‘We come more from a ‘do good’ space rather than ‘feel good’ space’

Q&A with Kedar Rajadnye, president and COO, consumer products division, Piramal Enterprises

Jul 29, 2013 03:28:00 PM | Article | Pooja Ahuja Nagpal Share - Share to Facebook


Currently, there is a creative pitch underway at Piramal Enterprises for its OTC business.  Earlier in the month, the company appointed Madison Media Sigma as its media buying agency. Campaign India caught up with Kedar Rajadnye, president and COO, consumer products division, Piramal Enterprises, to find about the brands in its portfolio, the advertising, competition, brand endorsers and the road map for the future.

In 2010, Piramal acquired i-Pill from Cipla and expanded the portfolio with i-can and i-sure. What was the thinking behind the expansion? How have the brands evolved?

i-pill was launched by Cipla in 2007-2008 and we saw it as a perfect fit with our portfolio as it’s a brand that empowers today’s women to take a decision whether they want to have a baby or not. As we connected with the consumers we realised that around 70 per cent consumers of i-pill are married women who also have two or three different needs. One of the needs was knowing for sure whether they are pregnant or not. Thus, we launched i-can in 2011, which is the first product extension after the acquisition of i-pill. It is the number two product in the pregnancy detection category today. In 2012, we also realised that there is lack of information regarding conception that percolates across India. i-sure is a product that detects with a 98 per cent accuracy the two days when a woman has a high chance of conception. It is India’s first ovulation kit.

We have done advertisements around these two products; we also stock CDs at consumer outlets where the consumer can learn the science of conception. We are present in the digital space, and have advertisements on TV and outdoor hoardings as well for these two products. i-sure is our fertility solution, i-can is a pregnancy detection kit and i-pill is emergency contraception. That’s how the three brands have evolved.  

With the no advertising of i-pill permissible, how do you market it?

Currently, there is a clear mandate that we can’t advertise i-pill. So we depend on word-of-mouth with consumers who have had prior experience to look and promote the brand. We are not doing anything to promote it to new users today. When Cipla launched i-pill in 2008, they did advertising in a responsible manner and reached out to consumers effectively and that has helped the brand greatly. The equity the brand enjoys today is due to the advertising Cipla had done. We have not been able to advertise the brand ever since we took it over.  We are awaiting governemt clarity on this and once it comes in, we will have a clear mandate on advertising for this brand.

In 2009, there was a rebranding exercise taken on for Lacto Calamine with a foray into face wash segment. In 2013, again an attempt to refresh the brand with an expansion into the anti ageing segment took place. Could you elaborate on the thought process...

Lacto Calamine is a heritage brand. In 2008, we realised that it had a very high presence in imagery terms, but in size it was very small. During a study, when a consumer was asked ‘What would you replace the brand with?’, we were shocked when they replied that they would buy a product from a leading FMCG major. Until then, we considered other OTC products as competition. We realised that we had to compete with the FMCGs. Thus in 2009, along with Elephant Design, we re-packaged the product and entered the face wash segment. Since then, a lot of effort has gone into making sure that the brand is contemporary and relevant to consumers today.

As the product grew significantly over the last three years, we also invested in research and development, and decided to launch the anti-ageing product. In 2012, we re-launched the brand Lacto Calamine and introduced two new products - sun screen and anti ageing cream. Going forward, we may have a moisturising cream.

And how would you compete with the FMCG majors in the skin care segment?

The key is to ensure that our products work. We may not have the might of an FMCG company that spends heavily on advertising but we ensure that our products work. This is what differentiates Lacto Calamine from other FMCG products. We come more from a ‘do good’ space rather than ‘feel good’ space.

When consumers use our products they can actually see the difference in their skin. For example, our anti-ageing product uses a patented US formula. No Indian brand uses a patented formula - many of them just claim anti-ageing but nothing works. Further, when we sell the product we also provide anti-ageing strips that can prove the improvement in the skin. We believe in efficacy and proof of action more than just advertising and feel good proposition.

The brand is present in all towns with a population of one lakh-plus. Also, the product having a strong efficacy credential, has a premium pricing unlike the offering of many FMCG companies. Thus, we are not trying to spread ourselves too thin - no point in being present in locations where consumers may not be able to buy.

