GAMBLES THAT WENT WRONG P&G's India CEOs tried several strategies over the years, but the results have been unspectacular.

DAVID THOMAS It was during David Thomas' tenure that P&G had reportedly set a target of Rs 2,000 crore by 1997 for its Indian operations in end-1994. As of 2003, P&G's India operations are not even half that figure. HELMUT MEIXNER & GARY COFER It was during Meixner's tenure that P&G implemented Operation Golden Eye, which involved repositioning the strategy to focus only on select urban markets, in a bid to avoid a head-to-head confrontation with HLL. Meixner's successor, Gary Cofer, then Director (Consumer Business Development), was closely involved in chalking out that premium distribution strategy. That game plan has obviously been ditched today, with sachets and price cuts clearly indicating a mass market plan. ADI GODREJ, Godrej Soaps P&G entered the Indian soaps market in 1993 via a JV with Godrej Soaps, and in 1994 launched Camay amidst high fanfare. But that JV with Adi Godrej didn't yield results, what with P&G being reluctant to invest in pushing the brand. The JV flopped in two years. HARSH MARIWALA, Marico After the failed JV with Godrej, P&G entered into a long-term distribution arrangement with Harsh Mariwala's Marico for, amongst other brands, Camay. That alliance too didn't yield any results, and it didn't last its entire tenure. Marico officials point out that P&G wasn't able to justify the premium on Camay to the consumer, for whom it was just another soap. HIREN PATEL, Nirma By October 2002, P&G made another attempt to revive Camay, this time via a licensing agreement with Nirma. Nirma CMD Hiren Patel was probably hoping for a premium rub-off on the value-for-money soap maker. As of today, the alliance appears to be going nowhere, and Nirma officials admit that Camay is "moving slowly". Latest marketshare: 0.1 per cent.

A decade ago, when David Thomas was CEO of Procter & Gamble's (P&G) India operations-then constituting three companies-a business magazine (not Business Today) reported that the consumer goods major had fixed a sales target of Rs 2,000 crore for 1997. At the end of 2003, the Cincinnati-based consumer goods giant's domestic business that's split between two companies-P&G Home Products, which markets the Ariel and Tide detergents, the Head & Shoulders and Pantene range of shampoos, and Pringles; and P&G Hygiene & Health Care, which markets Vicks and Whisper-didn't have revenues of half that figure.

Now, P&G isn't the first ever company to have gone out on a limb with wild projections of top line growth. The objective of digging out this nugget of a sound-byte from the nineties is not to make Thomas or P&G look foolish but to plot just one incident of the inconsistency of vision and the many slips twixt the cup and the lip experienced by the FMCG multinational in India over the years.

The recent bout of aggressive price cuts announced by P&G India in the detergents and haircare categories may have convinced a section of analysts that P&G means big business this time round, but to be sure this isn't the first time the ultra-secretive marketer has promised to unleash its "new, improved" avatar on Indian soil. Brands and sub-brands have been launched with much fanfare and their prices dropped amidst even more hoopla in the estimated Rs 5,500 crore detergents market; and in the estimated Rs 3,500 crore soaps segment, P&G has resorted to a string of alliances, either for manufacturing or marketing or distribution or for all three purposes, to push Camay beauty soap in the market, two of which didn't yield dividends, and the third that's currently on isn't going anywhere, either. True, P&G is a leader in the feminine hygiene segment with Whisper, it has done well to grab close to a fifth of the hair care market pie, and has a cash cow in Vicks, but the fact is that where it counts most P&G hasn't been able to make a difference in the estimated Rs 45,000-crore FMCG sector. Market share of Camay Soaps as of March 2004 is 0.1 per cent. Marketshare of the detergent brands (Tide and Ariel) as of March 2004: a little under 4 per cent, roughly a tenth of that of the market leader.

The P&G India top brass refused to cooperate with Business Today on this feature, preferring perhaps to put an end to the hype surrounding its latest bout of price cuts, when it slashed prices of Tide and Ariel by 25 to 40 per cent, and subsequently of Pantene shampoos. The silence may not be such a bad thing after all. For although it may be true that P&G's price cuts in detergents and hair care will hurt leader Hindustan Lever (HLL) since it has little option but to follow suit-its March quarter profit, which fell 23 per cent, is a good indicator of that-it doesn't necessarily follow that P&G is going to reap substantial gains, substantial enough to see it posting big numbers in the market share slugfest. Price cuts may be a good way to begin the battle, but to win the war P&G has to get its distribution act together, which as of today is still very urban-centric. Also, as one equity analyst explains, consumers may not be willing to upgrade to P&G products from the lowest-priced brands like Wheel and Nirma. Nikhil Vora, FMCG analyst at broking house SSKI Securities, says the price cuts will be effective in unnerving the competition and "weakening the market leader". But crucially what needs to follow is a presence on the ground, which isn't significant yet.

New MD Khosla has to focus on building a distribution network that can take on HLL's Shantanu Khosla, Country Manager, P&G India

Cut to the late nineties, when P&G India blueprinted Operation Golden Eye, a strategy that meant brands like Ariel, Camay, Pantene and Whisper would be targeted at only 20 per cent of the market, at the top of the pyramid. That plan clearly showed that P&G was willing to sacrifice volumes for profits, and opt out of a head-to-head war with HLL. Today, with sundry price cuts and aggressive sachet marketing (of Tide and shampoo brand Rejoice), the P&G strategy has clearly turned full circle, and the company is now in the process of getting its mass-market act together.

