Godrej is an age old brand in India; its one hundred year existence is a precedent of iron clad character in the minds of its loyal consumers. However the advent of new technology and competitors has diminished Godrej’s market position. Hence they have undertaken an enormous marketing scheme to gain younger consumers and retain their old ones. This marketing campaign caught my eye as a young consumer and therefore I have decided to analyse Godrej’s marketing proposal for my Extended Essay. Thus I investigate: “Has the revamping of the brand image of Godrej benefitted the company?”
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To investigate the above question, I have interviewed Mr. Shyam Motwani, Vice-President and Business Head, Retailing Division, Godrej Industries, his responses proved to be effective as I was able to attain specific information about their marketing strategies. I referred to the company’s profit and loss accounts, balance sheet and financial records to determine the success of Godrej’s marketing proposal. The Boston matrix, product positioning map and SWOT analysis were useful analytical tools which helped assess Godrej’s product portfolio, the position of their brands in relation to other companies and whether or not to commence on a new marketing strategy respectively.
Through my research, I was able to deduce that Godrej has benefitted from their marketing strategy as their company and its subsidiaries have grown and their profit and loss accounts show a substantial increase in sales revenue, net profit and retained earnings after the marketing plan. These indicators are an indication of the development that Godrej has made in attaining brand loyalty and creating brand awareness amongst a younger demographic of consumers. Therefore the revamping of their brand image has proved to be extremely beneficial to Godrej.
I would like to thank my Extended Essay supervisor Mr. G Satish for all his invaluable help in completing this essay. I would also like to thank my Business & Management teacher Mrs. Rajeshwari Venugopal for her astute guidance.
Table of Contents
Table of Contents 3
So far, the new mood consultancy idea has aided them in gaining customer satisfaction. The personalized attention that the customers receive has caused them to recommend Godrej Lifespace for interior designing. The new and vibrant appeal that it projects and its niche marketing has attracted a younger demographic of consumers, these are the type of consumers who are interested in modern and chic design. Godrej Lifespace is a subsidiary of Godrej Consumer Products Ltd but has been marketed under a different campaign. The success of the mood consultancy plan and growth in Godrej Consumer Products Ltd’s value from Rs. 285.09 to Rs. 599.81 is an indication that the marketing campaign has benefitted Godrej Lifespace. 15
2.Questionnaire: I have asked 20 people from different demographics to aid my primary research. 19
Are you aware of godrej’s new marketing campaign? 19
Yes- 16 out of 20 people or 80% 19
No- 4 people out of 20 or 20% 19
How did you get to know of their marketing strategy? 19
Television- 8 out of 16 or 50% 19
Newspaper- 5 out of 16 or 25% 19
Magazine- 2 out of 16 or 12.5% 19
Word of mouth-1 out of 16 or 6.25% 19
Has the marketing strategy caused you to switch from the brand you usually use to Godrej? 19
Yes- 13 out of 16 or 81.25% 19
No- 3 out of 16 or 18.75% 19
As a young consumer, has this marketing strategy attracted you to Godrej? 19
Yes- 14 out of 20 or 70% 19
No- 2 out of 20 or 10% 19
Have not heard of the strategy- 4 out of 20 or 20% 19
3.The following is the profit and loss account of Godrej Consumer Products Ltd. 20
Godrej Consumer Products Ltd. – Research Center 20
Profit loss account 21
4.The following is the balance sheet of Godrej Consumer Products Ltd 23
Godrej Consumer Products Ltd. – Research Center 23
Balance sheet 23
Sources of funds 23
Loan funds 24
Uses of funds 24
Net current assets 24
5.The following is the profit and loss account of Godrej Properties Ltd. 26
Godrej Properties Ltd. – Research Center 26
Profit loss account 26
6.The below is a comparative table of Godrej Industries Limited’s financial information. 27
Why I chose this topic?
