Question:
Describe about the Strategic Management Analysis of LUX ?
Lux is an important FMCG product owned by Hindustan Unilever Limited (HUL). HUL is a 52% owned subsidiary of Anglo – Dutch giant Unilever, which was initiated in the year 1888. This company mainly deals with consumer durables operating in the market and manufacturing them. HUL is a Indian based company which is a subsidiary of Unilever. Improving the supply chain, taking initiatives to build the brand with latest innovation is the main focus of the company’s prospective. The company aims to maintain its leadership in overall FMCG category in India.
Lux soap was first launched in 1916 by Lever Brothers. It was introduced to encourage women wash their clothes without fear of clothes turning yellow. In 1925 bathroom soap were introduced and it was introduced as luxury. In the year 1958 Lux came up with different colour range: pink, blue, yellow, green. Lux also came up with different packaging styles. Today Lux stands as one of India’s trusted care brands. In 2005 Lux came up with some new variants such as Wine and Roses bath cream, sparkling morning shower gels (Hul.co.in, 2015).
Some of the prominent variants are Lux fruit, Lux sandalwood, Lux Rose, Lux Almond, Lux Orchid, Lux Chocolate, Lux Oil and Honey Glow etc (Outsiders, 2015) .
Political factors:
Politically lux is facing a problem on the import of raw materials. Government has banned the import of tallow which is one of the basic requirements for soap. Also there is not so much problem for the ALFRESHSOAP so that it does not create any impact that can affect the product. Also adulteration of Vanaspati was another incidence by unscrupulous manufacture. Also the soap industries in India were under the restriction of raj (Sadler, 2003). Later on there have been more competition between organized and unorganized sector. The political scenario is changing day by day and new entrants are posing on threat by giving concession on tax.
The cost of soaps in India is very high as compared to other countries like Indonesia. This is mainly accompanied by the rise in cost of import duties. The import duty rates have increased from 20% to 35% and the excise rates have also increased at a speed of 16% that forms a major portion of the cost. The average expenditure per user of every household for toilet soap is Rs 237 and Rs 706 for high income groups.
The need for hygiene and personal skin care is very important nowadays with the increasing disposable income levels and rise in education. Being a member of the World Trade Organization it is very important to maintain the necessity of skin care and personal affection towards health. Therefore Lux targets the audience to go for Premium Soaps by enhancing the aspiration levels. NGOs towards inefficient PHC- primary health center and fragmented approach of government alleviate the problem. The rate at which advertising medias like cable TV and satellite are growing to give a emphasis to the market penetration initiatives of other competitors in the market.
The industry should focus on technology intensive opportunities rather being a capital intensive industry. The company should focus on manufacturing premium soap comparing with other soaps. The company should also focus in logistics management where distribution and marketing plays a pivotal role. Also the company emphasizes on Electronic Customer Relationship Management (E-CRM) and Supply Chain Management. The company is also trying to cope up with small kirana stores and small retailers. This company should cater to high income group as it is expected to rise by more 100 percent.
Lux was facing a problem of environmental degradation because HUL had fewer resources that could be used and they could produce less waste. Also there was a major development of European emissions which could restrict the amount of polluters that are being emitted in the air and thus Lux could become an eco-friendly product.
Because of their presence in the worldwide they are bound to abide by some rules and regulations by national law. Therefore HUL as a company should make any changes abiding to the changes accordingly.
Threat of New Entrants-
In every company new competitors is constantly entering the market to gain more market share and make their presence across more intense and compete globally. This makes threat of new entrants high in the market. In the last two years there are many companies such as Elf makeup, celebrity branded makeup which have come up into this industry. Because as per economies of scale perfumes and makeup are produced in larger quantities. This is relatively lower in cost per unit. Therefore this is an industry many firms like to open up into. And also very less capital is required and any company cam play a dominant role and become the market leader. Threat of new entry is high because palm oil is imported from Malaysia and it is very expensive in India compared to China and Malaysia. So To launch personal care products there will be more cost involved.
In this type the customers always look forward to reduce the prices and add services to improve the quality of the product that can affects firms competition. Also in this type the customers have a preference to swich over to other brands and not alwaya stick to any particular product. Which indicates that buying power is always high. But also customers prefer to stock various brands at favourable prices. In rural areas people are not interested to buy high priced products.
This means how much power the supplier side has. The cost of switching to the suppliers is not very high as there are many companies which create their own personal products. They have lesser suppliers because unilever has more than 100 manufacturing units in India (‘five forces’, 2015) .
This is the fourth force which is very high in this type of industry. If any customer is not satisfied with the quality they can always shift for other brands and go for other substitute products. It may be high priced or low priced depending upon the quality. In this type of Industry threat of substitute is very high. Because for soaps biggest substitute will be facewash and body wash. There is an upward trewnd to use them as it comes from the western culture.
There are large numer of firms which are competing each other. In this type there is very little product differentiation existing example the scents smell similar.
Conclusion:
From the above assignment it is concluded that Lux is one of the iconic products that has entered the Indian market. The history of Lux has been related to women of every generation and thios is one of their mission strategies. The brand Lux have been able to uniquely position itself in the market and launched through the media partners as well. Advertisements includes beautiful photos in pages of women magazines to billboards TV and newspapers as well to actively associate with the market. Lux has successfully transcended the hurdles of elite class epitome and has positioned itself occupying centre stage appealing to women of all ages.
Considering the present market share we can say that Lux is a promising brand which is coming to fulfill the needs of customers. The continuity and popularity stands out to be unique able to satisfy human needs satisfactorily and it promises to run across centuries.
It can be seen that Lux as a part of HUL is facing tough competition from its competitors. It is trying to retain its market share and achieve high growth and profits in the market. It can be recommended that they can use more marketing strategies such as BCG matrix, check its competitive strategies, go for some SWOT analysis to regain its market share. They must introduce some new products for example they can launch face wash with a fragrance that other companies are yet to launch in the market. This will have a greater impact on their sale. However it should also be noted that the marketing activity should be considered all throughout the year that will add in gaining competitive edge from its competitors in the market globally.
References
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