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  • 2. Dabur India LTD.

    Posted on October 21st, 2009 Hank 6 comments

    Dabur logo

    Dabur logo

    CASE SYNOPSIS

    Set in  June 2007, the  case is  about an  Indian enterprise attempting  what few  other consumer packaged  goods (CPG) companies from emerging markets have attempted to do: move beyond national geographical boundaries to the  global  arena.  In  most emerging  markets,  including India,  CPG  is  a  local business  characterized  by indigenous players  aspiring to  rule at  provincial levels.  Very few graduate  to national status. Having acquired a place  among the top 10 CPG companies in  India, Dabur India Ltd. (Dabur) has taken the next step forward. The case examines whether global expansion, uncommon  among its genre, is logical  for Dabur.  It  looks at  the issues  not  only in  the  context of  Dabur’s  unique positioning  in the domestic  market,  which itself  is  growing,  but  with  particular reference  to  the  ongoing  expansion in Nigeria.

    Selected Case Issues:

    1. Should Dabur build scale first in India before investing in global operations?
    2. Does global expansion detract the company from its core market?
    3. What are the reasons why Duggal and his team are expanding globally?
    4. What are the domestic competencies that Dabur can leverage in a global market?
    5. Is the company’s template for globalization workable?
    6. Why is the template not working in Nigeria?
    7. How should Dabur address the Nigerian market?

     

    6 responses to “2. Dabur India LTD.”

    1. Team 2 Critique
      The problem: Dabur is known for their CPG products that have a natural and organic offering. The main question: is it viable for Dabur to enter the Nigerian market under this offer.

      Comments for Team 2:
      *Using the BCG Matrix, the 4P’s and the Porter’s 5 Forces was very well done. We really enjoyed the explanations about barriers to entry into the market, focusing on efficiency seeking, market seeking.

      *Provided an excellent company profile that highlighted the company’s successes, competitive advantages, and value propositions.

      Major Points of Concern
      1.Market/Cultural Analysis
      More information should be provided on the demographics of the consumers, their preferences, and any cultural differences that could affect general consumption. The demand for the introduction of Dabur products in Nigeria was not justified.

      2.Test market?
      Justification needed for why Nigeria is a suitable test market vs. another developing African country.

      3.Transferable of core asset (Herbal, 100% products)
      The herbal/organic product niche might not be suitable for the Nigerian consumer. If the company still wants to enter the Nigerian market, then it would be wise to abandon the umbrella strategy and introduce a separate sister brand. The Dabur company image would transfer, allowing flexibility. The benefit of creating a sister brand would be to protect Dabur’s established brand equity. An alternative to offering a sister brand, is to expand into a market where 100% natural products are in high demand.

      Other things that we think should be investigated:
      *Nigeria’s attitude toward Dabur and the products that are in question (toothpaste, hair products, and mosquito cream)

      *When entering a new market it is wise to introduce a core product to establish brand equity before introducing additional products that would expand a line. Establishing solid brand equity would be keep for overall success. The team did not discuss the product strategy, in terms of order of introduction.

      *The 3rd recommendation was for Dabur to use existing distribution channels. It could prove to be difficult to use existing channels if a company is entering an unknown market. More investigation on the current Nigerian behavior purchase patterns would help to understand this better.

    2. Thank you for your good questions.

      I will respond to your 1,2 questions as below.

      1. Market/Cultural Analysis
      More information should be provided on the demographics of the consumers, their preferences, and any cultural differences that could affect general consumption. The demand for the introduction of Dabur products in Nigeria was not justified

      We had some controversial issues about the Dabur case’s insufficient information during the preparation. Consequently, we got to agreement that our analysis would be limited to the information. The reason was because that is perfectly matched with the purpose of the class and similar to the real situation.

      So we couldn’t make the detail cultural analysis about the portion you pointed out.
      That is because the information given in the case is not enough to go forward our detail marketing strategy as you pointed out market preferences any cultural differences.

      We, however, estimated the Nigerian market size and our market share from the Exhibit 6 and Exhibit 11 and forecast our positional as part of a market analysis. I tried to updated Analysis table in here but failed. If you want to see that, I am willing to give it to you.

      2. Test market?
      Justification needed for why Nigeria is a suitable test market vs. another developing African country

      There are three reasons why Nigerian market is a good test market as we slightly mentioned about this in the presentation.