The Godrej Group is one which has stood the test of time and is a brand with an iron clad reputation. But however, the emergence of new and more technologically advanced companies has dented the image of the Godrej Group, hence in order to prolong the company’s life cycle, the Godrej Group had launched a marketing strategy in the year 2008 to reinvent their brand image. This new marketing campaign has caught the eyes of millions in India and it certainly aroused my interest in the Group as a Business & Management student. The MARKETING module in the Business and Management Syllabus is the module which intrigued me the most. The extensive and large scale marketing conducted by the Godrej Group would be the ideal subject matter for my extended essay.
The marketing which the company has done and the way that it has been done is what truly gave me impetus to take up this topic.
Brief History: The origins of the Godrej name can be traced to India’s freedom struggle against the British. In 1897, Ardeshir Godrej gave up his profession as a lawyer and took up the art of lock making. From modest beginnings the Godrej Group now serves as the umbrella corporation for subsidiary companies, all of whom share the Godrej brand name. The Godrej and Boyce Mfg. Co.Ltd has diversified into various fields, most notably the consumer products and food products (refined oil and tetra pack fruit beverages). In 1930, Godrej became the first company in the world to develop the technology to manufacture soaps from vegetable oil, from there on; the Godrej Group has become a dependable and trustworthy brand in the Indian household. However, its greatest accomplishment is that it introduced India’s first and only 100% CFC (Chlorofluorocarbon), HCFC (Hydro chlorofluorocarbons), HFC (Hydro fluorocarbons), free refrigerator. The expansion of the company into such varied fields, coupled with mergers, acquisitions and joint ventures, The Godrej conglomerate is now worth an approximate $2.07 Billion and is one of India’s leading business houses.
Primary Research: I have created a questionnaire with various people from different demographics to see the extent to which the marketing strategy has been at a ground level. I have also interviewed a company executive from the Godrej as a source for my primary source of information.
Secondary Research: I have obtained the financial reports for the fiscal year before and after the marketing strategy was implemented in April, 2008. These records will be a lucid course to determine the success of the campaign. I have also be reviewed the customer’s response to this marketing campaign by studying the quarterly and annual financial reports, which will indicate whether there was an increase or decrease in sales after their marketing campaign was launched. I shall determine the outcome of the above plan in the analysis of my essay.
Key areas of syllabus & analytical tools
The Godrej Group has highlighted its subsidiary companies, Godrej Sara Lee, Godrej Consumer Products Ltd and Godrej Hershey Foods and Beverages Ltd as the beneficiaries of their marketing plan as their Fast Moving Consumer Goods (FMCG) is generating the greatest revenue. This marketing plan has identified the Product and Promotion out of the four P’s of marketing (Product, Price, Promotion, and Place). The promotional advertisements are used to tempt and build loyalty among consumers. This below the line promotion aims at achieving the above objectives to boost sales and revenue. The products here are being promoted by the GODREJ name, the implementation of the marketing strategy where in the old conventional red logo was swapped for a bright blue, green and ruby red logo to add the ‘cool’ factor to their products. The ideal tools to analyse the effect of the marketing strategy are the Boston Matrix, product positioning map and SWOT (Strengths, Weakness, Opportunity, Threats) analysis. Analysis based on the above aspects would demonstrate the true success of the strategy. The SWOT analysis and Boston matrix would be extremely informative tools as it would display the company’s best revenue generating products.
A 112 year old enterprise, which has never refurbished their brand decided to do so after more than a century of existence is doing so now. Why? The only rationale behind this question is heritage.
The new marketing strategy of the Godrej Group was revealed on the 18th of April, 2008. This strategy defines a path for the group to invest in a new Godrej master brand and corporate identity. The aim of this plan is to target a revenue growth of 25- 30% annually. The new plan focuses on the Fast Moving Consumer Good (FMCG), which is under the Godrej Consumer Products Limited (GPCL).
