Alliance University

MBA SEMESTER – I

Task towards partial fulfilment for DSA: Strategic Marketing Report

TILE:

A REPORT
ON
ZYDUS WELLNESS

SUBMITTED BY:
Group 4

REGISTRATION NO:
Tanuj Saxena, Prov-MBA/7-14/324
Sania Sadiq, Prov-MBA/7-14/270
Sindhuja Jayakumar, Prov-MBA/7-14/
Avinash Reddy, Prov-MBA/7-14/201

SUBMITTED TO:
Dr. Ray Titus

1STDECEMBER 2014

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Introduction:
Zydus Wellness Limited was incorporated as Carnation Nutra-Analogue Foods Limited.
Initially the company was engaged in the business of manufacturing, buying and selling of all
types of health food products, low cholesterol and low sugar products including table
margarine, cheese, butter and substitute products. The name of the company has been changed
from 'Carnation Nutra-Analogue Foods Limited' to 'Zydus Wellness Limited' with effect from
January 5th 2009. On March 17th 2006, Zydus Cadila acquired 834,000 equity shares of Rs 10
each representing about 14.96% of the fully paid up equity voting capital of the company at a
price of Rs 144.82 per share. The Consumer Division of Zydus Cadila was envisioned to
promote ‘healthy living’ by anticipating emerging and day-to-day needs in dietetic/health
foods, and personal care by offering healthier choices to the consumer. Health and wellness
have been identified as emerging opportunity areas in consumer healthcare and a key focus
area for the business. The consumer division aims to empower individuals to take increasing
responsibility for personal health by adopting healthy eating and living habits and lifestyles.
The Division markets products under three major groups – the Nutralite, Sugar Free range,
EverYuth range and a new product ActiLife.

Zydus Wellness Limited has been a niche and significant player in the growing market of
wellness with its portfolio of health care brands. These brands have been driving, contributing
and participating in growing the health and wellness market in the country. It seems mainstream
and generic wellness concepts in India will continue to dominate, while emerging niche
categories are likely to result in new opportunities. Online channels too are expected to grow
in relevance as a medium for interaction with consumers.

Product Images:

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The Marketing Environment:
Source Description
Political:
 There are no expected political influences or events that could
have affected the operations of Zydus Wellness.

Economical:  As per the latest Advanced Estimates (AE) of the Central

Statistics Office (CSO), growth in GDP was estimated at 5 per
cent in 2012-13 as compared to the revised growth of 6.2 per
cent in 2011-12. Index of Industrial Production (“IIP”), for
measuring Indian industrial growth, is expected to have grown
by 0.9% during 2012-13 vs. 3.5% growth during the same
period last year. The average Wholesale Price Index (WPI)
inflation rate from April 12 to March 13 was 7.3% as
compared to 8.9% during the corresponding period in 2011-12.
(Source: Monthly Economic Report, March 2013 as published
by the Ministry of Finance, Govt. of India).
 The Indian health and wellness industry is set to double by 2015
if current trends continue, a joint report by industry body FICCI
and advisory firm Price Waterhouse Coopers (PwC).At present,
the sector is estimated at Rs. 590 billion and is growing at a
CAGR of 18-20 per cent. Though traditional products continue
to dominate the market at 60 per cent, consumer awareness of
new forms of wellness products and services such as fortified
foods, dietary supplements, cosmetic treatments and
rejuvenation therapies is growing.
Social:  Increasing health awareness among Indian consumers due to
rising media penetration is also helping the sector to grow.
According to FICCI National Wellness Committee “Given high
disposable incomes, consumers are taking into account health
considerations as part of their purchasing decisions, with
preventive care gaining more prominence over a curative
approach to disease management”. The FICCI-PwC report

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 further adds that the per capita spend on wellness has jumped
from Rs 300 in 2008 to over Rs 480, last year.
Technological:  Increase in competition can be only beaten up by discovering
and expanding product portfolio continuously. Advancement in
technology like exploring and studying new substance to treat
skin, use as sugar substitutes and for reducing trans-fat is being
done by various firms in the healthcare wellness sector.
Innovation can only drive the increase in sales volume and
hence generate revenues.
Environmental:  There are no expected environmental influences or events that
could have affected the operations of Zydus Wellness
Legal:  Having strong brand equity in each of the segments, the
Company faces the risk of unauthorized and illegitimate use of
its brand names, packaging designs and other intellectual
properties related to its products by other players. The Company
ensures protection of its intellectual property through
appropriate registrations and other legal means.
 The Company also faces the risk of litigation from its
competitors or customers on claims it makes for values which
its products offer. The Company always strives to ensure the
highest standard of quality for its products and processes, and
continuously works on improving quality. It also maintains a
high level of accuracy in the area of product claims.

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Segmentation:
Demographic, Psychographic and Behavioural segmentation has been done based on age,
gender, personality, occasions and benefits. From teenagers to health conscious adults both
male and female are target segment for Zydus wellness who can pay a premium on skincare
and healthy nutritious substitutes.

