Segmentation - Targeting - Positioning

SEGMENTATION

Hair oil targets consumers in both urban and rural regions as it is an essential product. Parachute has its market in India as well as international markets in South-East Asia, Gulf, Bangladesh, UAE and Egypt. Among women, it primarily focuses on middle aged and young women. Income level of customer is not a problem as 1 rupee sachets and bottle of small, medium and large sizes are also available. Lifestyle and personality also influences the behaviour of the consumer, therefore parachute lately has been targeting the youth emphasizing that one can experiment as much as one wants with one’s hair till it remains protected and healthy.  

TARGETING

In the beginning the target market was females of all age groups who used coconut oil. Today with various variants available like Parachute advanced, Parachute advanced starz, Parachute Therapie, etc, target market has shifted to focus on consumers with hair fall problem, consumers who have kids of age 3-10 years, consumers who don’t want sticky hair but look for fragrance and free flow of oil in all season. One of its main target is youth who have moderate income and like experimenting with their hair, hence need good hair care product.  There are following types of market targeting:

1.      Mass Target Marketing

2.      Product Specialized Marketing

3.      Market Specialized Marketing
4.      Individual Target Marketing

5.      Differentiated Target Marketing

    6.      Niche Target Marketing 

POSITIONING

Parachute has always established itself as  a natural product which offers nutrient value to hair; Parachute hair oils have been positioned as everyday use hair care products. This played in favor of Parachute a few years back when there were hardly any competitors as it gave the brand another name to hair oil in households. This has given more flexibility and leverage to the brand from the beginning itself.

Sales Management

According to the AMA definition:

The planning, direction, and control of the personal selling activities of a business unit, including recruiting, selecting, training, equipping, assigning, routing, supervising, paying, and motivating as these tasks apply to the sales force. Sales management involves three interrelated processes: (1) formulation of a strategic sales program; (2) implementation of the sales program; and (3) evaluation and control of sales force performance. In formulating the strategic sales program, sales management involves a number of activities including development of account management policies, demand forecasts, and quotas and budgets; sales organization; sales planning; territory design; deployment; and routing. In implementing the sales program, sales management activities include supervising, selecting, recruiting, training, and motivating the sales force. In addition, implementation requires the development of compensation systems and sales force incentive programs. The evaluation and control of sales force performance involves the development and enforcement of methods for monitoring and evaluating sales force performance. Sales management activities typically required for evaluation and control include behavioral analysis, cost analysis, and sales analysis.

Sales Management comprises:

       1. Personal Selling                                                        2. Sales Force Management

IMC and Promotions

Integrated Marketing Communications (IMC) is defined by The American Marketing Association  as “a planning process designed to assure that all brand contacts received by a customer or prospect for a product, service, or organization are relevant to that person and consistent over time.”

Increased awareness about product, visibility and reach is brought about by promotion. With new concept of integrated Marketing communication coming into picture, it is important not only to promote through different channels but also make sure that all the communication across mediums is synchronized with one central theme. An effective communication identifies the target audience, and has clear objective as to what needs to be conveyed to target audience, designs proper and relevant message, selects appropriate medium of communication, plans a media mix optimally using the available budget, measure and test the results and finally monitor and manage everything to ensure smooth synced run.

Promotional Strategies employed for Parachute

1. Parachute Advanced Tender Coconut Hair Oil:

• Public Relations and Publicity
• Event and Experiences Promotion
• Interactive Promotion

Embarking on a journey that celebrates the moments of Tender Love and Care (TLC) , both Parachute Advanced Tender Coconut Hair Oil and Yeh Jawaani Hai Deewani came together on same stage felicitating  online contest winner as ‘TLC Queens‘ who shared their best moments of ‘Tender love & care Moments‘

2. Parachute Advansed Ayurvedic Hair Oil:

• Advertising and Interactive Promotion
• Word-of-mouth Promotion

PRINT BECOMES THE NEW FACEBOOK : Madison came up with a concept of combining print and social media. Since internet penetration was low, they tied with magazines, attached small oil bottles and a pre-addressed envelope send with every copy with message – ‘try this and if you like it recommend to friend by posting back envelope to us’ . Friends later received hard written letter, oil bottle and two envelopes.

3. Parachute Advanced Therapie Hair Vitaliser:

• Advertising (TV)

The campaign where  Deepika Padukone was the brand ambassador advised girls to massage the hair with Parachute Advanced for one hour and then use the shampoos in order to look Gorgeous Hamesha.

