Soaps are not being consumed less, but stocked less, reveals Cholayil study

Interesting perspectives are emerging from Operation Marketstorm (as reported by agencyfaqs! on August 28) launched this August by Cholayil Group company Dorcas Market Makers Ltd, marketer of Medimix, Vrinda, Cuticura, Ziva and Tejaswini brands, in Tamil Nadu. Operation Marketstorm was an attempt on the part of the company to understand the slowdown in the soap market and get a first-hand fix on consumer psyche.

"To our surprise, we discovered that the economic downturn has not led to a decline in soap consumption, though retailers are stocking less of soaps. May be due to the influx of soap brands in the market, or may be because of the slowdown, retailers are stocking fewer SKUs, which means overall there is degrowth in the soap market," says KHS Manian, vice-president, sales, Dorcas.

This clearly indicates retailers are trying to cut costs by stocking fewer SKUs of the same brand, while trying to spread the risk by spreading their monies on a wider basket of brands. That's not all, Operation Marketstorm also reveals that there is a big shift taking place in the consumption pattern of soaps. Hit by the downturn, many consumers have switched to soap brands in the economy segment. "There is an economic shift taking place in the market. In this constrained times, most manufacturers are offering schemes. The zero interest scheme offered by most consumer durable manufacturers has ensured that consumers invest in durables at the cost of cosmetics and FMCG products," observes Manian. Taking a cue from this insight, the company is mulling the launch of a soap brand for the economy segment. It is also test marketing a line extension of Medimix in the shampoo segment.

Most consumers from middle-income groups have increased their expenditure on consumer utility items by cutting on non-essential items and by opting for cheaper substitutes. According to the company, that has been the reason why a flurry of activity is seen in the economy soap segment with the take off of a plethora of brands such as Breeze, Godrej No.1, Nima etc. Operation Marketstorm also confirms that soap purchases have come down as marketers offer free soaps with just about any product. With consumers not having to pay for soaps and with companies accounting in only actual sales made, the market has consistently reflected poor off-take for the past year or so.

Though such freebies are hitting companies, most companies cannot really refrain from jumping on to the freebie bandwagon. "It is a vicious cycle. In any market there are drifting consumers who constantly switch brands for various reasons. Most of these guys are drawn to a brand/company when it offers free stuff. At times, even the most loyal customers switch to other brands when they find their favourite brand has nothing to offer. We cannot risk such a situation, even though it affects us adversely," says Manian.

According to him, Dorcas has been very cautious with its free gifts. For example, in August this year, the company offered a 50-gm Cuticura talc free along with three Medimix soaps in some markets of the south. This was done to support the relaunch of Cuticura talcum powder. In the north, however, the company felt the concept of ‘extra' works better; which is why it offered one Medimix soap free on the purchase of three.

The company hopes to garner more such insights into consumer behaviour when it launches Operation Marketstorm in the Andhra Pradesh market in some time. © 2002 agencyfaqs!