Wednesday August 3, 2022

Marketing-Led Business Strategy

In 1973, when the American cosmetic company, Revlon, introduced Charlie it conceived a fragrance specifically for the young working woman as its target audience. The entire communication strategy was constructed to represent this new and growing segment. These women took the subway, hurriedly grabbed a coffee at a rail station, worked at offices, wore business suits and popped across to the local café for a sandwich lunch. The advertising strategy targeted this new class of customers at a time of important social changes that brought greater levels of equality in the workplace. Revlon, in the launch of Charlie, had clearly identified its customers and structured its communication specifically to target them. Backed by suitable pricing, Charlie proved to be a success.

All new product launches first need to precisely identify the customer and subsequently design marketing communication plans to target them. Logistics and distribution, then follow. As I introduced our speaker Sahil Dharia, at a CMO session in Bombay on the 5th July, I asked him to explain his thinking behind three fundamental issues. First, who his target customers were in the socio-economic order; second, his communication plans to pursue them and third, the distribution strategy for his recently launched female hygiene products, specifically sanitary pads.

Sahil left a global role in a large financial services company to set up Soothe Healthcare, a manufacturing enterprise that seeks to increase the usage of sanitary pads amongst the Indian female population. In 2011, the penetration of this product was limited to 12%. A decade later it touched 25%. This segment, in the fast-moving consumer goods domain, has previously been dominated by two large multinational national corporations, Proctor & Gamble and Johnson & Johnson. Both focused their efforts largely on the metropolitan market which comprised the bulk of sales. Soothe, on the other hand, launched in tier 2 and 3 cities where usage of sanitary products was traditionally low. Barriers to entry were affordability, access and most importantly awareness. Nobody, in lower-middle class Indian society liked to talk openly about female hygiene and conversations were limited to whispered tones amongst a few related women.

Soothe had decided that its customers would consist of women in the age group of 18 to 25, from tier 2 and 3 towns, frequently students, but not limited to them. That was clear enough. But the real task was to convince girls to try their sanitary pads in place of traditional methods. This proved burdensome. As Sahil explained, they simply chipped away at the problem, working with retail outlets but also with institutional platforms such as schools and colleges. Advertisement and communication strategies used female celebrities to communicate a simple message. Often the barrier to adoption came from within families and friends. But as such things go, visible consumption creates more consumption, producing an upward spiral of sorts. As Sahil explained, the metro markets were saturated with usage rates at over 87% so the real opportunity was elsewhere but admittedly harder to crack.

Soothe adopted an aggressive pricing strategy, based on their research, at Rs 20 a pack. This was much more affordable than what existing players had to offer, so costs would not become an entry barrier for the customer segment they sought to address. Communication platforms included the traditional print media but really more digital and more targeted. The next challenge was distribution. This needed a partnership with retail outlets and the offering of free products so that customers could try them and see value. It was a painstaking task chipping away, outlet by outlet, initially in Poona where the product was first introduced. Over a period of five years Soothe claims over 350,000 retail outlets, across the country, that stock and sell its produce. From any benchmark, this is a remarkable achievement.

In this business, growth comes from new opportunities in expanding the market place. Other developing countries had followed a similar pattern. For instance, in China, product usage went up in 2002 from 2% of the female population to 42% over twelve years. Sahil believes the opportunities in India are not dissimilar. The market is evolving and consequently brings opportunities for both established and new offerings. Sahil does not fear the financial might and marketing finesse of large MNCs. The market is big enough for everyone.