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1The Godrej group also plans to introduce new products to the market, thus increasing its competitiveness with other international brand and revive its brand to lure younger consumers. They wish to achieve this by investing $20 million (Approximate) annually on brand communications. The company has also changed its logo; it has dropped the bright red Godrej sign and has taken up a fresh new logo which is coloured blue-red-green to attract younger customers.
Godrej being a veteran enterprise, has an identified market environment and product base hence it has the foundation to launch such a massive marketing plan. The mass marketing prepared by the Godrej group is promoting the master brand name GODREJ and not any individual product; hence they are exploiting economies of scale. The aims of the Marketing strategy are:
Revitalizes Master Brand strategy and identity for greater synergies across business and brand portfolio
Creates new Marketing and Branding strategy geared to supporting the group’s revenue growth target of 25-30% annually
Outlines a new portfolio management strategy to maximize the value of the Godrej brand and associated businesses.
JWT, James Walter Thompson, has created a new stand for Godrej, “Designed by Curiosity”. JWT has used this stand to reach and expand their consumer base by using this advertisement in the second season of the Indian Premier League, a cricket league which has a strong one billion viewer base.
Godrej has improved on its corporate image tremendously because of this marketing strategy. It’s simple and straightforward strategy has been received by the public as being refreshing.
JWT and Godrej have undertaken family branding to promote their FMCG goods.  Family branding is where a business has a brand name which includes a number of different products. They have undertaken this strategy to have the “Godrej” brand name spread to the products in the FMCG products.
In the personal grooming sector I have undertaken their product “CINTHOL” as an example to illustrate their marketing strategy in their personal grooming industry.  To make the brand name ‘Cinthol’ more recognizable to younger consumers they have appointed Hrithik Roshan as a brand ambassador to increase brand awareness. Cinthol was created as a brand which was synonymous with soaps, however with its diversification, it has moved into deodorants and body wash.
Godrej has also diversified into the construction industry as Godrej Properties Ltd. The aim of Godrej Properties Ltd is to deliver  “nothing less than the very best”. To deliver their best, they closely scrutinize all new materials being used, techniques of construction and the optimum utilization of time. Godrej Properties Ltd has primarily used above-the-line promotion such as newspaper and magazines to promote their residential and office buildings. Using newspapers and magazines allows them to reach a broader group of people, hence widen its consumer base. They would be catering to people from all strata of society, from the rich to the poor. Consequently they would be able to attract clients for their ultra- exclusive developments, corporate office spaces and regular housing developments.
Godrej has also entered the furniture industry through the name “Godrej Lifespace”. Parent company, Godrej & Boyce Manufacturing Co Ltd has decided to give its subsidiary a boost as it is willing to  “invest Rs 7.5 crores in manpower and training, Rs 16 crores in advertising and sales and Rs 12.5 crores in new stores over three years” according to Shyam Motwani, Vice-President and Business Head, Retailing Division, Godrej and Boyce Mfg Co Ltd. Similar to their parent company, Godrej Lifespace has targeted the youth as their prime target for their marketing plan. Firstly by entering the digital market with the launch of digital cameras, personal computers and laptops, they are catering to the current and future generations, hence ensuring a market in the future.
Analysis and discussion
Corporate image is very important for heritage brands like Godrej, because all the values can be carried across new lines as well without losing the ethos of heritage, transparency and trust. Once a firm has identified a goal(s) which it wishes to achieve and when it has a clear idea of its product base and the market environment in which it operates, it must decide and formulate a marketing strategy to achieve their goals.
To assess Godrej’s success with their marketing campaign, I have created a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis to weigh the pros and cons of their current situation:
Godrej has a broad product portfolio and outstanding reputation.
Merger of Sara Lee has benefitted its global image.
Record revenues and increasing market share.
Lack of capital constraints (availability of large free cash flow).
Great brands, strong distribution, innovative capabilities.
Godrej sells many products through the same Fast Moving Consumer Goods (FMCG) sector.
Godrej has strong domestic loyalty towards its brands.