      First, Dabur had already started an international business consisting of five overseas plants before they got down to their global strategy. One of them is located in Nigeria and their international business was more focused on manufacturing rather than selling locally. Regarding this, they could utilize the existing plant and sales distribution channels already developed with a small investment.

      Second, one of Nigerian market’s traits was low competition with global competitor compared to the other countries.

      Third, there are no Indian Diaspora. At that time Dabur’s main target was Indian living in foreign countries and they wanted to change this direction to pursue not-related international people as a part of the real global strategy.
      In this point, the situation that No Indian Diaspora in Nigeria fitted in order to test how potential their products globally.

    3. I want to treat your concern 3

      Question

      The 3rd recommendation was for Dabur to use existing distribution channels. It could prove to be difficult to use existing channels if a company is entering an unknown market. More investigation on the current Nigerian behavior purchase patterns would help to understand this better.

      My answer

      So Dabur had localized distribution channel in Nigeria when deciding to enter the market aggressively.

      As I menetioned in the answer to question2, Dabur had already started an international business consisting of five overseas plants. One of them is located in Nigeria.

      Just strengthening the relationship between the distribution channels is not likely to be more difficult than building up new one.

      Namely, they could utilize the existing plant and sales distribution channels already developed with a small investment.

    4. Team 7,

      This is regarding concern 1) market and cultural analysis.
      - With respect to market analysis. We mentioned verbally that African counties suffer from mosquito born diseases; hence there is a need and market for mosquito repellent products. The current products i.e. coils, mats, sprays have cons (like sprays are more expensive and these products are health hazardous). Hence Dabur sees the opportunity to introduce mosquito repellent cream, which is safer to use owing to its natural ingredients and there is no competition. Consumer demand and no competition is the biggest advantage which Dabur has with respect to the market
      - With respect to cultural analysis, it is believed that Africans have similarity in taste like Indians (not given in the data).

      Concern 2) Why Nigeria and not other countries in Africa?

      Our team also mentioned about the manufacturing plant in Nigeria which is a plus point as compared to rest African countries. This indicates that there is presence of sales force. Also geographically this is closer to North & South America and also equidistant to rest African countries so if in future it wants to expand business inside/outside Africa, Nigeria is a better location than rest of the places in Africa.

      - We would counter argue about Dabur introducing its core brand first due to following reasons:
      Again we did mention about order of introduction verbally and we pointed what products Dabur should introduce first in our last slide
      i) The data shows that Africans are bent towards cosmetics and beauty product rather than those with therapeutic value. There is a competition threat and market size is not large enough. Moreover Dabur is doing very well with Hair oil in Asia and Middle East.
      ii) Nigerians have not experienced Dabur product much. To introduce hair oil which might not have a great impact (due to reason given above), but introducing something which has a market demand would allow Dabur to catch attention.

      iii) Mosquito repellent is not doing very well in India. The problem is not the brand but the product demand. If Dabur can advertise the pros of the cream in a demanding place , it is more likely to succeed.
      iv) Once Dabur is recognized because of its mosquito repellent cream, then it can introduce hair oil owing to its established brand value.
      If Dabur emphasis on its natural and healthy image, it can succeed in oral and skin business line.

    5. Radhika, Team 2

      Team 7,

      This is regarding : Nigeria’s attitude towards Dabur products (skin care, oral care, health care).

      This case is dated 2007. That time exhibits revealed that there was an adequate market size for skin and oral care, indicating Nigeria’s interest in these products (not specifically Dabur but in general). But has no indication of Dabur’s prior presence in the Nigerian market before the manufacturing plant was set up.
      So attitude of local Nigerian people cannot be accurately predicted towards Dabur product. But as I mentioned below in the previous comment (comment post just before this), there is similarity in taste of Africans and Indians.
      Additionally, they would have inclination to natural products owing to the fact that cosmetics are more costly and African people cannot afford it.
      They might like Dabur’s product.We can just say (believing that we are in 2007) Dabur’s product have potential to be successful firstly due to market’s demand and secondly due to people’s taste. But we may not be in position to pass a judgment if Nigerians like Dabur products until unless they are all out in the market.

      [Just to add a bit more information, (outside the data given by the exhibits) It is said that India and Nigeria share the same historical and cultural-background. They both went through colonization. India went through political and economical changes earlier while Nigeria is going through it now.
      Currently, Dabur's product are doing well in Nigeria ]

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