Fevicol- Case Study
Fevicol is one of the most trusted and recognized household brands in India today. The market cap for Pidilite Industries Limited was 303,350 million as of 31 st March 2016. There are 34 brands under its umbrella.
OBJECTIVES
- To identify factors that lead to the development of a strong brand equity
To identify steps taken to build a strong customer relationship.
- To understand the role of brand extensions in the company’s growth strategy
- To elucidate Integrated Marketing Communication components for brand building
QUESTIONS
- How has the brand developed resonance with its customers?
- What steps did Fevicol take to build their brand equity?
- Analyze the customer relationship management strategy adopted by the organization. 4. What market strategies can Fevicol adopt against competition?
5. Analyze the marketing communication mix adopted by Fevicol, and was it successful?
This case was prepared for inclusion in Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within the university, and cannot be forwarded outside the university or used for other commercial purposes. All Rights Reserved.
FEVICOL: AN ICONIC BOND
The MP. Marketing of Pidilite Industries, Mr. Dinesh Thakkar was getting ready for a meeting with his CFO. He suspected the company was beginning to lose market share on the flagship Fevicol brand because the competition was extending credit to their wholesale/retail dealer network. Fevicol had diligently stayed away from extending credit to its distributors for the simple reason that the Fevicol brand was very strong for the past 50+ years in India, and had carved out a unique niche in the market. The Board of Directors of Pidilite (the parent company of Fevicol brand) did not want to take on any financial liability on their books by extending “distributor credit”. The age-old wisdom in most Indian businesses was “cash is king, sell product for cash”. This had worked exceedingly well in the past for most Indian entrepreneurs and manufacturers. The CFO’s opinion reflected the same
This case is also applicable for “Designing and Managing Integrated Marketing Communications”
approach when he had told Mr. Thakkar “why extend credit to our trade partners when Fevicol . the only adhesive brand anyone remembers in India? Even the Bollywood movie song praises the power of Fevicol. It’s a household name everyone knows and wants”.
Dinesh felt while the CFO had a point, and his team’s branding strategies for Fevicol had worked very well. However, now a new segment of traders and end users were emerging, they were looking for quick financial gain and might not consider a long-term “value relationship” with the manufac turer. In the adhesives segment, there were a few new emerging brands, mostly regional, who were offering compelling trade schemes and end user promotions, along with various flexible credit terms and discounts to woo the trade and the customers. Fevicol had an iron grip on the market with about 80% market share but he did not want complacency to set in. He knew though the adhesive component was a very small share of the cost of the furniture, majority of the carpenter’s preferred Fevicol adhesive to any other brand. The real success of the brand lied in creating the strong belief that nothing is as strong an adhesive as Fevicol. This message had resonated well with everyone in the eco-system—the carpenters, contractors, interior designers, and even the architects. The chal_ lenge now was to continue this successful positioning into the future in a fiercely price competitive and changing marketplace and how would they achieve it?
HIST0RY OF THE FEVICOL BRAND
In 1954, synthetic glue for carpenters (applicators) was unheard of in India and was uncommon. Glues were mainly made up of animal fat or starch. B. K Parekh (Founder Chairman of Pidilite) did great deal of work with carpenters to arrive at formulae for synthetic adhesive which met their requirement. This product was then branded as “Fevicol”. In the initial years, great efforts were put in to conduct trials on Fevicol with carpenters throughout the country. As this was a proposition which sought to change their established practice of using animal glue and starch, it took great deal of patience and perseverance to get the product accepted by the carpenter community.
The customers that used the product were illiterate and unaware of the superior benefits Of the product. To increase brand recognition, he decided to develop a logo that would be symbolic Of the performance of the brand. At that time, Mr. P.N. Sarma, the head Ogilvy & Mather (O&M)’ a leading advertising agency in Indi,a and Mr. Ranjan Kapur were the key executives at the agency The logo for the brand was to convey “the strength of adhesion”. After many rounds of discussi011 they finalized the iconic logo of two elephants (facing opposite directions) together pulling a plank of wood between them.