Godrej hard to inspire vision and direction for large company.
Godrej is not a widely known brand in foreign countries.
Godrej still can tap the younger demographic of society.
Godrej’s investment in furniture is innovative as no other major company has ventured into that avenue.
Godrej is in no danger of liquidation because it is involved in industries; hence it has the opportunity to spend money on a marketing campaign.
There is a risk that the FMCG industry is maturing.
Godrej is concentrating too much on the FMCG sector; this is a threat if the market takes a downturn.
Size of the company will demand an assorted marketing mix; it must consider social, economic, political and economic factors.
Despite the threats, Godrej can and must engage in a marketing strategy to entice younger consumers for their products. Also since Godrej is not a competitor at a global level, a new marketing strategy would help them gain recognition in foreign countries.
Godrej worked with JWT, James Walter Thompson which is one of the world’s lead branding consultancies to study the Godrej brand across employees, consumers, investors and business partners and redefine its approach to harnessing the brand’s intrinsic strengths. The initial phase of the initiative will build the Godrej Master Brand in tandem with the three businesses of personal grooming (Cinthol), furniture (Godrej Life space) and property(Godrej Properties).
The JWT is distinctly using Promotion, one of the four P’s of marketing to re-establish the brand firmly in its present consumer base and establish the Godrej brand in the younger end of the market.
Its utilization of bright and colourful advertisements as well as the implementation of a new logo has helped attract new consumers.
By doing so, Godrej aims to gain a higher market share and consequently long term brand loyalty. Having gained this loyalty, they would ultimately allow them to charge premium prices for their goods as the brand loyalty that they develop will reduce price elasticity for its goods. Godrej has also utilised family branding to gain economies of scope because they would be advertising their entire product range in one advertisement, hence saving millions.
Boston matrix has been used to assess Godrej’s product portfolio. This analytical tool will help me to form a balanced product portfolio to examine whether some products should be discontinued. It looks at two criteria, market growth and market share.
The above Boston matrix assesses Godrej’s product portfolio. The four products which I have chosen to assess are Cinthol (Star), Godrej hair Dye (Cash Cow), Ambipur (Problem Child) and Evita soaps (Dog). Evita and Ganga soaps were introduced by Godrej to the FMCG sector, however it was not able to establish itself in the market as it did not gain market share nor did it attain market growth. Hence Godrej has discontinued production under its name and has instead entered a licensing deal with the Future Group as they no longer wish to sell these brands.
Ambipur is a car fragrance company which has been recently launched in to the FMCG sector. It has seen to have potential for growth but is not a well known brand; hence extensive above-the-line marketing must be conducted to ensure that this brand can be made recognizable.
Godrej hair dye has been in production for decades under the Godrej name. Hence it has gained a large market share but since it is saturated in the market, there is no scope for large growth for this product. This generates the most revenue for Godrej in the FMCG sector because it is a well established brand. There is a risk that Godrej hair dye might become a Dog, that’s why Godrej must engage in extension strategies to prolong its life cycle.
Another tool to assess Cinthol’s position in the market, a product positioning map can be constructed. A product positioning map is a  visual tool which shows the customers’ perception of a product or brand in relation to the others in the market. Godrej’s main competitor in the FMCG sector is Hindustan Lever, the below shows the position of their brands prior to April 2008, i.e. before Godrej’s marketing strategy. Here Cinthol is a product with low quality and high price, this is so because the new upgraded version of Cinthol has just been released and hence must be sold at a high price. Hindustan Lever’s soap brand “LUX” is sold at a low quality and low price, which indicates that they too must conduct a marketing strategy to re-invent their brand.
Post the marketing strategy, Cinthol has improved enormously as a brand. The below product positioning map is one which portrays Godrej’s position post the marketing make over. Cinthol as a brand has been repositioned by Godrej to appeal to a broader and younger audience. In the position map, Cinthol has translated from being a product with a high price and low quality to a product which has both high price and quality. Comparatively, Hindustan Lever’s soap brand “LUX” is not performing as well, it is still a product with a low quality and low price. Hence this too is an indicator that Godrej has benefitted through this marketing strategy, especially over its close competitors.
