Price Wars: The Shampoo Industry

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Price Wars The shampoo industry has seen a tug of war in the pricing department over the years. The change in the prices in turn effect the market share which showcases the elasticity of the market. Some of the major price wars indicate the impact price cuts can have in the overall industry environment. In 2002, Procter & Gamble strategized to reduce the price of Head & Shoulders to boost its volumes. The company slashed the price by Rs.23, finally amounting to Rs.99 for its 200ml bottle. The company experienced an increase of 5 -10% growth in the sales. Head & Shoulders was positioned as a premium brand as a direct competition to HUL’s Clinic All Clear. The price reduction strategy helped P&G eat into HUL’s market share. In 2004, the consumer…show more content…
This continued in 2015, as Procter & Gamble slashed the prices of its shampoo brands by 15-32% as part of a strategy to regain the lost share to its rivals, mainly including HUL. Pantene Pro V now costs 32% less while Head & Shoulders was reduced by 17%. Head & Shoulders now stands 17% cheaper than HUL’s Clear while Pantene is 24% cheaper than Dove. HUL is expected to soon come up with its own price slashes. The price wars represent the competitive environment of the shampoo industry. The big players in the industry are able to respond to price cuts by their competitors, but for the smaller players it is a tough job. The attributes of these price wars resonate well with the features of a monopolistic competition. 5. Advertising Shampoos are marketed aggressively. Each brand tries to portray its niche through advertisements. While one shampoo is “total nourishment”, another is “Hair Fail Control”, and yet another is “Let yourself shine”. Due to these continuous advertisement efforts, penetration in urban areas is close to 100%. Following are a few Indian brands operating in the Shampoo Market and how they position themselves through ads: • Normal: Dove, Fiama D’wills, Dove, • Herbal: Himalaya, Nyle, Vatika • Anti-Dandruff: Head and Shoulders, Clinic All…show more content…
This obviously results in high advertising and media expenditure. P&G spent more than 8 crores advertising on only TV advertisement for its flagship product Pantene during the initial 4 months of its launch. Similarly HUL spends between 4 and 6 crores in the initial launch phase for its products. There is science behind it after all. In the shampoo category, ad-to sales ratios have shown a tremendous jump of almost 10% compared to 5% rises in other product

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