lotion)
 Renovation of existing products to respond to changing demands (Toothpowder to
Toothpaste)
 Reinventing packaging to stand out among competitors.
 Dabur, whose food category is not so popular should enter into acquisitions with
packaged food makers to gain market share in this category.

3. Functional Strategy:
 Adopting a push strategy in rural areas where Dabur can display its products
through Kirana Stores and its upcoming retail shops.
 Advertising through social media focusing on communicating changes in its
product line and communicating a revamp of its variants for the urban.
 Re-engineer its sales and distribution structure and drastic rationalization of
Dabur’s stockiest and distribution network.
 Inclusion of younger personnel in the top management to provide inputs on
changing demography of its customers from Gen X to Gen, especially in the
marketing team.
 Training to equip the functional staff to deal with customer complaints and
customer satisfaction training.
 STRATEGY ANALYSIS

SWOT/TOWS ANALYSIS
 HELPFUL OPPORTUNITIES
 Natural brand
 Niche market
 New product development
 Better product packaging
 Health product
 Rural penetration

 HARMFUL THREATS
 Many competitors compete on cost and product range
 Herbal raw materials are demising

 INTERNAL STRENGTH
 Herbal brand
 In-house raw material
 High export
 Depreciation shown high
 Monopoly in chyawanprash
 High brand awareness
 Diversification

 STRENGTH - OPPORTUNITIES
 Moving towards natural by developing Real juices
 Partnership with banks and IOC to reach rural market

 STRENGTH – THREATS
 Using high promotion on IPL and TV ads – “Brave and Beautiful”
 In-house more development of herbal resouorce – Nepal

 EXTERNAL WEAKNESS
 High cost
 Product length
 Consumer perceptions that brand is for people above 35 years of age
 No branding by social media

 OPPORTUNITIES – WEAKNESS
  Increasing low cost product length to reach rural penetration
 Digital marketing to target niche market
 Branding as “Health and Wellness” – targets young, vibrant, socialized

 WEAKNESS – THREATS
 Improvement in product basket to reduce threat from competitor

BCG MATRIX

High Low
Health Care (Oral) Personal Care (Hair)
Health Care (Supplement) Home Care
High

MARKET GROWTH
Food Products (Health) Personal Care (Body)
Low

Health Care (Digestive)

MARKET SHARE
 RECOMMENDATION/CONCLUSION

In conclusion, Dabur needs to focus on their core brands to leverage their competitive advantage.
This needs to be done across new geographies areas. Its strategic allocation of resources in
leveraging technology would help improve operational efficiencies. Strategic positioning with
increased brand visibility to occupy more shelf space would strategically propel Dabur to the top
three FMCG company in India. Continuous innovation, especially in the personal care segment,
internationally along with premium pricing in the US market will help Dabur enhance its
performance. Dabur is reinventing its target by focussing on the middle aged people.
Simultaneously, it is also building a a contemporary brand that appeals to the youth with
increased spend on digital ads, and creating products with excellent packaging format that gives
the product sharper appearance and commands price premium. In distribution, their wide
network covers over 5.8 million retail outlets giving them high penetration both in the rural and
the urban market. Dabur’s international sales contribution (30 percent of total sales) is increasing
over the years and it has increased their global presence to over 60 countries where its brand
popularity is increasing. Dabur are present in the SAARC countries, Middle East, Africa, US,
Europe and Russia. This has happened despite political disturbances in MENA region and the
currency devaluation in Egypt and Nigeria. Their Namaste America grew by 20 percent. The
local coverage of the potential rural market is covered by the “Project Double” wherein Dabur
has increased the rural coverage from 14,000 to 44,000 villages in the past three years.