Target Market:
Cater to the mass market comprising of people who are not only health-conscious but also
price-sensitive. Young middle aged males and females for both price sensitive middle class
and upper class people.

Positioning:
Products like Sugar Free and Nutralite are not only positioned as healthy substitutes for
diabetic and obese people but also as a necessity to keep young and healthy people active and
free from excess calorie intake or Trans-fat intake. New brand ambassadors have been signed
which in the society have an image being fit and active for TV, Magazine advertising and
promotional events.
EverYuth has been positioned as daily Use Skin care product for women, it has established
"Born to Play" positioning for Everyuth Menz in a highly cluttered personal care segment and
also communicated product benefits by encouraging men to experience the products at multiple
touch points.

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SWOT Analysis:
Strengths:
 Excellence in research and innovation makes Zydus Wellness a company developing
well differentiated new products continuously with a better value proposition to
customers.
 Well positioned brand image in minds of consumers and hence more probability of
being in their consideration set.
 Intensely designed and highly effective logistics and distribution network.
 More number of variants based on ingredients and gender selling at various price points
gives customer more choices to consider one product over the other.
 Continuous re-launching of the same products with new packaging and fresh marketing
campaign helps consumers to recall the brand easily.

Weakness:
 Higher competition with bigger firms like P&G, J&J, HUL, Palmolive selling similar
products at competitive prices and giving higher margins to retailors.
 Lower investments in marketing campaign and brand promotions.
 No regular audit of distributor.

Opportunity:
 Penetration in rural market is minimal.
 Very few competitors producing sugar substitutes and margarine butter so more focus
should be on strengthening brand image and penetration of these products in market
place.
 Enormous scope in development of products and enhancing product line.

Threats:
 Higher competition with bigger in scale, brands selling similar products at competitive
prices.
 Lack of awareness about the products and its benefits among customers.
 Limited range of products in the portfolio makes the company dependent only on
existing products for revenue generation.

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Products:

Brand Category Status Quo Strategies Implemented

Sugar A low calorie A market share of more  A new theme campaign with
Free sugar than 93%, which virtually endorsement by a new celebrity and
substitute. represents the entire low integrating all products on one
calorie sugar substitute platform.
market in India.  Low household penetration levels of
sugar substitutes hence focus on
category development in the future to
generating strong growth.
EverYuth A range of Skincare category  New packaging, improved
skincare witnessed a slowdown formulations for superior
products. primarily due to reduced performance and aesthetics and a
spending on personal care powerful new marketing programme.
products specially face  A new brand ambassador who now
wash, scrub and peel-off features in all advertising, point of
by consumers driven by sale and outdoor communication.
high inflation. The  Launch of EverYuth Menz line with
Company continued its new modern packaging and a high
thrust on new product technology whitening cream. Launch
launches with the launch of first range of transparent soaps in
of several variants in the Lemon, Fruit and Neem variants to
existing categories. expand the product portfolio further
and improve distribution reach
backed by strong advertising and
promotional support.
NutraLite Margarine There have been multiple  In retail, the Company has expanded
butter free from launches from low priced its product portfolio with the launch
trans-fat. competitors with a focus of a premium variant, Nutralite with
on the price sensitive Omega 3. This launch has
customers. Despite this, strengthened the health positioning of
Nutralite has maintained the company and was voted ‘Product
its dominant position in of the Year 2013’ based on an
margarine category independent survey conducted
through a commitment to amongst 18000 consumers in India
quality and service. undertaken by global research agency
AC Nielsen.
 An additional flavour variant with
cheese has also been launched.

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 ActiLife Nutrition milk ActiLife was launched in  Company has been investing in
2011. education through advertising,
additive for
sampling programs and in-store
adults activations.
 As with any new idea, the lead time
for its adoption is often fairly long
and the Company is diligent in its
approach while refining the
marketing support programs to
achieve business goals.

As a strategy, the Company is also looking at line extensions aggressively across the different
categories where it competes. All brands in the portfolio have strong equity with consumers
and ready acceptance in the trade. This allows the Company to bring innovative new products
to the market and drive growth by leveraging its strong health care heritage. With a continued
focus on strengthening its existing portfolio, expanding distribution to reach a wider consumer
base and launch of innovative products in the wellness domain, the Company is confident of
achieving its long term goals and bringing wellness to the lives of every Indian.

Price:
EverYuth face wash, scrubs and skin care products range between Rs.80 for a 50gm tube and
Rs.105 for a 100gm Tube.
Nutralite spread is available for a price between Rs.28 for 100gm and Rs. 145 for a 500gm
jar.
ActiLife adult milk additive is available at a price of Rs.160 for 250gm.
Sugarfree-100gm bottle for Rs. 140, available in sachets, pellets and in drops form.

