Title: The Marketing Plan for FMGC (Soap)

Contributed by: G Mohana Krishnan

Executive Diploma in Marketing Management,

Loyola Institute of Business Administration (LIBA)

Loyola College, Chennai

Table of Contents

Sections Descriptions

1. Executive Summary

2. Situation Analysis

3. Market Opportunity and Issue

4. Objectives

5. Marketing Strategy

6. Target Markets

7. Positioning

8. Marketing Mix

9. Review and Control

10. Marketing Organization

11. Contingency Plan

12. SWOT Analysis

GM Enterprises (GME) is a hypothetical start-up. It is set up by Mr.G Mohana Krishnan as a Proprietorship firm who found opportunity in FMCG Sector in the Chennai region in Tamil Nadu, a state in India. The company decided to focus on a new product that provides parents with a quick, easy, and affordable method to effectively monitor children’s hand washing.

Proper hand washing is the most effective preventative measure available to combat communicable diseases. The greatest contributing factor to this problem stems from the inability of parents to monitor and control children hand washing. Existing products offer no effective or affordable solutions for enforcing and ensuring hand-washing compliance.

GM Enterprises is the first producer that answers this problem and provides indisputable proof every time a person washes his or her hands.

Section 1: Executive Summary

After washing occurs, the unique dye in our soap remains on the hands and fades to the skin's natural color in under six minutes. This would allow parents to conclusively verify at a glance whether hand washing has taken place. No other product on the market offers such a high level of assurance of sanitation compliance. The product is safe and meets all current FDA regulatory requirements for soap.

GME will initially tie up with large retail chains as a private-brand supplier for them. However, it plans to enter the domestic market, and subsequently the international market with its own brand once it has stabilized its procurement base, production process and quality of products, and generated enough financial resources. GME aspires to be a leading soap manufacturing company within India in the next 10 years.

Section 2: Situation AnalysisGME proprietor analyses the situation using the 4C frame work. 4C stands for customer, competitor, company and context.

Customers:GME is entering its first year of operation. It has tied up sales with one larger retail chain, which will be opening 500 stores all over India in the next three years. This group already has 50 stores in operation, mainly in southern India. GME is also negotiating with another large retail chain. These two retail chains will take care of about 100% of GME’s sales in the first year.

Competitor: GME knows that there are some established brands in this field like Lux, Dove, Pears, Dettol, Lifebuoy and several local manufacturers. GME, after a detailed analysis, has found that its major competitive advantage is the assured access to good quality raw material at a very reasonable cost and its ability to develops and markets soap utilizing time-sensitive dyes promoting sanitary and safe environments to businesses and parents interested in maximizing cleanliness.

Company: GM Enterprises was founded in Chennai and created as a Proprietorship Company. The company will initially be based out of a residential apartment in Chennai to run operations. In Year 2, we will move to a rented office. Total funding required to get the business started is estimated at Rs.5 million. GM Enterprises boasts a strong focus group and experienced board of advisors. The Initial plant capacity is for processing 50 tons of soap per month, will be used to test, patent, approve, produce, and market, as well as provide working capital for the first year. However, the capacity utilization is expected to be 70%, 80% & 100% in the first, second and third year respectively.

Context: The annual production of soaps in India is estimated to be about 10 million tons. Due to rapid growth in organized retail and promotion of Indian Soaps for export, production is expected to grow at the rate of about 25% per year. The demand in the export market and organized attempts at brand building is also expected to help in obtaining better prices.

Section 3: Market Opportunity and Issue

Assuming just about 100 grams of consumption per month for about 20% of Indian’s 220 millions household, the market potential comes to about 53, 000 tons per year.GME’s current capacity of about 450 to 500 tons is miniscule in proportion to this. Moreover, the tie-up with two large retail chains and exploration of the 1.2 million strong armed forces market (with about 4 million consumers) offers tremendous opportunity for growth.

The key success factor in the market is the provision of quality products in desired quantities, and at reasonable prices. Access to quality raw material at low cost, which is remunerative to the producer/intermediary, is another requirement for success in this market.

Section 4: Objectives

Develop a complete prototype, which meets regulatory standards by the end of Year 1. Achieve an internal rate of return of about 20% Achieve an average growth in sales of about 25% per year.To receive 95 percent positive customer feedback by the end of year 2. Achieve sales of 280, 360 and 450 tons in the first, second and third year, respectively.

Sales Forecast

Year Sales (Tons) Rupees (Millions)

2011

2012

2013

280

360

450

140

180

270

Assumptions:

The plant will run for 10 months in the first year at 70% of the capacity, for 11 months in the second year at 80% of the capacity and for 12 months in the third year at 100% of the capacity.The realized prices will be Rs.50,000/ton for the first two years, and Rs.60,000/ton for the third year. Achieve break-even sales of 130 tons in the first four months of operation

Break even Analysis

1. Revenue/ ton Rs. 50,000

2. Variable Cost/ton Rs. 35,000

3. Contribution/ton Rs. 15,000

4. Fixed Cost Rs. 2 million

5. Break-even volume = Rs.2 millions / Rs. 15,000 = 133 ton

Break-even sales would be at about 33% of the capacity

Section 5: Marketing Strategy

GM Enterprises will follow four concise strategies to achieve our desired growth: Exploit first-mover advantage in a highly fragmented market with a unique and differentiated product. Develop a strong branding campaign to build awareness, positive perception and sales of our products within our target markets. Continue to develop new products to satisfy an ever-growing set of markets. Customer focus with operational efficiency and customer intimacy

Our Mission

Our mission is to create value for customers by continually improving health and reducing preventable illnesses through the use of our soap.

