Shampoo Industry Analysis

Introduction

The evolution of the shampoo industry in India began in 1960 when it was considered as sheer luxury and not a necessity. The market was dominated primarily by HUL and P&G. Post the liberalization policy of 1991 new players including both multi-national and Indian companies companies like Garnier, ITC, Marico, Dabur, Clinic, Emami, Bajaj, Cavin Kare and others have entered the Indian market.

Shampoo market of India

The shampoo industry is growing at 14% and is classified into three key categories:

1. Cosmetic

2. Herbal

3. Anti-dandruff

Shampoo industries are targeting the upper, upper middle, and middle class in the society. Due to saturation and flat margins in these segments with high penetration they turned their eyes to the

Brands also innovate or customize their existing product portfolios for new consumer segments. This is known as Brand extensions. Brand extensions are 5 times more successful than launching brands. They increase sales by 30%

Examples of brand extension in the shampoo industry are TRESemme range of shampoos and conditioners by Hindustan Unilever, Dabur has leveraged Vatika 's brand equity to launch Vatika Herbal shampoo, and Godrej Soaps has leveraged its dominance of the hair color market to launch Godrej Colourgloss shampoo, for users with colored hair. Also, several pharma companies (including Johnson & Johnson) have launched medicated anti-dandruff shampoos which will probably carry higher credibility with buyers

3. Product

Product Pricing

Monopolistic competition is the amalgamation of the characteristics of both pure competition and pure monopoly. Every firm enjoys a level of monopoly power due to the differentiated product offering, though the difference is marginal. This in turn also moderates the emergence of a single dominating firm in the industry. The product line-up is similar but not identical therefore the power of unique price making is not present, but the prices will be in a group reflecting the general trend of the industry.

The factors that influence the price making power of the firms in the monopolistic competition largely are:

• Less than perfectly elastic: The products of each firm act as close substitutes, though not perfect substitutes. This allows a level of buying power into the hands of the consumer. Due to this, the firms have a high elasticity of demand

• Downward sloping demand curve: The varying tastes and preferences of the consumers is attributed for the downward slope of the demand curve, which indicates that the demand curve is not