Place:
It covers 4.3 million retail outlet, 2000 redistribution stockists reaching urban population and
250 million rural consumers in India. Retailors includes street vendors, departmental stores and
supermarkets. It has a well-designed distribution model which comprises of C&FAs,
Redistribution stockists, wholesalers and retailers. Zydus Wellness distribution network
focuses on product availability, brand communication and higher levels of brand experience.
40 Factories of Zydus Wellness are sent to a depot with help of a carrying and forward agent.
The company has its depot in every state of the country. The C&FA is a third party and gets
servicing fee for stock and delivery of products. In each town, there is at least a redistribution
stockist who takes the goods from the C&FA and sells them to retail outlets.

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Promotions:

Promotional Zydus Himalaya P&G VLCC Unilever J&J

Activities Wellne Health
ss Care
Televisions Advertising
Magazines
Gift Sales
Promotions Promotion
Event Publicity
Sponsoring
Marketing Personal
Team Selling
Websites Indirect Selling
Funding Social
Responsibility

Table: Various product promotional techniques adopted by cosmetic companies.

Source: www.bignerds.com

Represents that the given promotional activities are followed to promote the products.

Promotional activities for every product in the product line becomes necessary for the company
so that the consumer can recall the brand easily and consider it for purchase. Launch of new
products must be accompanied by heavy marketing so as to bring awareness among the
consumers. Zydus Wellness is continuously re-launching its product with slight modifications
in packaging or changing the brand ambassadors so as to bring a fresh new appeal in the market
place. New products launched like ActiLife must be promoted well because it has a higher
scope of growth, very few competitors and low penetration in the market.

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Future of Zydus Wellness:
 Zydus Cadila has set a target of registering a consolidated revenue of over Rs10000 crore in
2015-2016. The company recorded revenue of Rs7208 crore in 2013-2014. The company
proposes a capital expenditure of Rs450 crore in 2014-2015.
Source: www.4-traders.com
 Zydus Wellness is planning to enter the related categories like jams and biscuits in the
coming year.
 Despite challenging macro environment, Sugar Free has delivered resilient 24% YoY value
growth in 2QFY14 (Volume growth: 12%). It gained market share from 92% to 94%.
 Presence across categories (pellets, powder, sachet, liquid and tablets), low penetration of
sugar substitute, expansion in large rural market, changing lifestyle and celebrity (Akshay
Kumar, Sanjeev Kapoor) backed brand promotion will drive growth in the future.
Management is confident of 20% revenue growth in Sugar Free over the longer term.
Source: www.hdfcsec.com
 It has already planned to launch new products like EverYuth: Fairness peel-off, 3 in 1 wash
off face mask, Nutralite Yummy, premium priced Nutralite with Omega 3.
 Expenditure on advertisement is going to remain higher and in the range of 18-18.5% of
sales.
 Nutralite is witnessing slowdown blues. The company feels lack of promotions by the
industry has led to slowdown. Despite margarine being priced at 10-15% discount to
butter and being positioned as healthy alternative to butter, it failed to enthuse consumers.
Furthermore, lower margin institutional business (contributes ~75% to Nutralite sales)
impacts profitability. The company believes that the increased emphasis on retail part of
the business will aid future growth.

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Evaluation of Current Position:
Financial Ratios March March
2014 2013
Net Profit 44.87% 42.79%
Quick Ratio 3.56 3.10
Return on Assets 83.32 65.66
Debtors Turnover ratio 589.14 519.54

Investment Turnover 43.9 31.6

Net Operating Profit per 52.02 54.52

Share
Earnings per Share 24.69 24.85
Face Value 10 10
Earnings Retention Ratio 75.70 75.87

 Comparing ratios of the company for the year 2014 and 2013 there is a significant
difference between the financial conditions of the Zydus wellness. As shown above net
profit has increased from 44.87% to 42.79% which indicates that the earnings of the
company has increased significantly as compared to the cost incurred. This might also be
due the increased awareness of personal grooming, health consciousness and in-turn
increase in sales of Sugar Free and EverYuth Menz products.
 Return on assets ratio has increased which suggests that the value of assets that the
company owns has increased to 83.32 from 65.66. It might be due to the increase in real
estate prices and due to the technological advancements in the machinery bought by the
company which is giving better output hence greater returns.
 Increase in quick ratio also suggests that the company has now more liquid assets and it
can raise funds for future investments easily.
 Debtor’s turnover ratio has increased significantly which indicates the relationship
between net sales and average debtors, i.e., net sale are higher than the average
debtors. This might be due to the fact that Zydus Wellness has shown an increase of 94%
in market share of Sugar Free.

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 Investment turnover ratio has also increased which indicates all the investment made in
marketing of new products or re-Launching new products are giving better revenues in
return.
 So it is evident that all the investments activities and product innovations the company
has put forth has resulted in an increase in brand value of the company and has strengthen
the company’s position in the market.

References:
Internet:
www.moneycontrol.com
www.business.outlookindia.com
www.4traders.com
www.owler.com
www.economictimes.indiatimes.com
www.valueresearchonline.com
www.sharekhan.com
www.hdfcsec.com
www.bignerds.com

Books:
Strategic Marketing- Douglas West and John Ford
Management Accounting-M Y Khan, P K Jain

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