Thursday, June 16, 2011

Godrej Growth Strategy in Asia, Africa & S America

The article discusses the growth strategy of Godrej group  and the Marketing challenges for FMCG companies in different markets of Asia, Africa and South America.
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Godrej has taken the route of inorganic growth outside India. In last few years it has made in roads in UK, Nigeria, Indonesia, South Africa. The journey began as a joint venture with Sara Lee. Godrej was a minority partner with 49 % stake. The Household Product Company Sara Lee was present in Indonesia and some other emerging markets. Relavant Terms :
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Godrej Group : The Godrej Group is an Indian conglomerate headquartered in Mumbai, India. It was founded by Ardeshir Godrej and Pirojsha Godrej in 1897. The group has interests in real estate, FMCG, industrial engineering, appliances, furniture, security and agri care. Turnover is more than 2.6 billion dollars (Rs 3,000 Crore). Present Chairman : Mr Adi Godrej.

Growth Strategy : Inorganic through a host of acquisitions as well as alliances.

New Markets : East Asia, Africa and South America

3x3 Strategy : The Operation Strategy Adopted by Godrej which is focussed on India like Markets, Core Products of the Company and Freedom to local SBUs to adapt the marketing strategy.

EVA : Economic Value Added or EVA is an estimate of a firm's economic profit. EVA is Net Operating Profit After Taxes (or NOPAT) less the money cost of capital

Caucasian : in American English, the term is sometimes restricted to Europeans and other lighter-skinned populations

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Godrej is number one player in hair care and insecticide and number two in soaps. When MNCs entered Indian FMCG market Godrej acquired Keyline to learn modern trade.

It has concentrated in the markets that have similar characteristics to India – in terms of demographics, consumer behaviour, population growth, size of the middle class and the bottom of pyramid. The target of Godrej is the middle and bottom of pyramid. It is a mass positioned company.

Private labelling began in the US after fifty years of modern trade. In India, on day one itself, Reliance was talking about how to stock the entire store with its own brands. Kishore Biyani of Future Group has been talking about it for the last five years. This strategy helps in increasing the market share rapidly as the brand becomes more stronger than the product attributes. Godrej for future has similar plans.

There are critical cultural differences in global modern trade. SA follows the European and America model. Shop space is very crucial for success in this market. Because if you don't get the dominant space that you deserve then the consumer doesn't see you as a leading brand. In Indonesia and Argentina the emphasis is on innovation. In these markets, competition is strong across the board.

Godrej Products in Argentina
Brazil and Argentina are very similar. But there are two different markets in Brazil – the Caucasian market and the ethnic market. For the Caucasian market Godrej has products and knowledge. But for the Ethnic population they are working in line South Africa.

The products which Godrej has successfully marketed are : Hair Colour (via Rapidol in South Africa), 'Issue' (Number one brand for hair colour in Argentina), Hit ( Leader in insecticides), Cinthol and No 1 in soap category.

Godrej In South Africa
The next phase is to establish Godrej as a brand internationally. Today its products dominate the brand. Right now it's Hit in Indonesia, Issue in Argentina and Inecto in South Africa. Godrej wants to position itself as an attractive employer. In Argentina when you walk into the office there's a big banner that says 'Welcome to Godrej Argentina'. It's largely a vehicle as an employer brand.

To build the brand communication media is dominated by TV in all the countries. In sports loving Nigeria Music, Dance and Sports events are important place to attract attention of youth. The average Nigerian is a 24/7 sports lover. In rural Nigeria radio scores over the TV. In Nigeria & Argentina the preferred screen is a desktop or a computer. Mobile marketing is growing in Indonesia and South Africa. In India and Indonesia mobile are looked at like a laptop with a sim card.

Marketing on Social sites is yet not proven, but it can not be ignored. Godrej brand has pages on facebook. Godrej launched hair style brand “Roby” on Facebook. Christian Dior has a 400,000 followers and a small brand like Roby has 100,000, that is significant number.

Whether, Godrej Corporate branding is essential, is a question that management has to decide. In India, Goodknight is not known for Godrej. We have not put the Godrej brand in Goodknight. It is a 25 - 30 year old brand everybody knows it as Goodknight, but if you get into consumer perception how many will know it's Godrej Goodknight? Because the brand equity of Goodknight is tremendous. It's the same with the brands in the other countries.

Today all the overseas companies Godrej has acquired have their own strong brands. People in Indonesia don't know Godrej, very few perhaps, but its products are known.

The company is making three tier effort to establish a corporate identity.

• The first level - it's a Godrej group company. That is to assist recruitment talent attraction,

• The next level is to communicate the value of the Godrej brand,