Fevicol Report Group -2 PDF

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Report on Fevicol Company...

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Fevicol

Group 2 Participants: NAME

ROLL NUMBER

Abhishek Mallick

M069-20

Ashwin Rai

M079-20

Jahnavi Agarwal

M089-20

Puranjay Khetarpal

M099-20

Shaloo Bhansali

M109-20

Tejaswi Varshney

M129-20

Varun Naik

M139-20

Vandana Kumari

D008-20

Table of Contents: 1. Introduction - About the Company, History 2. Analysis a. 4P b. SWOT c. STP (including Bull’s Eye) d. Ansoff Matrix 3. Consumer Survey: Consumer Decision Journey, Profile of Target Survey Group 4. Competitor Analysis 5. Present Scenario of Fevicol 6. Financial Analysis 7. Conclusion : Our Recommendations 8. References Page: 1

Fevicol

1). INTRODUCTION “Yeh Fevicol se bhi majboot jod hai.” P  rime Minister Narendra Modi remarked, wrapping up the 4th day of the Indo-Japan meet expressing his trust and friendly bond with the Japanese people. For a low involvement category product to be referenced by the Prime Minister goes on to show how Fevicol has carved a Brand name in the minds of the people , so much so that it has become synonymous with the product line it represents.The innovative marketing campaigns and moment marketing have a huge mass appeal. Fevicol has been referenced in the pop culture media numerous times like in the movies like Masti (2004), Awara Pagal Deewana (2002) and the viral song “Fevicol Se'' from the movie Dabangg 2. This report will analyse the mammoth brand that the company has become and the marketing strategies that catapulted the brand to capture the largest chunk of the market share in the Adhesive Markets. Analysis of different parameters shall help in gauging the overall scenario of it. Fevicol is owned by Pidilite Industries. It is the brand name for poly-synthetic resin adhesives. The primary applications were in wood working with secondary applications being upholstery, footwear and flooring. It expanded into the retail markets in the 1970s and became a household name. Referred to as the Ultimate Adhesive, Pidilite states the three features of Fevicol that have made it the brand it is today- a) the superior quality b)ease of application and, c) iconic advertisement. As adhesives only accounted for a small fraction of the woodwork process, the competitors targeted the hardware stores and wholesalers. Confident about the superior quality of the product , Fevicol adopted a bold strategy of marketing it directly to the consumers.. Through word of mouth publicity, the brand started to enjoy more trust from the customers and established their foothold as the leading brand.

2.a) 4P ANALYSIS ●

Product – The products of Fevicol cater to a wide range of household and industrial applications. Some of their popular offerings include: Fevicol MR, Fevicol SH, Fevicol SR, Fevicol SpeedX, Foamfix etc.

● Price – Fevicol has 10g to 50kg SKUs. It uses premium pricing over its products as it enjoys near-monopoly in the market to which it caters to. Promotional pricing is often observed as well. ● Place – The products are widely available as they cater to enterprise clients as well as end-users. Fevicol has its market in more than 54 Asian countries with more than 65,000 retail stores. Fevicol products are also available online.

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● Promotion – Fevicol has been a pioneer in innovative advertising. Its funny and witty advertisements directly connect to the real-life situations of the customers. These advertisements are often placed between high TRP television shows such as cricket matches or primetime shows. The concept of moment marketing is used. Fevicol provides incentives to its identified dealers for greater brand visibility.

2.b) SWOT ANALYSIS STRENGTHS ● Marketing Strategy – The instant viral advertising campaign (designed by Ogilvy and Mather) has made the brand a generic name for the product. Nearly 80% of our respondents call adhesives “Fevicol”. ● Networking – It networks extensively with carpenters, painters, architects and interior designers. One example of this is the Fevicol Design Ideas book with furniture designs. It prints about 150,000 copies a year. It also brings together homeowners, interior designers and contractors through a website and a mobile app. ● Market Share – Its market dominance is near-monopolistic and with a 70% market share, it is the market leader in Indian adhesive industry. ● Brand Awareness – Its advertisements have successfully occupied the mind share of the customers as is evident by our survey where 98% respondents are aware of the brand as compared to 31% of Centuryply adhesives and 22% for Araldite, its main competitors. ● Distribution Network – Its products are available in all towns above 50,000 population through a network of 65,000 dealers and retailers and now it is targeting all towns above 10,000 population. Secondly, they connect with the main user of the product: The carpenter. The “Fevicol Champions Club” connects over a 1 lakh carpenters across the country in a manner that's like Facebook, way before Facebook. WEAKNESSES ● Weak Credit Structure – It has stayed away from extending credit to its distributors unlike its competitors because it does not want to take on any financial liability on its books by extending “distributor credit”.

