Marketing Shampoos – a view from the other side of the world

Most developing countries have much lower per capita income when compared to developed countries. The world's most reliable information source (www.cia.gov) estimates the 2011 per capita incomes of India at $ 3,700, Pakistan at $2,800 and Bangladesh at 1,700 as against $ 48,100 for the United States. This huge gap in incomes poses a big challenge for US and other multinational companies when they try to market their products in developing countries. Many products that are considered to be normal daily use items in a developed country might be unaffordable to most of the population in a developing country. My example in this case is the humble shampoo; a product that even the poorest person (especially women) in a developed country will not think twice before buying.

Shampoos generally come in bottle sizes of 250ml (8.45 oz) to about 1000 ml (33.8oz) and these sizes are universally available. However, in India shampoos are mostly sold in single use sachets of 7.5ml (0.25oz). Unilever, which has the largest share (44%) of the shampoo market in India, sells its Sunsilk and Lux shampoo in these sachets. Each shampoo sachet is priced between 2 and 4 US Cents. Clinic All Clear, the anti-dandruff shampoo is sold at 5 US Cents per sachet.

Not to outdone P&G, a late entrant in the Indian market, now sells Head & Shoulders and Pantene brands in 7.5ml (0.25oz) sachets at 6 to 8 US cents a sachet. Incidentally P&G has the second largest share (25%) of the Indian Shampoo market. P&G has also put its washing powders in sachets with Tide priced at 2 US Cents a sachet and Ariel at 4 US cents.

Imagine, at this price Unilever, P&G and others not only have to cover their manufacturing costs but also distribution costs and various margins for whole sellers and retailers, and the huge advertising costs that the hair care products require. It’s the volume of sales that really makes this segment profitable for them. The total Indian shampoo market is currently estimated to be between US$ 470 and US$ 550 million, out of which 40% is sold in sachets

It should be noted that most sachet sales in India take place in small towns and rural areas where people have extremely low purchasing power and the penetration of shampoos (i.e. the number of people who use shampoo) is very low. The introduction of shampoo, and other products, in sachets creates a new market for these products, a market that could not afford large bottles of shampoo but is quite willing to buy in small sizes that are priced to suit their incomes

References:

http://www.unilever.com/images/ir_Unilever-in-India_tcm13-113961.pdf

https://www.cia.gov/library/publications/the-world-factbook/

http://trendwatching.com/trends/SACHET_MARKETING.htm

http://www.scribd.com/jeetan1984/d/35942531-The-Shampoo-Market-Imc

http://business.mapsofindia.com/top-brands-india/top-shampoo-brands-in-india.html

http://www.pg-india.com/hp/history.htm