HUL’s Tresemmé: Creating Customer Value through Premiumization and Salonization

HUL’S TRESemme’: Creating Customer Value through Premiumization and Salonization

The year 2010 was the inflection point, for Hindustan Unilever Limited (HUL) in India, as the company’s market share across segments tanked and regional players were challenging its longstanding supremacy in various categories. While competitors’ profits were multi-folding, HUL was trudging along in single digits and was blamed for being complacent. HUL’s top brass admitted that they were not connected as they could be. Taking this as a clarion call, HUL started to redefine its business strategy themed on –‘Winning Today, Winning Tomorrow’, commenting on the efficacy on this, the then HUL’s CEO and MD, Nitin Paranjpe (Paranjpe) said, “The strategy has been to future proof the organisation, understand the changing aspirations of consumers and offer them products that are relevant.”

Having recognized the products and categories of the future, HUL’s strategy since 2010 has been built on two key pillars — brand extensions and premiumizing its portfolio. Identifying the aspirational needs in personal care to upgrade consumers, it had been premiumizing its products for the last 2 years. Traditionally, priced high in India, salon-style products have always been perceived to be efficacious by consumers; HUL saw an opportunity in this segment and introduced TRESemmé in October 2012 for the salon frequenting customers. It hit the markets with a DIY proposition for Indian women to help them create their own style while ensuring the ‘just-out-of-salon’ feeling at home, every day at an affordable price! To drive home the brand’s association with style and fashion, actor and model Diana Penty along with international hair stylist Marcus Francis were roped in for the ads, backed with an aggressive digital marketing push in a bid to tap the urban consumer. Since its launch, TRESemmé struck a chord with the consumers and became a ₹100 crore brand within a year. How would (if at all) HUL make TRESemmé either a ₹500 crore brand or ₹100 crore brand over the next 5 years? How would HUL’s direct competitors (for this category – L’Oreal and P&G) and indirect competitors (Salons, Spas, Skin Clinics, etc.) respond to HUL’s Tresemme’s launch success? How would this define Indian personal care market?.....................

Indian Personal Care Market

The personal care products market in India was estimated to be worth $4 billion, by the end of 2012. Personal hygiene products (including bath and shower products, deodorants, etc.) hair care, skin care, color cosmetics and fragrances are the key segments of the personal care market (Exhibit I). The largest segment of personal hygiene products, largely dominated by bath & shower products, grew at 5% per annum, over the last 5 years since 2012............

Shining Hair and Shining Indian Urban Women

The hair care market consists of the hair conditioners, hair colorants, hair oils, hair shampoo, hair equipment, hair treatment, hair accessories and hair styling (gels, creams) products. Hair care, once an occasion-based activity, has now become an integral part of Indian consumer’s daily beauty regime. The penetration level of the shampoo category (of the entire personal care segment) is gaining ground in the rural and urban markets (Exhibit II).............

TRESemmé: Global Product – Indian Marketing Mix

TRESemmé, Unilever’s globe-trotting hair care product, made its debut in Indian personal care market in 2012. Since its launch and with HUL’s well-crafted market positioning, within a year the brand became a ₹100 crore grosser. Core to its success has been the way marketing mix has been deftly used to deliver superior and unique customer value with HUL’s salonization and premumization route...........

Product

TRESemmé is a brand of hair care products first manufactured by Godefroy Manufacturing Company in St. Louis, Missouri, United States, starting in 1947. The brand name is a phonetic translation of “well-loved” in French, (très-aimé).........

Price

TRESemmé is available between ₹60 and ₹1,000 (a 100 ml Hair Fall Defense Shampoo, for instance, costs ₹64; a 225 ml bottle costs ₹128, while a 600-ml bottle costs ₹249; conditioners and other styling products such as serums, hair sprays, etc., are priced higher) (Exhibit VII)..........

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What Rivals are Doing?

L’Oreal and P&G are the companies competing with HUL in this salonization category. L’Oreal so far has indicated no plans to push its professional range of products onto shop shelves. The company has three lines – Matrix, L’Oreal Professional and Keratase – targeting the mass, mid- and premium salons respectively in
the country..............

The Road Ahead

HUL executives said that the acknowledgement for TRESemmé initially has been good, thanks to a felt need for salon-style products at affordable price points, market experts say that the road ahead is not likely to be easy..............