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● Downward Pricing Pressure – Due to the presence of multiple competitors and various new entrants, the industry now faces downward pricing pressures to remain competitive in the market. ● Niche Market – It is largely unrivalled in the wood works segment, but was not able to replicate the success with its “Marine”, “HeatX” products not being able to acquire a considerable market share.

OPPORTUNITIES ● International Market – Currently exporting to nearly 80 countries, it plans to expand through partnerships and joint ventures. ● Growing Adhesive Industry – The world adhesive industry is poised to expand to $ 67 billion by 2026 with a CAGR of 5.05%, with India, U.S. and China accounting for 57% of it. ● Product Line Expansion – Nearly 55% of its revenue is derived from its adhesives & sealant business and there is vast potential in expanding the Industrial Adhesive (5%) and Art & Craft Material Products (10%). ● Growing Urbanization – As people move towards a more urbanized way of living, the demand for real estate, furniture is also rising, driving up the sales.

THREATS ● Fluctuating Costs – 60% of expense is the raw material cost, i.e., Vinyl Acetate Monomer. It is imported and assumes foreign exchange risk, although low oil prices set it off to an extent. ● Covid-19 Induced Slowdown – The revenue fell to less than 50% as the COVID-19 pandemic brought many real estate projects and sales declined. ● Changes in Furniture Industry – The rise of ready-to-assemble furniture like Ikea have led to fall in demand for customized furniture, which in turn had led to decrease in sales of the flagship product for carpenters.

2.c) SEGMENTING, TARGETING, AND POSITIONING Understanding customer needs and developing offerings that suit their needs has been the formula for success for Fevicol. Their customer-centric approach and focus on innovative products has made it an undisputed leader in the market of adhesives. Page: 4

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Fevicol is the first commercial adhesive brand of India and the journey of becoming the market leader involved multiple strategic steps to target the correct segment and position it as a strong and an easy to use- adhesive that gave the best bonding strength Initially, Fevicol targeted craftsmen, carpenters. As the segment was not so educated, Fevicol made an effort to make them aware of fevicol. The company educated and encouraged craftsmen to use the right amount of adhesive in the appropriate manner for optimum results. They started launching design books from 1989 to help craftsmen and carpenters make a variety of furniture. Through Ads and clubs, they conveyed that the total expense incurred for the craftsman was marginal (almost 2%) but it assured a good quality finished product safeguarding the rest 98% of the cost. Through Fevicol Champions’ Club (FCC), started in 2002, it provided a platform to the carpenters and other wood-working contractors to come together as a community for their personal and professional growth and also to be recognized for their efforts. It always focussed on building confidence with the workers. Due to the strong brand equity, the brand was able to make inroads in the consumer segment selling Fevicol MR for art and craft needs of individual customers. The product was sold at stationery shops as a bonding solution for art and craft needs. It could bond cardboard, thermocol, fabrics, wood, plywood, etc. The new-age targets are interior designers and architects who need quick settling adhesives for their work. Fevicol launched Fevicol SpeedX and Fevicol Pro-Bond to serve this new segment.

POSITIONING Fevicol has an extremely unique positioning, it targets a wide array of markets and has set up different positions for different markets. It has one of the best advertisements, posters and marketing strategies which exemplifies its positioning and differentiates the brand from its competitors. Its level of innovation, diversified portfolio and mid-level pricing also enhances value for the customers. Moreover, its distribution network is very strong and the supply chain is very efficient. With the mantra of bonding and high quality, the product has always been known to be value for money.