4.  Parachute Advanced Hair Oil:

• Advertising (TV)              
• Interactive Promotion

WORLD’D BEST HAIR : The campaign hinges on a ‘Pass the Sash’ concept where users can share the ‘World’s Best Hair’ sash with other Parachute Advanced users they know. This was brought to life through a Facebook Application. Users could select a friend, add the sash to their profile picture and pass on the Badge. They could also choose to create a video compliment by selecting a few pictures and copy from a given list of options, which then renders into a video. The application also had a Sash Map that tagged places in India where the Sash had traveled, on Facebook.

Parachute has employed many more promotional strategies for its other variants and continues to do so.

Channels Design and Distribution

Channel Design :

Various channels for Parachute Hair Oil include - wholesalers, retailers, sales agent, advertising agencies.

Parachute Hair Oil employs both pull and push strategy. A push strategy uses trade promotion money, manufacturers sales force or other means to induce intermediaries to carry, promote, and sell the product to  customers. The benefits that Parachute Hair Oil provides are well understood by the customers. Parachute uses majorly a pull strategy product which use promotion, advertising and other forms of communication to a very large extent.

Value:The company should first decide and narrow down on a target market, target group and then take into consideration the demand of the product. Designing of the supply chain backward from that target group should be done leading to a demand chain planning and thus selecting a value network.

Decision Making:

Analyzing Customer Needs and Wants:

Consumers choose the channels they prefer based on convenience,  price as well as their shopping motivates. Parachute hair oil is often used in small quantities by consumers. The waiting and delivery time is almost nothing as the product is available readily to be picked up from the shelf at any store.

Establishing Objectives and Constraints:

Channel objectives vary with product characteristics. Parachute Oil products are transported in bulks to stores and therefore channels that minimize the shipping distance and handling amount is used. This provides appropriate level of service and helps reduces the cost.

Distribution Decision:The distribution channels help businesses meet their marketing sales objectives. Marketing channels not only serve the market and but also help make markets. These channels must be in accordance to the company's strategy with respect to segmentation, targeting and positioning.

Importance of Distribution:

1)  Distribution constitutes a significant competitive advantage and is designed to save on cost, improve and increase efficiency, provide easier transactions, provide larger customer base, and allows businesses to focus on other aspects of the organization.

2) Businesses with  brand strategy, strategic promotion and convenience for customers is provided.

3) Channels  that are poorly chosen can have long term consequences and can ultimately lead to a failure in the market.

Retailing,Wholesaling and Logistics

Wholesaler: Sell at a margin of 8-10%. Sell at local Kirana stores in case the stock is left over.

Kirana Store: The product is purchased at MRP and a margin fixed by the distributor of the company is earned.

Super Markets: Buyers decide on pricing Strategies depending on the locality and nearby retailers. Products can be sold at a discount of Re1 or 50 paisa for Parachute Hair Oil.

Hyper Markets: They sell in packs of 3 and reduce the total MRP by Rs 5-8. Small SKU's are at times available for free with the product.

Distribution network for Parachute in India:

Sales territories:

Urban-135

Rural-35

Towns covered:

Urban- more than 32000

Rural- more than 11000

Distributors - 850

Super distributors - 120

Retail outlets: 

Urban - 1.65 million reach

Rural- 0.85 million reach

Product Pricing

Setting a Pricing Policy:

Selecting  the pricing Objective:  To acquire Maximum Market Share is the objective.

The market for Parachute Hair Oil is price sensitive and a low price will stimulate its market growth. The costs of production and distribution will fall with accumulated production experience. According to 2012 survey Parachute has been able to get hold of the market share of 53% becoming the Brand Leader and it is the first brand in that segment.

Determining Demand: In India, customers prefer small frequent purchases. Parachute hair oil is available in different sizes thereby providing all the options to its customers. Parachute faces competition from Vatika, Bajaj, Dabur, etc,  but it still remains  the leader. It targets the rural along with the urban population. The price Catalog of Parachute Hair Oil is as follows.

Normal 200ml-Rs39, 20ml-Rs5; mini pack-Re1; Parachute Therapy 50ml-Rs190 Parachute Advansed 80ml-Rs27, 170ml-Rs48, 300ml-Rs80. Customers are loyal to this product and purchase this inspite of small changes in prices.

Estimating Costs: The cost is influenced by key raw materials, the cost of packaging and ingredient oil prices . The cost is different for each variant as each of them has different composition and is packed differently in various sizes. Total cost and the fixed cost together determine the total cost of the product.

Analyzing Competitors' Cost, Prices and Offers: As mentioned above, Parachute Hair Oil has a strong base of loyal customers. Presence of competitors does not really affect this product. But for new customers it is crucial that Parachute analyses the features offered by the competitors on their product and hence price its own product accordingly by subtracting the cost of those additional features.