Perhaps Operation Golden Eye didn't yield the desired results. Certainly not in the detergents market, in which average market shares of Ariel and Tide together have remained static in the 4 per cent region since 1999. Indeed, ever since P&G entered the laundry segment in the early nineties, gains if any have been momentary and acceptance by consumers, low. The marketer's first launch was a rather bold one, of Ariel, as a premium concentrate powder with a "no-bar-required" proposition. The brave objective was to upgrade users from discount powders and bars. But by the mid-nineties, P&G was slugging it out in the bar market with an Ariel bar-a product you won't find too easily on shop-shelves today. To target a wider base of consumers, P&G also launched Ariel Gain SuperSoaker around that period, but its fate today is very much similar to that of the Ariel bar--virtually invisible. Market observers point out that SuperSoaker did help P&G tot up its highest ever market share in detergents in 1996, of some 7 per cent, but the company hasn't been able to build on that gain. By 1999, P&G's detergent share was just a little over 4 per cent.

That's when the P&G top brass decided it needed another brand in the detergents market to counter the HLL juggernaut. Enter Tide, the global whiteness brand, another premium powder, though at a slight discount to Ariel and HLL's Surf Excel. Tide did make some gains, but those were negated by the erosion in Ariel's share. By 2001 the price cuts coupled with aggressive promotions began, with Tide being dropped from Rs 120 to Rs 85. Another round of price cuts came in 2003 on sachets, and thereafter early this year on the large packs (from some Rs 85 to Rs 46 per kg). Ariel too now had a lower price tag, of under Rs 100 per kg, down from Rs 155 at one point in time. The results of these rather extreme price cuts have yet to show: As of March 2004, Ariel had a value share of some 2.1 per cent, and Tide of some 1.7 per cent. Clearly, despite heavy discounting consumers may still be unwilling to upgrade from the bottom of the pyramid, where brands like Wheel and Nirma rule the roost.

The soap saga

If P&G has hit a brick wall in its attempts to carve out a space in detergents, it hasn't made much headway in the beauty soaps business either. When the company entered the soaps market with beauty brand Camay in a joint venture with Godrej Soaps in 1994, it did show initial signs of promise with shares of over 2 per cent in the first year. But it has been all downhill since. The JV with Godrej fell apart, as it wasn't showing the desired results. Godrej Soaps officials blame the disaster on P&G's reluctance to back the brand financially. As one analyst points out, P&G's mistake wasn't just in not being able to make the JV with Godrej work. "What's worse is they paid Godrej tonnes of money upfront to get into the JV, which came to Godrej's assistance in fuelling the growth of his own soap brands," he adds. Today, Godrej Consumer Products is a major player in soaps with such brands as Cinthol, Godrej FairGlow and Godrej No. 1 contributing to over half of sales. "Soap is not a focus area for Cincinnati, and I don't see what they're trying to do with Camay here," says a senior Godrej official. Adds Pradeep Mansukhani, CEO (Sales), Marico Industries, with which P&G had got into a long-term distribution arrangement, but which also didn't bear fruit: "Backing a premium soap is tough, which even HLL realised with Dove. But Dove at least has its one-fourth moisturiser USP. On the other hand, consumers saw Camay as just another brand, and the company found it difficult to justify the premium on the brand."

The Godrej official adds that P&G had approached his company once again after the JV for a licensing agreement, for which Godrej Consumer would have to fork out a royalty. "It was probably a money-making measure, so we refused," he says. Nirma Consumer Care in the meantime obviously thought differently and, in October 2002, got into a licensing arrangement for making, marketing and distributing Camay. As per the agreement Nirma would be entitled to use the Camay trademark for five years, and pay a royalty to P&G. A Nirma executive admits the brand is "moving slow", but declined to react to an e-mailed questionnaire addressed to the company. Suffice it to say that the P&G-Nirma arrangement, as it stands today, is a no-win situation, with Nirma unable to get the soap moving off shelves (wherever they do manage to reach the shelves in the first place), and P&G unlikely to gain much in royalty payments either.

It is indeed puzzling to figure out P&G's persistence with Camay in the Indian market. If the marketer did feel a need to carve out a presence in soaps, it could have had a go with some of the other brands from the parent's stable-like the Olay and Ohm by Olay beauty bars, or the Zest deodorant bar, or Ivory or even Safeguard, a germ protection bar. But then again, if Cincinnati doesn't see soaps as a key area, it makes little sense for P&G India to lark about with Camay or any other soap brand, with or without a partner.

To be sure, P&G Cincinnati has plenty of firepower left in its armoury that it can unleash on the Indian market. In just the personal & beauty category, for instance, it has a wide range of antiperspirants and deos, colognes, cosmetics, hair care, hair colour and skin care brands. Then, talk of bringing Crest toothpaste into the Indian market has been on for a few years now, but the company can't seem to make up its mind whether it will be able to take on a well-entrenched Colgate and a strong No. 2 in HLL. Clearly, if P&G has ambitions of taking on the market leader, it needs to scale up and enter new categories, even as it pulls out all stops to gain meaningful share in detergents. Whether that happens, time-or rather Tide-will tell.