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2.d) ANSOFF MATRIX Existing Products

Existing Market

New Markets

New Products

●

Fevicol SH

●

Fevicol Marine

●

Fevicol MR

●

Hi-Per

●

Fevicol SR

●

Pro-Bond Edge Fix

●

Fevicol SpeedX Pro-Bond

●

Foamfix

●

Fevicol, the first adhesive brand of India, started with Fevicol SH targeting markets of woodworks involving carpenters. Due to strong brand equity, it launched Fevicol MR and SR for students and household purposes capturing around 70% of the market. To solve the existing problems of moisture exposure, water bubbling it launched new products Fevicol Marine in 2010, Hi- Pro-Bond with bubble technology in 2010. Entering a new market targeting interior designers, architects, it launched Fevicol Pro-Bond and Fevicol  SpeedX. Fevicol has recently come up with pasting solutions not for wood but leather, foam and rubber. Woodwork and carpenters often make use of products like rubber,foam so Fevicol has entered a new closer market with Fevicol Foamfix .

3). CONSUMER JOURNEY MODEL OF CONSUMER BEHAVIOUR Marketing Stimuli: The advertisements, the pop culture presence and the strong word of mouth create a large Mind share among consumers. The products are easily available in any hardware, stationery or general store. Consumer Psychology and characteristics : T  he early consumer psychology could be understood by Herzberg’s two-factor theory model. a)Satisfiers : The ease of application, the Fevicol Carpernter’s Club, the monthly mail from fevicol. b) Dissatisfiers: Fevicol addressed the unpleasant smell and dramatically simplified the application process. The brand has also achieved emotional resonance with the people from their humorous yet relatable advertisements. This also triggers their buying decision. The demographic characteristics are that they are involved in woodwork or use it in School or office desks.

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Buying Decision Process: The buying decision process in an elaborate procedure that will be explained in the coming segment which will be substantiated by primary and secondary research. Purchase Decision : The purchase decision is influenced by several factors. The regular users choose it because of its high availability and unawareness of other brands. PRIMARY RESEARCH A) Survey (Instrument: Questionnaire): AGE DEMOGRAPHIC : 11-35 years LIFE STAGE: School Students, College Students, Young Professionals 1. Which brands are you aware of?

2. Which of the following products of fevicol have you used the most?

3. Would you move to any other brand if

4. What Price of fevicol do you usually buy?

fevicol is not available?

5. To what degree do these factors affect your purchase decision?

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INFERENCE The mindspace share of Fevicol is very high. 98.86% of the respondents were well aware of the brand. This can be accounted to its catchy viral marketing campaigns. At the same time the competitor awareness is very low. The products most popular in terms of usage are Fevicol MR, Fevistik and Fevikwik which represent that the customer segment under study generally uses more of the everyday adhesives. The prime factor in the selection of the product was the strong Brand Fevicol had created over the years. The lower influence of the advertisements can be attributed to the younger demographic that isn’t attuned to watching much television now with the surge of digital and OTT platforms. The packaging has a relatively lower influence. Availability seems to be one of the very important factors as Fevicol is a Low Involvement product and so the consumer doesn’t invest much in thinking and analysing. The Ease of application of Fevicol still remains as one of the major sales drivers to this day. The various sizes and forms helps to ease the application process. Fevicol has launched its white glues in varying sizes and prices of collapsible tubes and containers. More than half the surveyed audience bought Fevicol in the range of Rs10 to Rs50. As a low involvement product the consumers tend to buy smaller amounts in one go and so the availability of varying affordable price options is a key driver that Fevicol has capitalised on. B) TELEPHONIC INTERVIEW - DEALERS AND SUPPLIERS: We interviewed 2 dealers to understand the customer buying behaviour for adhesives. Following questions were asked and following insights were drawn.

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1. Who are the main market players for adhesives? ● Fevicol, Jivanjor (Jubilant), Araldite, Loctite 2. Which adhesive is mostly preferred by consumers and why? ● Fevicol because marketing and awareness is high for Fevicol 3. Does variation in prices of adhesives play a significant role behind the purchase decision? ● No, there is no significant difference in prices of adhesives of different brands. 4. Who are the main customers of Fevicol? ● Carpenters, Contractors, End - users 5. Which are the major products of Fevicol in demand? ● Fevicol SH (by carpenters) ● Fevicol Marine (by residential users and high paid contractors) ● Fevicol Heatx (by contractors and carpenters) 6. Approximately, what percentage of consumers prefer Fevicol? ● 40% of consumers prefer Fevicol ● 40% of consumers prefer market competitors ● 20% of consumers prefer locally produced adhesives INFERENCE We came to the conclusion that different Fevicol products were preferred by different consumers because of its rigorous marketing through advertisements. Awareness regarding Fevicol was much higher than any other brands which led to the success of the brand.