The brand in question, Cinthol, is a star product for Godrej. It has a high market share and market growth. Godrej must invest in developing and promotion star products because by doing so it is their intention to make it a Cash Cow.
Cinthol has been a brand which has always been associated with the alpha male; however they have revived this idea in a contemporary way with which younger consumers can identify. They have revived this idea through their website; they have re-launched their site to make it more youth oriented and more interactive for users. Gaming sections, new offers, contests and a blog have all been used as tools to develop brand recognition amongst youth. Interactive Avenue is the Mumbai based digital agency which created the Cinthol website. Their vice- president, Amar Deep Singh says,  “Godrej wanted us to create a platform where the youth could find out about Cinthol’s brand values and which they would find entertaining enough to continue their interaction with the brand.” Finally, Cinthol is launching a new product known as “Fresh Aqua”, which is a skin hydrating soap. The use of a vibrant package symbolises zest and energy. The launch of this new product is aimed at creating a new market for their brand. Promotional pricing has been undertaken by Cinthol to market “Fresh Aqua”. Promotional pricing is used by any company to entice consumers and build brand awareness.
This concept of Godrej has been quite successful as they have taken digital media as a means to popularise their brand, especially for an age-old brand.  Hrithik Roshan too has benefitted sales as their retained earnings have increased from Rs. 88.09 to Rs. 114.30 crores, i.e. there is a 23% growth in their sales. Also it has increased in market share to 9.5% in 2009 making it the second largest soap manufacturer in the domestic market.
Godrej Properties Ltd has also entered into joint venture (JV) with various companies to promote their global brand name. In February of 2010, Skidmore Owings & Merrill (SOM), the hands that designed the world’s tallest building, Burj Khalifa, and Godrej Properties Ltd has agreed to collaborate in a development in Gujarat, India. This joint venture has helped develop their global brand name as associating with the Chicago based firm will allow their name to be known in North America.
They have also segmented markets based on income and socio-economic classes where in newspapers was used to target middle-class and upper middle-class clients. Godrej advertised in high society magazines in India such as “India Today” and “Business Today” to attract clients who senior management for office buildings. Since these are their clients for high price, exclusive housing, they would be appealing to both types of clients with the advertisements in the magazines.
The effectiveness of Godrej Properties Ltd’s efforts can only bear fruit in terms of profit. The marketing strategy was decided upon in the first quarter of 2008, around March to April.  During this time, their retained earnings read Rs. 52.80crores in the year 2008. Post the implementation of the marketing plan, the Godrej Properties Ltd’s balance sheet indicates that it has an increased cash flow and greater financial resources for the future. Godrej Properties has benefitted as there retained earnings now reads Rs.82.61crores crores as of March 2009; this is a 36% increase. This is a clear indication that the marketing strategy has benefitted Godrej Properties Ltd.
They have drawn in higher income customers to their stores as they are pampered for choice. Also as part of their new customer oriented initiatives, they are planning to install touch screen kiosks at the Lifespace stores to aid their customers in making a smarter choice. Godrej Lifespace has also implemented niche marketing by advertising their mood consulting feature which caters exclusively to a specific market and not the ‘average’ consumer. Mood consulting is a concept where  “the store draws upon the emotional element within the shopper to help him ‘create the mood’, which translates into product selection”.
By using niche marketing, Godrej has less competition for these specific consumers; hence they can charge higher prices for their design spaces. This will allow Godrej to make large profits. It is important to note that Godrej has first utilized asset-led marketing to gain a presence in the furniture industry, for this reason they are able to gain a competitive advantage over their competitors.