Most of the furniture in India was custom-built, hence, the support from the carpenter community was critical for success of furniture-related adhesives like Fevicol. Thus, promoting the interests of the carpenter was of paramount importance. In 1980, they launched quarterly black and white four-page design book called Fevicraft, which they mailed to all carpenters to help expand their business. It had pictures of different furniture designs and line drawings of interior spaces to help the carpenters showcase designs to their clients, thus generating interest in terms of ordering interior designs and new furniture. In 1985, the color version of the book was launched.
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In 1989, a hardbound Fevicol Furniture Book was created with superior designs with high utility value which was sold to the carpenters. This Furniture Book became part of the kit of every goo carpenter as it started getting them contract/assignments with their clients. It was very popular with the carpenters and helped grow the company’s user database rapidly. In 201 5, Fevicol Design Ideas book, for residential and commercial purposes, was launched along with an online portal in the same name which would act as a liaison between carpenters, contractors, and architects.
FOCUS ON CORE BENEFIT
From the very onset the brand built confidence and trust with the trade, offering the best product formulation for furniture adhesives application, achieved through a unique formulation, compared to the messy traditional animal glues. This approach started building confidence amongst the carpenters, the trade, and the end users. Gradually the product quality of Fevicol became the benchmark for the “Best Adhesive”.
Thereafter, the company consciously built trade/market-friendly policies, implemented with local sales executive teams to provide genuine services to trade and the end-user customers, thus creating a strong personal bond and trust for the Fevicol brand.
OVERVIEW OF PIDILITE INDUSTRIES LTD
The company was founded by Shri B. K. Parekh in 1959. The determination and vision of B. K. Parekh ensured that in the next few decades, the company kept on introducing new products and built many strong brands. In fact, Fevicol is one of the most trusted and recognized household brands in India today. The market cap for Pidilite Industries Limited was 303,350 million as of 31 st March 2016. There are 34 brands under its umbrella. The operating profit for the year 2015—16 was 11640 million and increased by 44.5% over the previous year and net profit at 7030 million increased by 40.1%. over 2014—15. Sales of consumer products grew by 8.7%, lower than the growth rates recorded in the last 5 years. Sales of industrial products grew at a much slower rate of less than 1% due to weak domestic environment.
The business is divided into various divisions handling adhesives, sealants, art material and Stationery adhesives, construction chemicals, pigments, synthetic resins, etc. Out of these, the adhesives and sealants is the largest business contributing to 65% of the company revenue. The brand
Fevicol falls under the adhesives and sealants division and is sold in varying pack sizes.
OVERVIEW OF THE ADHESIVE MARKET
The Indian adhesive market is estimated to be around Rs.70 billion per annum and has recorded strong growth during the period 2010—2015. It is one of the fastest growing industries at CAGR Il during 2010-2015 and is expected to grow at CAGR of 15% over the next few years. The increase in demand of adhesives in India is due to the increase in the consumption of adhesives in Packaging, furniture, automotive, and construction industries.3 The major players in the adhesive market are Pidilite, Henkel Technologies, and Jubilant Agri and Consumer Products Limited. (Assume 1 US $ = 66).
EXISTING PLAYERS
Jubilant Agri and Consumer Products Limited (JACPL)
Jubilant Agri and Consumer Products Limited (JACPL) has a well-diversified product portfolio that includes consumer products like adhesives, wood finishes, wood preservatives; food polymers; synthetic latex such as Vinyl Pyridine, SBR, and NBR latex; Agri Products like Crop Nutrition, Crop Growth and Industrial Chemicals. JACPL is a wholly owned subsidiary of Jubilant Industries Limited (JIL).
Jubilant Agri and Consumer Products Ltd, manufactures and markets adhesives which are de_ signed to work on multiple substrates, including wood. It caters to the market of both water-based and solvent-based adhesives, which are required for different applications. JACPL also provides specialized adhesives for various applications. The offerings are made through the following brands. Jivanjor, Vamicol, Polystic, and Hero. The Consumer Products division had a network of more than 600 distributors and over 15,000 retailers all over India. It has 10% of the market share.
NEW ENTRANTS
Asian Paints
Asian Paints TruGrip Ultra is a water-based, synthetic resin adhesive which was direct competition to Fevicol. It was used for bonding a wide variety of wood-based substrates.
