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Suppliers have relatively complex supply chains to get access to several different types of chemicals and borax needed to sell the wide variety of products the chain providers.
Highly dependent on the price of borax and other whitening products, which is used in many Proctor and Gamble products. Detergent market growth in India is predicted to be 6 to 8% according to many industry sources.
Potential Entrants
Proctor & Gamble, Lever Brothers, and brands from Europe are continually working on Joint Ventures to move into the Indian and Pakistani markets. Of these, Proctor and Gamble has the majority of the existing market share, with approximately 10% of the total Indian market.
There is a wide variety of smaller and lesser-known competitors throughout the two countries. Pradeep, Meeem Perfumes and Cosmetics, Gloebal Chem, S.R. Soaps, and over fifty other smaller companies all compete for Indian consumers. The quality level and the ability of these new entrants to ensure a consistent stream of products is unknown. What further makes this new entrant's success uncertain is the supply chain for key detergent chemicals and additives being sporadic and difficult to predict. As a result each of these companies often have several quarters or even years of sales, and when their supply chains become impacted by a lack of chemicals and substrates country-wide. This high cyclicality in overall availability of key ingredients for detergents causes a high turnover rate of manufacturers within India and Pakistan. To be a potential entrant that stays the course in the Indian market, any market entrant must have an established and stable supply chain that can compensate for the wide variations in demand and raw materials within the entire region.
Competitive Strategy for Market Entrance
In summary, the following conclusions emerge from the analysis of entering the Indian and Pakistani markets with detergents:
New Entrant and Supplier analyses show that the establishing of a stable and reliable...
This was found from seeing the transitory nature of smaller competitors and the high dependence they had on in-country production of materials for detergents.
Pricing is in freefall and to move into the Indian market, the price per packet must be at or below 22 rupees. To make this happen a Joint Venture is critical in the development of distribution networks throughout each region of the country is essential. These Joint Ventures for distribution rights also minimize risk and provide an opportunity to learn about the Indian's markets critical needs and how to eventually create a subsidiary in the region. It is not recommended that a subsidiary be created; instead a Joint Venture with the largest distributors in the region will minimize risk.
Finally the growth of the Joint Venture also hinges on business development partnerships with washing machine manufacturers also trying to move into the Indian market. Maytag, Whirlpool, General Electric and other manufacturers are all moving into the Indian market. Partnering with them on bundling opportunities is another strategy to move into the Indian market with minimal risk.
The bottom line is that the Indian market is very unlike any other the majority of the world's manufacturers have entered. As a result, it is highly advisable that Joint Ventures and business development agreements be used to share the risk of new market entry in India and Pakistan. Further, relationships with Joint Venture partners solve the problem of having to staff an office and hire assistants. The focus should be on learning about the specifics of the market instead of setting up offices and learning the intricacies of the specific regions and the strength and weaknesses of local competitors. The focus should not be on the development of regional offices or subsidiaries; this is too premature of a decision and will result in many expenses that aren't necessarily needed.
Figure 1:
Porters' Five Forces Model
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