So far, the new mood consultancy idea has aided them in gaining customer satisfaction. The personalized attention that the customers receive has caused them to recommend Godrej Lifespace for interior designing. The new and vibrant appeal that it projects and its niche marketing has attracted a younger demographic of consumers, these are the type of consumers who are interested in modern and chic design. Godrej Lifespace is a subsidiary of Godrej Consumer Products Ltd but has been marketed under a different campaign.  The success of the mood consultancy plan and growth in Godrej Consumer Products Ltd’s value from Rs. 285.09 to Rs. 599.81 is an indication that the marketing campaign has benefitted Godrej Lifespace.
Repositioning the Godrej brand in the current economic climate has its obstacles, as highlighted by Debu Purkayastha, VP and senior Creative director said,  “Giving a makeover is never as simple as it seems. With the kind of heritage and stature that Godrej possesses one had to keep in mind how to appeal to a younger audience without alienating the older segment. The challenge was to make it as interesting without being flippant or showy. We have managed to achieve that balance”. The other problems that they would face would be generic branding, and their FMCG sector would not gain recognition because they would not be able to establish an effective brand name in the market for their goods. Another disadvantage of family branding is that bad publicity for the company will damage all of Godrej’s products, because all of their products were advertised with the brand name of “Godrej”. Finally maintaining the same consistency will be problematic, a substandard product in Godrej’s product range will damage its entire portfolio of products. Godrej must be cautious as their companies should not suffer from diseconomies of scale.
The research can go on. With all the expenditure put into brand building, brand awareness and visibility, it seems obvious that Godrej has succeeded in this attempt.  On a monetary note, Godrej has recorded an after tax profit of Rs. 169.10 crores in December 2009, which is a dramatic increase from the Rs.-33.90 crores in December 2008.  Also, according to the questionnaire that I have created, 80% of people were aware of the marketing strategy, 81.25% of the people said that they would choose Godrej products over the products they used to use and 70% of the younger consumers were attracted by this marketing campaign. Therefore, it can be deduced that Godrej’s marketing strategy has benefitted that as they have achieved that objectives of attracting  younger consumers and  generate greater revenues. Whether they are able to maintain this successful run remains to be seen. To prevent a decline in its position, Godrej must follow the below recommendations:
A wide prolonged strategy should be adopted, like cost cutting measures and continuous market research. This will translate into new products, improved skills of the workers and a critical analysis of the competitor’s strength.
A cost benefit analysis should be conducted to review their social costs and benefits.
To remain a good brand in the mind of the current consumers, Godrej must conduct an environmental audit.
Godrej must constantly monitor all activities to ensure profitability of each product in its product portfolio.
To maintain these standards in the future, Godrej must aim to be the benchmark in the industries they are involved in.
So it sets me thinking, how long can they sustain it? After the brand image makeover has Godrej been able to become a market leader in the Fast Moving Consumer Goods Sector?
The following interview is conducted by NDTV (New Delhi Television), a news channel operating with India, with Mr. Shyam Motwani, Vice-President and Business Head, Retailing Division, Godrej Industries
QUESTION: Hi Mr Motwani, wonderful having you on. Firstly- what does this marketing strategy entail?
Shyam Motwani: Well, we realised few years ago that our master brand, the Godrej brand, 112-years-old, needed rejuvenation, a fresh look. India is changing rapidly and so are our businesses are changing rapidly. We needed an alignment of the brand with our business, consumers, employees, India getting younger and younger every year, so we decided to appoint ‘JWT’, well known brand consultancy agency to study the Godrej brand, do research, work out with our team how we need to reposition the Godrej brand and how we need to reposition it relative to our businesses.
QUESTION: This is the first time that Godrej is planning to get a corporate branding along with the individual brand campaigns, is that correct?
Shyam Motwani: Yes, we have had some of this earlier, but never in a very coordinated, concerted manner. This will be the first time that we are doing this group wide. Over the last 3 years there has been somewhat of a tipping point. India is growing very rapidly, playing a much bigger part in the economy of the world; we
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