Assignment Questions

I. What’s your assessment of the growth and potential of Indian personal care market in general and hair care market in particular?

II. What do you understand by HUL’s – business strategy theme – ‘Winning Today, Winning Tomorrow’? What were the contributing factors which became the shot in the arm for the introduction of TRESemmé and its success eventually?

III. How do you think the SPM (Salonization pitch, Premiumization and Masstige proposition) principles were transformed into unique marketing mix? How were the 4P’s tweaked for TRESemmé to unveil a unique customer value proposition? How did this contribute to product differentiation?

IV. ................

Exhibits

Exhibit I:Segmental Breakup of Personal Care Market in India

Exhibit II: Category Penetration Levels – Rural and Urban

Exhibit III: Comparative Attitudes Towards Beauty in BRIC Countries (Females in the age group18-55)

Exhibit IV: Surge in Indian Individual/Household Spends

Exhibit V: Hair Care Growth Markets

Exhibit VI: BRICS – Beauty Market Penetration Comparison of females aged 18-55

Exhibit VII: TRESemmé Variants – Price

Exhibit VIII: TRESemmé Ad – Featuring International Hairstylist Marcus Francis and Actor, Model Diana Penty

Exhibit IX: TRESemmé DIY Videos on YouTube

HUL’S TRESemme’: Creating Customer Value through Premiumization and Salonization

Synopsis

This case study enables a discussion on how customer value can be created through premiumization of an existing category (hair care) through offering a differentiated product, so that customers would uptrade. TRESemmé was introduced in India in 2012, targeting the salon frequenting customers, with a DIY proposition, claiming ‘salon inspired hairstyle at home, every day’ at affordable price. TRESEemme’ struck a chord with the consumers and within a year it became a ₹100 crore brand, giving tough competition to the existing players P&G and L’Oreal.

Any woman or a girl in her teens, who steps out from the salon with a hair treatment wishes for nothing more than her hair to stay - lustrous, smooth, soft to the touch, or at least be able to afford salon treatments more often. Unfortunately, the latter is a luxury few can afford even though the former stays a life-long aspiration. HUL wanted to offer that luxury at an affordable price for the mass segments with its premiumized product TRESemmé – shampoo and conditioner. Offering unique value proposition to the consumers, with its salonization pitch and deep ‘masstige’ (upper mass) positioning, TRESemmé took the Indian hair care market by storm and by 2013, it joined HUL’s ₹100 crore brand club. This case study analyzes, how TRESemmé would bridge the gap between the ‘Premium’ and ‘Mass’ segment, in the shampoo market, creating a new customer category that wants to uptrade. How long would TRESemmé’s winning streak continue, if the salon inspiration strategy wouldn’t trickle down to the mass segments? Would premiumization help ensure, TRESemmé to build a unique brand in India?

Prerequisite Conceptual Understanding/Before the Classroom Discussion

This case study presupposes a conceptual understanding of the following. A working knowledge along with the business implications of the following concepts would enable an effective discussion leading to more practical solutions than a mere intellectual exercise............

Expected Learning Outcomes

• • How a mass segment can be tweaked to offer a Premiumized product
• • How salonization pitch made TRESemmé to create new consumer segment between Mass and Prestige segments
• • Role of HUL’s unique product/promotional mix to project TRESemmé as a premiumized product, devised exclusively for salon frequenting customers
• • Measures that TRESemmé should undertake to increase and sustain its market position

Assignment Questions

• I. What’s your assessment of the growth and potential of Indian personal care market in general and hair care market in particular?
• II. What do you understand by HUL’s – business strategy theme – ‘Winning Today, Winning Tomorrow’? What were the contributing factors which became the shot in the arm for the introduction of TRESemmé and its success eventually?
• III. ..................

Case Analysis

The classroom discussion and analysis for this case study could be summarized through the Board Plan [Exhibit (TN)-I]. However, the classroom discussion was facilitated under three broad sections as explained below [Exhibit (TN)-II]...............

Exhibits

Exhibit (TN)-I: The Board Plan

Exhibit (TN)-II: Discussion Dashboard

Exhibit (TN)-III: Growth of Shampoo Market in India

Exhibit (TN)-IV: Detriments of Customer Perceived Value

Exhibit (TN)-V: Consumer Currency – ITEMS

Exhibit (TN)-VI: Customer Value - TRESemmé - Shampoo+Conditioner