Reckitt adapts in India

03 December 2010

NEW DELHI: Reckitt Benckiser, the household goods group, has adopted a unique approach in India, initially focusing on high-income consumers and "creating categories" before broadening its reach.

"If one looks at developing markets, they are growing at 18% to 19 % for Reckitt," Reckitt's ceo, Bart Becht, told the Economic Times. "For us, India is a very big market and so are some of the other BRIC markets."

The firm has introduced several of its 19 "power brands", like Easy Off Bang, Vanish, Veet and Air Wick, in India during the last five years, and Becht said a nuanced strategy is needed to planning such schemes.

"The timing depends on how ready the consumer is and what it takes to bring products to them," he argued.

"Building categories requires consumer insights like how people use the products, what their habits are and how it fits into their routine."

As an example, he suggested the widespread usage of turmeric in India leads to hard-to-remove stains, posing unusual challenges to lines such as Vanish.

While many FMCG manufacturers have launched cheaper items targeted at households with limited discretionary expenditure, Becht stated Reckitt's particular model delivered different priorities.

"Our products in general start on top of the pyramid especially in developing markets. Even in developed markets we are geared towards higher income groups," he said.

"That's logical because we are creating new categories and they tend to be more expensive because they offer better solutions."

However, having achieved the necessary traction among affluent demographics, the organisation then typically aims to expand penetration elsewhere.

"In India, we started with urban and have gradually moved into rural markets," Becht said.

"Harpic is a classic example, where we started with very few outlets but today we have a massive amount of distribution even outside urban areas."

One issue of lesser consideration to Reckitt is corporate branding, despite modifying its logo last year, deliberately simplifying its insignia to emphasise the letters "RB".

"Dettol has been a successful product here in India. We are sure that 20 years down the line, Reckitt in India will be known by the brand Dettol," said Becht.

"If you go to Europe, we are known by one of our power brands called Finish. But today, Finish is the smallest category that we are working in."

"We are not interested in whether Reckitt Benckiser is known, what interests us is the popularity of the brands among consumers."

The company recently courted controversy in India by requesting media agencies competing for its account paid an upfront fee, and Becht revealed further such innovations may occur.

"The pitch fee was not a huge amount of money. But what was more important was to make sure that we had serious players coming to the table and not people who just try out," he said.

"There is a huge amount of waste still in the media industry which we are trying to cut out … There are lot of middle men at the end of the day and this has to change."

"Are we going to be successful the first time we attempt it? Probably not. But that doesn't mean we are not going to try to get there."

Two key product sectors attracting Reckitt's attention are health and personal care, with the possibility of making acquisitions to increase its turnover of 2,000 crore rupees ($442m; €335m; £282m).

Data sourced from Economic Times; additional content by Warc staff