Henkel Adhesive Technologies had a B2B presence in the adhesives segment in India with their Loctite brand and lacked a retail presence for which they entered into a distribution agreement with Asian Paints, which sold the brand at the retail level through a co-branding initiative. Asian Paints had a distribution network spanning 36,000 hardware shops which Henkel wanted to capitalize 011• Loctite had been present primarily in industrial adhesives since 2000, and the new retail products were to be manufactured at the factories based in the western region of India, at Kurkumbh near Pune. Their range of products were Asian Paints Loctite Quick, Asian Paints Loctite Rapid, and Asian Paints Loctite Tough.
UNDERSTANDING THE PULSE OF THE CUSTOMER
Fevicol provided ease of use and the best bonding strength. It offered superior value to the craftsman as compared to its competitors by consistently introducing innovative products in the market resulting in undisputed trust from its customers. As one contractor from Mumbai put it, “I am a loyal Fevicol customer for the past 25 years. Fevicol offers better grip and quality compared to any Other brand. Most problems occur due to the laminate, ply, or applicator-related issues and rarely for the product. Though my clients do not ask whether I used Fevicol, it is the most dependable and so don’t compromise and always use it.” The training and activities conducted for craftsmen throughout the year, provided him with an opportunity to interact with his fraternity and upgrade his skills an ongoing basis.
The brand had a critical functionality in the craftsmanship and any compromise on the quality of the adhesive would mean a sub-standard offering. Although the cost contribution of Fevicol to the total expense incurred for the craftsman was marginal (almost 2%) but it assured a good quality finished product safeguarding the rest 98% of the cost.
Not using the right amount of adhesive would lead to a customer complaint and maybe even a loss of business in the marketplace. The company educated and encouraged craftsmen to use the right amount of adhesive in the appropriate manner for optimum results. This enabled the company sales force to continuously build and nurture the relationships locally with the carpenters, to build their confidence in each new product right from launch, and demonstrate each new product’s application and benefits. It also enabled the sales force to collect direct feedback from the carpenters.
This model was adopted across the country across the various cities and towns and had a massive appeal for the craftsmen. After the demonstrations, the craftsmen would then place sales orders with the retailer who in turn would then supply to them. Products were usually available in 1 kg, 2kg, and 5 kg containers for craftsmen for household buying, and for industrial buying, they were available in large packs of 10 kg, 20 kg, 30 kg, and 50 kg.
Products were available in various packs starting from 50 gms to 200 kg barrel based on the requirements of end users, workshop, joineries, etc.
INROADS INTO THE STATIONERY AND CRAFT SEGMENT
Due to the strong brand equity, the brand was able to make inroads in the consumer segment selling Fevicol MR for art and craft needs of induvial customers. The product was sold at stationery shops as a bonding solution for art and craft needs. It could bond cardboard, thermocol, fabrics, wood, plywood, etc. It had strong bonding and was ready to use and non-staining (See Exhibit 3). This ingenious idea gave customers an opportunity to experience the strength, reliability, and ease of use of the Fevicol adhesive.
STRENGTHENING CUSTOMER RELATIONSHIPS
Fevicol Champions’ Club (FCC) was a unique initiative started in 2002 by Pidilite Industries to offer craftsmen/contractors an opportunity to network within their fraternity leading to both social and professional growth. It started off small but the movement has grown over the years. The activities organized by FCC are conducted to build goodwill among the community and society. Pilgrimages (taking them to places of worship) are organized for the contractors, socializing activities are planned,
Skill-enhancing workshops are conducted along with activities with family members. The FCC Website helps the contractors get regular updates on the activities conducted by the company across various locations.
One of the important events celebrated by FCC Clubs every year is “Shramdaan Divas”. In its fifth consecutive year in 2016, it witnessed participation from 45, 100 contractors across 196 towns who donated a day Of their labor towards repair work of facilities used by the Under-privileged and needy children across the country. Vriksharopan Divas (tree-plantation drive), in its second consecutive year, had participation from 15,350 FCC members who planted 19, 120 trees.