Selecting a pricing Method: Parachute has perceived value pricing method and delivers its product to the customers at a price that they perceive feasible and appropriate.

Selecting the Final Price: The final price is selected keeping in mind the additional factors, including the impact of other marketing activities, company pricing policies, gain and risk sharing pricing and the impact of price on other parties.

Pricing Strategy For Parachute Hair Oil:

Analysis of 100ml Parachute hair oil

MRP                    :       28

Retailer Profit    :       13%

Distributor selling price or Retailer cost price: 24.77876

Distributor profit margin : 4%

Distributor cost price : 23.82573

Company profit : 12%

Company Cost price : 21.27297

Product Hierarchy

The Product Hierarchy

The product hierarchy stretches from basic needs to particular items that satisfies those requirements. Product Hierarchy comprises six levels.

Need Family: It is the core requirement that underlies the existence of a product family. The requirement for Parachute Hair Oil is generated from a need for personal care.

Product Family: All the product classes that can satisfy a core need with reasonable effectiveness comprise product family. Parachute is a part of the hair care family.

Product Class: This is a group of products within the product family recognized as having a certain functional similarity.This is the product category. The category being taken into consideration here is the Hair Oil category.

Product Line: A group of related products manufactured by a single company is a product line. All the products lie within a product class that are closely related because they perform a similar function, and are sold to the same customer groups, as well a they are marketed through the same channels, or fall within given price ranges. In such a case, Parachute Hair Oil is the product line which has a range of product types.

Product Type: A grouping of similar kinds of manufactured goods. Items in a type share one of several possible forms of the product. Parachute has a number of product types such as Parachute Tender Coconut Oil, Parachute Jasmine, Parachute Advansed and Parachute Therapie.

Item: An item is stock keeping unit. It is a distinct unit within a product line or a brand distinguishable by size, appearance, price or some other attribute. Parachute oil is available in different sizes and accordingly have different prices. It is available in family pack bottles, sachets, normal flip flop cover bottles, etc.

Marketing Mix

Marketing Mix Elements:

4 P's of Marketing: The four P's of marketing comprise Product, Place,  Price and Promotion. Let us see how these can be related to Parachute Hair Oil.

Product - Product is used to refer to the varied range of products or services that a company is selling including  quality, reputation  and branding of the product. The variants of Parachute are Parachute Advansed, Parachute Therapie and Parachute Jasmine. Therefore Parachute is accepted by all sectors.

Price - Price refers to the amount of money for which the product is available. Parachute oil products are available in different forms and also in different sized packs. Parachute: 200ml- Rs 39, 20ml- Rs 5, mini-Re 1; Parachute Jasmine: 500ml-Rs90, 50ml-Rs 12; Parachute Therapie: 50ml-Rs 190; Parachute Advansed: 80ml-Rs 27, 300ml-Rs 80. This makes Parachute affordable by all.

Place - Place means the location where the shops selling Parachute exist and where this product is actually sold. Parachute hair oil is easily available in urban as well as rural India and also a few other countries where it is expanding its market. 

Promotion - Parachute promotes its product by advertising through Print,  Digital Media and Television. It has celebrities promoting the brand such as Deepika Padukone and Yuvraj Singh. Advertising is especially heavy before Holi and during winters. Campaigns like '1 hour champi kiya ' help remind people about the benefits of oiling before hair wash. Sales promotion such as 20% extra was also made on the 200ml pack. This creates awareness among the people and generates more customers.

Five Product Levels:

Relating it to Parachute Hair Oil -

Core benefit lies with the customer as it is the customers requirement that has to be fulfilled. The actual service that the customer is buying is strong and healthy hair.

Basic product is generated by the company as it provides with customer benefit. The company is the first to provide such a product with a fresh design and in a new form. Marico created the basic product, Parachute Hair Oil.

Expected product is the reaction to all the products available in the market. It rests in the mind of the customer. Customer willingly accepts the product as it  fulfills his requirement.

Augmentation brings about distinction in the products and therefore lies with the competition. Variants of Parachute Hair Oil were introduced as a result.

Potential product lies with the company as company is the innovator of the product. Competition will also have potential product as it innovates to create products that can compete with the company's product. The competitor and the company are in a continuous process to make better product than each other and prove their product to be the best.

Product Classification: Parachute Hair Oil is a non durable good which is tangible and is normally consumed in one or a few uses. This oil is available in different sizes of packages and are purchased frequently. It is easily available in almost every location at affordable prices and are advertised heavily to  build preference over other competitors. The promotional strategy has been described above already. 