The brands possess an urban orientation.  How are you targeting the rural market for your OTC products? What is the contribution of the rural sales to the business?

Our journey as an independent company has just started four years back after the split from Boots.  We are building distribution and focussing on the towns with a population of one lakh-plus. We believe that with our current size we can jump to the position of top three players in this space in the next five years. Thus, we plan to increase our distribution and take our products to the 3,800 towns that have a population of 50,000 and above. Currently, our products are more urban-centric but we will have to move to rural areas in the next twoto three years. The contribution of rural sales to our business is negligible as of now.

Boxer Mary Kom is the ambassador for the brand Polycrol xtra strong.  How has it helped sales? It is the only brand that uses a brand ambassador? Will we see more endorsements?

Polycrol is an antacid and is at number three in terms of sales across India. However, this brand is extremely strong in East India, which is one of the largest antacid markets in the country. We launched Polycrol xtra which is a stronger and better formulation and got Mary Kom on board. We believe that Mary Kom has helped us in connecting with our consumers in the East.  She stands for the attributes of being hard working and serious and this is exactly what our brand stands for as well. Thus, she is the right fit for the brand and in the last three months we have become number one in this region overtaking the other two traditional players. We are building a strong equity and infrastructure here and looking at growing in the neighbouring States.

As of now she is the only endorser for our brands as it is important that we get the right fit for the brand. Our products work and hence speak for themselves. Thus, the content is more important than the celebrity.    

Is it easier to acquire an existing brand and build the portfolio or start from scratch? Which other acquisitions or new brand launches will we see in the future?

We have done both - acquired i-pill and launched in-house brands such as Jungle Magic and Itchmesol. You will do an acquisition only of a critical size, and if the brand has an equity. Unfortunately, in today’s market the valuations are all over the place and therefore not many acquisitions have happened in this space. The challenge of building brands is that the success ratio will be in the range of 15 to 20 per cent depending on the kind of composition, market and so on. That mean only one in five products will succeed. Secondly, what happens is that you are competing with the Airtels, Pepsis and Cokes of the world for advertising space. So it is a huge revenue expense that has to be undertaken.

Both these factors compounded create a problem in launching products on your own. Therefore, there is a need to create a model so that you can launch a product in a more sustainable way. Having said this, acquisitions can give you an advantage in terms of time as you have passed the corridor of uncertainty while new brands are yet to go through this. We are looking at both these opportunities.

What is the growth rate that the OTC division is looking at? How do you intend to achieve this?

According to a Nielsen study, we expect the topline to be around Rs 300 crore for the financial year 2013-14. We have planned a four-phase route to achieve our target. Firstly, we intend to strengthen our geographical distribution networks particularly in smaller towns. Secondly, we intend to build core equity of our brands, make them stronger and build brand extensions. We intend to make our core brands super brands. Thirdly, we want to launch brands such as Jungle Magic in our portfolio. Lastly, we are looking at acquisitions.

How big is each category’s (various products) contribution to the sales? What kind of growth are you seeing in each category?

Lacto Calamine, i-pill and Saridon are vying to be the first Rs 100 crore brand in our portfolio. These brands are growing much faster than the market. Our growth has been around 25 per cent for the last few quarters. The OTC market is growing at 14 to 15 per cent. The other brands Polycrol, Supractive, Tri-Activ are in the mid-size segment.

How relevant is digital in the media mix? What percentage of the marketing budget is allocated for digital?

We are surprised at how digital has evolved in the last two years. Now we are seeing a large part of the consumer base using digital to gather information and make purchases. We have embraced this change and moving quite rapidly in this space. So we have an e-commerce division in place and we are also developing apps for our brands. For i-sure, there is an app which you can download on your smartphone that can guide you to conceive a baby.

Today, our total marketing spends would be anywhere between 45 to 50 per cent of our topline and the target for this financial year (2013-14) is Rs 300 crore. We spend around Rs 70 to 80 crores on mass media advertising like TV and press. The digital medium accounts for around 7 per cent of the marketing budget.