Similarly, booklets on furniture designs provided to them enhanced their business prospects. The club organized various activities and celebrated the Vishwakarma Day which paid reverence to their deity. A huge get-together is organized every year at various locations across India to celebrate this day. The FCC provided insights to the product and marketing teams on the challenges faced by the customers and offered solutions.
The Fevicol Champions’ Club (FCC) has provided a platform to the carpenters and other wood-working contractors to come together as a community for their personal and professional growth and also to be recognized for their efforts and imbibe new methods bringing them success, both socially and professionally.. The trust and respect which the brand enjoyed was strengthened by these activities.
REDESIGNING THE PACKAGING
In 2002, Pidilite decided to revamp the packaging of the brand, Fevicol. The original design of Fevicol was changed once in the 80s. This was the first major change thereafter. To increase the vibrancy of the brand, Mr Amulya Baruah of Plus One Design, was hired to give it a new look. This meant a revamp of the design of the pack as well as the logo. Along with that there was a total revamp of the container which gave the product an entirely smarter and sleeker look with a stronger handle, making it easier to carry a bulkier pack, as shown in Exhibit 4
MARKET CHALLENGES FOR RETAINING CUSTOMERS
The brand enjoys a huge fan-following from its users who have across years and generations only used Fevicol. The durability and reliability that the brand offers is second to no other player in the market. The brand, in fact, has been very successful in consumer, bazaar (trade), and industrial market segments.
The brand is synonymous to the adhesive category and has enjoyed unprecedented position as a leader in the category. It is only the customers who are extremely price sensitive who move to unbranded synthetic adhesives, thereby compromising on the final product.
As adhesives is a low-involvement product, and the final wood-work does not show any traces Of the brand of adhesive used, many a times even when the carpenter has not used the product they still claim that they have to gain credibility with clients and also get a better price for their work•
In fact, in one of their campaigns “Mataji” released in 2006 by O&M in their usual style Of satire addressed a very important matter of customers buying readymade furniture without checking whether Fevicol has been utilized. It communicated to the readymade furniture makers the risk of not using Fevicol. According to “India Furniture Market Forecast and Opportunities, 2019”, the country’s furniture market is projected to grow at a CAGR of around 26% during 2014—19. Home furniture segment is the leading contributor, followed by office and institutional segment, The western region of the country is expected to be the highest revenue contributor in the India furniture market, followed by southern region, due to the presence of large number of industrial h ubs and upcoming infrastructure developments in these regions.
PRICING AND DISTRIBUTION
Premium pricing is adopted in line with the product image and offering. This has helped the brand consolidate its position in the market. To fortify Fevicol’s presence in both the B2B and B2C areas, Pidilite had set up a “Rurban” division to concentrate on the distribution in the semi-urban and rural regions. Being focused on the semi-urban and rural areas could open up new revenue streams through higher volumes for Fevicol.
The adhesive segment has a robust and wide-spread distribution channel across India. It is manufactured at the plant and then dispatch to the Carrying and Forwarding Agent (C&FA) from where the goods are distributed across the country to various distributors, who then further distribute the product to the retailers. The ply-wood retailer stores across the country stock Fevicol and all its variants. In fact, in the earlier days, these ply-wood shop owners would keep the 5 kg Fevicol container right at its entrance to enhance the store image because it was the only branded product they had in their store among mostly unbranded ones. In fact, a loss-leader pricing was adopted by these store owners as they were willing to give huge discounts on Fevicol to urge customers to buy plywood from them.
A separate identity, “Rurban sales development”, was created for a section of Tier 3 markets where treatment and strategy to promote business was different. Here the type of customer and the furniture made were also different, but it was important to address their specific needs as well to expand the market.
SALES PERSON SELECTION AND TRAINING
Each Of the company’s salesperson was selected based on initiative and self-motivation. He was trained to take pride in selling Fevicol to the customers and catered to all types of ply-wood stores to sell the product. The sales person was always encouraged to tackle all customer complaints and empowered to solve them in favor of the customer. The sales person was fully trained and well versed with the product attributes and benefits and was given consistent training on new and existing product.