PLC and ILC

Product Life Cycle:

Every product has life cycle. Every product would have a limited life and will pass through different stages bearing different challenges and opportunities. As sales and profits in these life cycle stages vary, a different marketing strategy should be followed by company at every stage. There are four stages of a product life cycle – Introduction, growth, maturity and decline. It is not compulsory that a product must undergo all stages in its life cycle. The various stages of Marico’s Parachute oil are as described below.

1. Introduction:When a product is just released in the market it is in its introduction stage . It may not earn profits and most of the cost is spend on promotions to bring a product into the market. Before entering any market a business should have enough knowledge about – the target customers,  sufficient demand for product,  risk is involved in it and whether  they will be able to continue delivering expected results on grounds of quality and expenses. All these factors have to be taken into consideration before deciding  to launch a new product. During this stage, interest is induced in the customer for the product. It may happen that customer may not accept the product readily. However, Parachute entered the market safe in 1990s. During that time the hair oil sector was dominated by unbranded oils. Marico saw the opportunity and hence came up with it brand ‘Parachute’ which became India’s first branded Hair Oil. It was also the first one to come up with attractive packaging of oil in Plastic bottles. Parachute in its initial days (when it dealt only with coconut oil) was successful in building a good connection with the mass,especially with middle class households based on the concept of ‘100 % purity’ and ‘Grandma’s hair care solution’.

2. Growth:Once a product has achieved a place in the market and gained interest and customers start demanding for it, a product is said to be in its growth stage.  There is rise in sales and profitability in this stage. There are a few challenges involved as well in this stage. Competition starts increasing and thus making it not as easy for the product to survive in the market. Parachute started facing competition from brands like Bajaj , Dabur, Keo-karpin etc. These competitors forced parachute to launch new brand variants in other oil types. Around 10 years back, Parachute showed emergence of competitive brands coming up with hair oils of different type like jajoba, olive, almond, Alma etc. hence it launched its Parachute Advanced Oil series with non-sticky scented coconut oil. It improvised on its product to win customers from competitors.    

3. Maturity:When a product has established itself in market firmly as leader it is said to be in its maturity stage. Parachute has generated loyal customers for itself. It is one of the leaders in the world of branded hair care products. The brand recorded a volume growth of 10% during year 2012-2013. Parachute is therefore in its maturity stage with a good amount of brand visibility. It should now concentrate on retaining its loyal customers and target new markets. It has already started to expand its international reach covering under explored markets like South Africa and Malaysia. It also has taken over brands from Egypt and Bangladesh slowing expanding globally. It focuses on targeting the youth with its innovative variants and juvenile appeal. Parachute has launched variants targeting kids and middle aged people. It occupies the position of a trusted brand. 

4. Decline:In this stage the product starts to decline and die. It could be due to reasons like technological advancement, shift in consumer interest, competition etc. In such a stage, companies can either review their market strategies or policies to revive their product else they can let it die slowly while they may work on introducing another product in market. At times products in decline stage are acquired by competitors. This can be a good alternative if the brand is incurring loss to owning company and company doesn't see any advantage in bring it back to the market. Parachute though has not seen any of its variant getting obsolete, Marico has hardly a few brands in declining stage and now whose production is stopped. For example, Sweekar Oil.

However, Industry Life Cycle is an appropriate way of describing the life cycle as it is depicted across  a particular category. Competitions and its effects can be well depicted on the Industry Life Cycle graph.

Competition

Competition Faced by Parachute:

Competitors are really not a threat if they are understood and are dealt with pro-actively. They give a good insight about what your current position is relative to them. Competition drives companies to constantly deliver – exceptionally. Understanding your competitor gives an insight into their future moves and decision sometimes. Analysis of Competition is a learning process of knowing your competitor in and out.

Parachute is world’s largest selling coconut hair Oil and it too is subject to competition. It's competitors are Parachute.

Direct competitors are those who compete against the brand in same product category while indirect competitors are those may act as substitutes for a product. Parachute coconut Oil faces direct faces direct competition from Vatika Enriched Coconut Hair Oil as they both are in same category of coconut hair oil. The brands like Dabur Amla Hair Oil, Bajaj Almond Drops, ,Bajaj Bramhi Amla Oil, Nihar Shanti Amla Hair Oil, Keo Karpin Hair Oil etc are substitutes for Parachute Coconut oil as they offer hair care with different type of oil. If customer does not like coconut oil or is unhappy with parachute’s sticky oil, they might just easily change their preference to the above stated substitutes.

The table below shows how the competitors differ with each other.