4). COMPETITOR ANALYSIS We have taken 3 brands as competitors of Fevicol and analysed the same. Araldite: It was formed in 1946 and positioned itself as Professional adhesives and an extremely strong glue. It has a huge product portfolio encompassing products namely Araldite Standard, Araldite Rapid, Araldite Crystal, Araldite Instant. It has targeted its markets towards Construction Industry, Coating, Electrical Engineering, Electronics. It’s price ranges from ₹10-₹3500 and has diversified uses. It can be used in Bonds Metal, Wood, Masonry, Ceramics, Glass, Dry Concrete etc. Although they have weak penetration in the markets among end users (Individuals) and have local supply chain issues in Tier 2 and 3 cities. But they have precise segmentation and DIY Tutorials which works in their favour. Page: 9

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Loctite: Formed in 1956, Loctite has all kinds of Industrial uses like Mechanical Fastening, Welding, Activators and Accelerating etc. Having an innovative positioning of optimal adhesion for any product made from any material, it has worldwide presence in 125 countries and has a wide coverage in terms of product categories. Its price ranges from ₹290-₹3000 and therefore cannot sustain price wars with competitors due to higher prices. Jivanjor: Started in 2008, it is a part of a bigger company named Jubilant. Leveraging on the same, it has superior technology along with ease of application. It basically targets woodworking adhesives and is used in Home Décor, Office Décor, Institute Décor, Kitchen Décor, Wall Décor and Garden Décor etc and its price ranges from ₹150-₹2700. But, the negative point of Jivanjor is that it is present only in premiere cities of India.

5) PRESENT SCENARIO OF FEVICOL ● There was a massive impact on business due to the lockdown as a large part of the business remained shut for initial days and distribution was a challenge. ● The company leveraged this time to fix process issues and upskill its staff through video-based learning sessions. ● Fevicol Increased promotion on Instagram and other social media platforms due to increased digital usage and made suitable modifications to match the current scenario. ● Readjustment of project portfolio to expedite projects that directly address: -Productivity (process automation)

-Consumer

experience (chatbots, voice bots)

6) FINANCIAL ANALYSIS

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What are the trends of Revenue, Profit and Profit Margin for Fevicol in the last 8 years? ➔ Cumulative Annual Growth Rate of Revenue for Fevicol is 11.26% ➔ Cumulative Annual Growth Rate of Profit for Fevicol is 16.72% ➔ Cumulative Annual Growth Rate of Profit Margin for Fevicol is 5.2%

● Competitor comparison. Trendline comparisons with Jiavnjor, the major competitor of Fevicol for Revenue, Profit and Profit Margin are as follow:

Revenue of Jivanjor has been on the lower side compared to FY17, whereas for Fevicol it is on an increasing spree. Fevicol has been gaining revenue share at the cost of competition. Profit for Fevicol has been relatively stable compared to Jivanjor. Jivanjor has operational inefficiencies leading to lesser profit margin in FY18 & FY19. Jivanjor has drastically improved on their operational efficiency to increase profit margin in FY20 even though revenue was lesser than FY17. Profit margin trendline for Fevicol has been stable, indicating same operational efficiency albeit increase in revenue. INFERENCE Fevicol has strong underpinning financial support as indicated by different parameter trendlines. Nearest competitor Jivanjor is facing loss in revenue and operating margin concern.Fevicol is poised for the same level of growth in the near future, strengthening its leadership in the market.

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7). CONCLUSION : OUR RECOMMENDATIONS Understanding the current scenario, we recommend the following for Fevicol's success in the long-run: ➔ Fevicol’s cost should be kept under control keeping in mind sound sales strategies. ➔ The company must realise it’s social responsibility and adhere to higher accountability & ethics in its operation. This will garner better trust among its shareholders and satisfied customers. ➔ The company should explore new channels and identify the need gap of customers. ➔ Fevicol should strongly look into its digital presence. ➔ Though there is less to learn from its competitors, still it can retain its top position by closely analyzing its competitors ...