INTERNATIONAL PRESENCE
The company has global presence in 14 countries across the globe. In Bangladesh and Egypt, the
COmpany has manufacturing facilities. There has been a significant increase in exports of consumer and craftsmen products in order to achieve sustained growth. This has been possible because of the exPanding distribution network in various countries and deploying additional manpower.
TO facilitate better global networking, Pidilite has established offices/subsidiaries in several countries, including Singapore, USA, Brazil, UAE, Indonesia, Egypt, Bangladesh, Kenya, Sri Lanka, Thailand’ Ethiopia, Myanmar, and Ghana. Most of their products are manufactured in-house with the help Of a strong, research-driven innovation overlaid with consumer insights. A well-equipped and Well-staffed R&D center continuously develops and enhances products for consumers, craftsmen,
and industries. Pidilite has also established a state-of-the-art research center in Singapore that is now a member of Singapore Chemical Industry Council (SCIC).
The operational teams in each country had customized and transferred the brand’s “success for_ mula” from India to those countries, and successfully implemented the brand extensions as well. In Bangladesh, Fevicol had completely displaced an incumbent Japanese brand and commanded the brand awareness and popularity levels at par with that in India. Pidilite had set up manufacturing facilities for Fevicol in Bangladesh, Egypt, and soon after, in Sri Lanka. The international operations at the company is on a fast track and poised for major growth
INTEGRATED MARKETING COMMUNICATIONS
In 1987, B. K. Parekh and M. B. Parekh felt the need to design an advertising campaign for Fevicol and requested Piyush Pandey of O&M to conceptualize it. Initially, the ”Dum lagake haisha” (put all your might into it ) was conceptualized for Levitate, but the brand slogan was so appealing that it was applied for the Fevicol campaign. After this success, Piyush Pandey and his team have worked extensively with the brand and won accolades for their creative execution. The brand captured the hearts and minds of consumers thanks to its engaging and humorous Integrated Marketing Communications and its never-dying appeal with the masses. “The earthy humor in Fevicol ads brings a smile to everyone’s face. The ads have even made our other clients think of life beyond selling products and ending up connecting with the audience better,” says Piyush Pandey, executive chairman of O&M (India and South Asia), the agency which brought Fevicol to the center stage in the 1980s with the “Dam laga ke haisha” (put all your might into it) television commercial. The brand advertised heavily during the cricket world cup and IPL season. The brand exposure increased hugely due to the viewership.
The Bollywood movie, “Dabangg 2” had a dance number starring two very famous actors that dramatically emphasized the strength of the Fevicol bond.
In 2009, Pidilite Industries and O&M got together to celebrate 50 years of adhesives brand Fevicol. This culminated in a film entitled “Moochwali”. A young girl performed a male role in a play, wearing a moustache stuck on with a dab of Fevicol. It never came off. She grew with it, lived with it, and died with it. She even reincarnated with it and the nation of a billion-plus loved it• It was an irreverent, smart, and funny advertising that one would not necessarily associate with a B2B (or business to trade, at best) advertising until two or three decades ago. It is what we today call “the Fevicol kind of advertising’.
The brand’s film involving the overcrowded open bus is a pride of India (see Exhibit 5) and relates to everyday life of the common man. The advertising campaigns whether in film or in print emphasize focus on the strength of the adhesive by a metaphorical representation.
For Fevicol Marine, the campaign was so devised that it would communicate the strength Of the adhesive even when immersed in water for longer periods of time. “Wahi mazboot jod, paani bhi” (the same bonding strength is also possible under water) was the tagline .
Fevicol won the Silver EM VIE in the Best Ambient Media in 2013—14 category for an innovative “free store” activation at a city mall in Mumbai wherein 87 wooden items of all shapes and Sizes were on display. Visitors were offered the opportunity to pull off any of these items and walk away with it. However, none of the wooden items could be removed, thereby reinforcing Fevicol as the ultimate and most reliable glue. See Exhibit 7 for more Fevicol print ads. Another publicity event was when Fevicol participated in the Standard Chartered Mumbai Marathon in 2013, where a group Of people wearing the Fevicol branded shirts were doing a “standing run”, which is running on the same spot as if they were glued to the place. This funny behavior at a marathon attracted huge attention from all the participants and the media coverage created quite a stir in the press and TV.
