"While it may be counter-productive to cut price, Shine Star should consider a cheaper brand" Geogi E. Zachariah, Group Product Manager, VVF

One of the shifts that have been happening in the industry is the downtrading of consumers from high-priced premium quality soaps to premium quality at affordable prices.

It is apparent that Shine Star missed spotting the trend. Having made the mistake, it must now focus on correcting the situation. In my opinion, the company's strategy should be two-pronged. On the one hand, it should look to launch a low-priced brand. On the other, it should reposition Softy, which seems to be losing marketshare to Baby Care.

We already know that Shine Star is making more than its fair share of profits on Softy. While it may be counter-productive to either cut price or launch a cheaper line extension, Shine Star should consider a cheaper brand. It should support the new brand with a media campaign. The equity that Shine Star enjoys with trade will help it get a better realisation for the brand. Remember what the gm (Sourcing) of Shine Star said about Baby Care's pricing of Rs 15? "Price that is substantially lower than the competition, but high enough to give a good margin over the contract manufacturing cost." An attractive pricing should also enable it to look at rural markets. Doing so may generate higher aggregate profits, and hence support the logic of this new brand.

At the same time, since Softy already has lost its cutting edge, Shine Star needs to look at this brand too. One of the reasons could be that the consumer is no longer getting value for his money. Hence, Shine Star must look at possible ways of adding value to Softy. Basic questions like what is the promise or core value of the brand that is delivered to the consumer at Rs 26, need to be answered again. A clear answer to this will enable the company to retain the higher margins generated through Softy, and at the same time exploit the inclination of consumers for a low-price value proposition through a new brand. After all, the customer is king.

"Buying out, merging, or even collaborating. If possible, will only be a short-term solution." R. Suresh, Prisident, NFO-MBL

Unquestionably, some drastic and speedy reorganisation of people and thinking is needed at Shine Star. Being caught off guard by an event that began to happen two-and-a-half years ago, despite clear warning signals suggests a disconnect from the marketplace and consumers, complacency and a lack of communication.

Low-cost competition is a reality that giants like Shine Star have to increasingly contend with. Buying out, merging, or even collaborating, if possible, will only be a short-term solution-somebody new will sooner than later come along. And given the difference in structure, overheads, and policies, fighting the challengers on their turf (primarily price) is not the answer.

Shine Star needs to invest in creating a distance between what it gets from its suppliers (Bubbles), and what the consumer buys from from it (Softy), through investment in building the brand and in quality upgradation (protected against piracy by watertight legal clauses). The right way to go about the task would be to leverage the company's strengths-aggressive distribution (bundling, retailer relationships, merchandising), technology, innovation and branding.

Softy, being targeted at infants, needs to move from a functionality focus to a consumer-need focus. Rather than promote generic benefits (soap ideally suited for babies), the brand would do better to stand for trust. This would open up possibilities for new products, brand extensions, and other opportunities.

Shine Star should explore reaching this new consumer segment through new form, size and packaging variations of the existing brand Softy. At no point should a cheaper variant, quality variation, or downgrade be considered with the existing brand-this could destroy the long-term health of the brand in its present form.

In the luxury soap segment, the impending threat to Lush should be nipped in the bud. Unlike Baby Care, where launching a cheaper variant would have raised questions on credibility and quality of Softy in this segment, Bubbles' new offering can be countered with a new or existing brand. The broad competitive strategy will be similar to that in the Baby Care segment.

Shine Star also needs to critically review its supplier relationship management. And while reducing the number of suppliers provides economies of scale and improves service and quality, the hidden threat in pursuing this strategy needs to be recognised, monitored, and countered (as much as possible) through legal means.

No brand or company can afford to stand still. There is a need to to continually evolve and respond to changing consumer needs and aspirations. If Shine Star does not, somebody else will.

"It would not be prudent on the part of Shine Star to break off its relationship with Bubbles in haste" Anand Bhardwaj, Executive VP, Electrolux Kelvinator

Shine star's problem highlights how important it is to safeguard long-term interests while entering into vendor agreements. Had the company's legal department and Chauhan been proactive, they could have helped control the damage much earlier in two ways: one, they could have dissuaded Bubbles from launching its own brand and even persuaded it to renew their non-compete agreement at a time when D'Souza did not have the kind of bargaining power that he acquired after the success of Baby Care. And two, even if they couldn't pre-empt it, they could have countered the launch of Baby Care much earlier.

What are the options available to Shine Star now? It certainly needs to counter Baby Care and one option is to launch a new, low-priced brand-a low-priced line extension of Softy, while attractive, is not recommended due to the likely dilution of the brand equity and high cannibalisation. This option needs to be weighed against buying out Baby Care, which is a relatively new brand, but has garnered shares more because of its low price rather than brand equity. Besides, knowing Shine Star's desperation, D'Souza is likely to drive a hard bargain.

Another option is to reduce the price of Softy significantly for a long period of time, similar to the price reduction that Philip Morris undertook of its flagship brand, Marlboro, in 1993. If successful, this strategy can increase volumes and market shares and put pressure on Bubbles. But a price reduction strategy is a double-edged sword and can hurt financially. Given the fact that Baby Care has a 6 per cent marketshare and Shine Star has only lost a 1 per cent marketshare, one cannot recommend this strategy wholeheartedly.

The ideal course of action would need to look at two areas: the product area and the vendor area. As far as product strategy is concerned, Shine Star will need to continue its brand-building investments in Softy to maintain a high brand equity and loyalty. Here, a relaunch option needs to be considered very seriously to further differentiate Softy from Baby Care without damaging its equity. More importantly-and as outlined earlier-Shine Star will need to launch a low-priced brand to contain Baby Care. The launch of this new brand and other low-priced variants across different segments would help Shine Star gain volumes in rural areas-a sector where the higher-priced Shine Star brands seem to be stagnating.

As far as the vendor strategy is concerned, it would not be prudent on the part of Shine Star to break off its relationship with Bubbles in haste. Bubbles is a high-quality, low-cost supplier and Shine Star must continue its relationship till it has developed equally high-quality vendors as alternatives. It must also work out a strategy for long term, non-compete and formulation safeguard agreements so that the Bubbles experience is never repeated again.