Marico Industries is Deeply Affected by Increasing Material Prices

Hair oil to skincare

The shares of Marico Industries are traded in the Indian stock markets at Rs.157. The company has transposed itself from parachute driven to skincare business. It wants to compete with Nivea, Pond’s in an overcrowded market. It also wants to enter into biscuits segment. The company makes hair oil and edible oil. Skincare market is Rs.45000 million in India. Marico wants to extend its two decade-old coconut hair oil brand Parachute to body lotion and other skincare products. Will its strategy succeed?

Will extension of brand name bring success?

While discussing about powerful brand names, we have to remember that each brand is associated with a particular thing in the minds of the people. You cannot force people to associate it with something different. Take for example the powerful Colgate brand. Immediately people remember toothpaste, toothbrush and related things in dental care. Suppose tomorrow Colgate starts manufacturing two wheelers and names them as Colgate motorcycles, will the people accept them? Very unlikely. Therefore Marico will do well to examine its strategy. Of course, it can enter into skincare lucrative segment and make profits. But it should introduce a different brand name for these new products and should not extend the name Parachute, which is already associated with hair oils. Perhaps Marico can have the new brand name ‘MERICO’ or ‘MERRYCO’. It will reflect both the company as well as the product.

Powerful competition

Marico will be introducing first a body lotion. First it will be introduced in the East India and then gradually spread to other regions. Marico will enter the skincare market with the Parachute Advansed umbrella brand name. A powerful competition awaits the company. Marico will have to face Hindustan Unilever’s Vaseline and Pond’s, German company Beiersdorf’s Nivea, L’Oreal’s Garnier and Johnson & Johnson’s Neutrogena plus others. The success of the company depends upon its marketing and distribution skills in a vast market dominated by the multinational companies. Dettol was successful in extending its brand from an antiseptic medicinal liquid to antiseptic soap. Tuning the consumer’s mind is also important. ITC introduced Sunfeast biscuits in 2003 and immediately captured 10% market share. But it made no further progress since then, probably because it gave contract for the manufacture of biscuits to one particular company in Bangalore and has not since changed them.