In 2016, the Company received the “Most Promising Company of the YeaH’ at the CNBC-TV 18, 11th India Business Leader Awards (IBLA).
The company hosted the prestigious Pidilite Awards for Excellence (PAFE) ceremony to felicitate meritoriOUS students of architecture and interior design. The company believes that talent and excellence are paramount and both should be rewarded and recognized. A Pidilite Knowledge Series was initiated where leading architects and interior designers participated and shared their knowledge and experiences with each other. This lead to building stronger customer relationships not only amongst contractors but also amongst interior designers and architects.
Fevicol Design Ideas was launched on the digital platform in 2013 with a new website and a mobile application. This website connected home-owners to professionals like interior designers and contractors. There are 10,000 interior designers and 15,000 contractors on the website and showcases approximately 50,000 design ideas.
SEGMENTING, TARGETING, AND POSITIONING
Understanding customer needs and developing offerings that suit their needs has been the formula for success. Their customer-centric approach and focus on innovative products has made it an undisputed leader in the market.
Demonstrations on new product usage and queries on existing products are solved at the FCC (Fevicol Champions Club) meet by the sales person. This inculcates a sense of confidence about the usage of the new product amongst the users who ultimately then land up buying it for the use in their wood work.
The R&D of Pidilite launched innovative brand extensions for Fevicol. One of them being Fevicol Marine, which had an exceptional bonding strength and was an ideal adhesive for bonding wood, Plywood, laminates, veneers, particle board, kitchen units, wall units where exposure to water and humidity was high.
Fevicol Marine was a specialized waterproof adhesive that protected furniture from de-bonding even when exposed to water. A piece of furniture was subject to a lot of stress due to change in weather, moisture, infrequent, and continuous exposure to water. This often resulted in opening Of joints and de-bonding of laminates in spite of using good quality material. The special chemical properties gave a superior bonding result along with waterproofing. The product ensured that bonded plywood would remain intact, even if it is kept in water for 48 hours, or in boiling water for up co an hour. Moreover, this adhesive was very useful for making furniture in areas like kitchen, bathroom, balcony, and roof-top terrace where exposure to moisture was high.
Fevicol Marine enjoyed great success in the market and was able to capture a sizable market share across the country. The variant—though launched for a specific end use—turned out to be
even usurping their veteran brand Fevicol SH. Fevicol SH was a synthetic resin adhesive intended for wood working and binding plywood, laminate, veneers, MDF, and all types of boards and cork. It was also used to manufacture sporting goods and book binding. Fevicol SH achieved handling strength in 8 to 10 hours, fully curing in 24 hours. Earlier on the applicators (carpenters) were using Fevicol SH, but after Fevicol Marine was launched, a majority of the applicators started using Fevicol Marine due to its versatile properties.
The brand came into existence when the demand arose from the consumers to have a faster-setting adhesive which would be equally effective when exposed to water. The brand extension was conceptualized and launched in 2010
Fevicol Speedx was devised to provide handling strength in 2 hours which improved productivity and was cost effective to the user. Fevicol SH Xtra was conceptualized to enhance the offering of Fevicol SH and provide superior tack development, early-handling strength development, and faster-setting time.
Marketability of the finished wood work was pivotal to the users of the brand. Clients would often request for new age materials like PVC or Acrylic sheets to be used in the wood work. For this purpose, the applicators required an adhesive which would meet this need, and along with it, provide a factory-finished look to carpentered furniture.
The essence of the brand and the brand extensions continued to focus on the changing consumer preferences, and hence, were successful and gained market popularity.
NEXT STEPS
So, after the brief review, Mr. Thakkar was now ready to discuss the next year’s marketing plans with the CFO before presenting it to the Board of Directors and the CEO.
Fevicol reigned supreme as a market leader and enjoyed remarkable trust from its customers. If the rumor was true about the big paint company entering the adhesives market, then the marketing team needed a strategy which would further strengthen Fevicol’s brand equity and capitalize on the brand extensions to face a potentially formidable competitor.
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