Section 6: Target Markets

The focus group helped to define the target market for soap. As a result of the group it is found that the most restaurants and hospitals have tremendous market need for a product. Soap are an ideal market because they have a vested interest in reducing disease transfer amongst children, and have adamant support from their clients to create as clean an environment as possible.

The focus groups were to be made up of both male and female in order to determine who would be the most likely to purchase the product, in what forms, for what purpose, and at what cost. As a result of the focus group ideas were formulated on how marketing the washing soap may proceed. The results of the focus groups led to further discussion about the pricing, packaging, and promotion of the product.

About 10% to 20% of the production will be used for brand building and testing the local retail channels in a focused manner.

Section 7: Positioning

GME will position itself as a value-for-money brand, one that is reliable and trustworthy.

Keys to Success

A first-mover branding campaign to build awareness of products as the standard for ensuring hand-washing compliance. Patent protection to defend our time-sensitive dye and product concept from competitors. Complementary relationships with organizations interested in increasing hand washing compliance.

Section 8: Marketing Mix

Product: GME product line provides a unique control level to managers & supervisors and parents alike. We have two basic product lines: CHILDassure, intended for day care facilities, and an antibacterial based product for hospitals (HEALTHassure) and restaurants (FOODassure).

Product Description: GM Enterprises will produce a line of institutional liquid soaps with a time-sensitive dye blended into the mixture. The dye reacts with the hands during the lathering process, staining the hands a distinct color, then fading in less than six minutes. The packaging will be compatible with existing soap dispensers mounted in washing stations and be available in a variety of sizes. Initially, GM Enterprises will produce products with childcare acquirers in mind, utilizing the brightest colors possible. This product line, called CHILDassure, will consist of four colors: red, blue, pink and green.

Price: With all other points in place, price is the last item that needs to be established. It has become apparent, within our research, that the following price levels may be used for each product type:

Soap in Jar: Rs.50/ kg Soap in plastic bags: Rs.30/ kg Soap in wrappers: Rs.40/ kg

These prices are based upon a combination of secondary research, cost estimates, and focus group information. A discount of 10% will be offered on the invoice price for volume exceeding 10tons/month. The distributor will decide the maximum retail price to be printed on the packs.

Place: GME will need to be determined on the preference of the target market. When conducting the focus group on soap numerous ideas were introduced. The most important goal that was established when determining a place and time to distribute the product is making the product easily obtainable

Numerous locations of sale were indicated by the focus group, the focus group suggested that the product should be available any times of the year. Selecting the correct time is critical to ensure the popularity and sales of this product. The focus group assisted the marketing team in concluding that careful consideration be taken when choosing the time and place to market soap to receive the greatest results. Initially, GME will supply to markets directly. In the second year of operation, the product will be launched under the “GM Enterprises” brand, in a few major towns of Tamil Nadu, Karnataka, Kerala and Andhra Pradesh at select outlets through wholesale channels.

Promotion: The promotion of a product is strongly tied to the place, price, and packaging. The basic promotional route will be point-of-purchase material, attractive danglers placed near check-out-counters, and sample trial packs of 50 g each. Also, we will develop an awareness campaign to promote our product through several avenues. We will also attempt to capitalize on the novelty of the solutions provided by our product by actively seeking local news and media coverage to help spread awareness.

Section 9: Review and ControlGME will have simple, decision friendly, weekly, monthly, quarterly and annual reports focusing on the following:

Revenue and unit sales

Expenses

Customer feedback

Market log (self and competitive major activities)

Section 10: Marketing Organization

Proprietor, will head the marketing function, and will be supported by a focus group and experienced board of advisors and also a senior manager.

Section 11: Contingency Plan

GME anticipates pressures on price due to competitive activities and strong buyer

power. Its impact will be felt on profitability and break-even volume. Even with a sufficient cushion at present, GME envisages tight cost controls consisting of a lean organization, long-term contact with orchard owners, and efficient use of resources. It is also keeping sufficient capital cushion to manage the enhanced working capital requirement due to delays in payment, and need to keep a sufficient inventory.

Important Assumptions:SalesWe have assumed no payroll expense for the startup period. 100% of sales will be made on credit, the industry standard. As such, we assume, on average, a 45-day collection schedule. Customers will pay for all relevant shipping charges. To be flexible in meeting the customer demand, we plan to maintain a minimal stock of product at a rented warehouse and dispatch it from there. The rest of the product we expect to be shipped from the outsourced producer's site.

Research

Further research to finally arrive at a working prototype will be outsourced to a chemist with extensive experience working with dyes. After a working prototype is developed it will be pushed through the appropriate regulatory channels. Funding for research for the first product (CHILDassure) will be provided for in the initial startup capital outlined in the start up table and summary. We will use our success in the day care market to propel and fund in additional research and development on an antibacterial version of our soap for use in restaurants (FOODassure) and hospitals (HEALTHassure).

Market

Initial target markets include all professional day care facilities with capacity for 20 or more children.

Projections related to consumer acceptance were estimated using market surveys.

Section 12: SWOT Analysis

STRENGTHS:-

Unconventional strategyo Effective advertising, Free publicityo Continuously evolving the campaigno Strong emotional toucho Cross-selling Possibilities

WEAKNESSES/CRITICISMS:-Contradictory in natureObjectification of womenWomen featured were comparatively slimUse of idealized images in other brands under the same flagshipContradictory Japanese campaign

OPPORTUNITY/RECOMMENDATION :-

Target male customersMaintain better standards of qualityUnified advertising throughout the globeContinuous innovation

THREATS :-Risk of being a brand for “fat girls” Involved marketing riskCopy by the competitors Undermining the aspiration of consumers Sustainability of campaign in long run

Thank YouAny queries please…..