Tuesday, June 15, 2010

Leveraging Goodwill: Marico's Kaya

BhawnaSajwani | Welingkar,Mumbai

Brand diversification is a curial decision as it can lead to make or kill a brand. Brand dilution is often hazardous for the entire spectrum of products but it seems Marico knows the formula to lead. Marico’s “uncommon sense” shaped into a skin care centre, not into mundane beauty parlours. ‘Kaya Skin Clinic’ aided Marico to diversify from products to services.

Parent Brand
Marico markets well-known brands such as Parachute, Saffola, Hair & Care, Shanti, Mediker and Revive. This completely product oriented company has leveraged its product-led consumer insight into consumer insight for services. In 2002, Marico Industries ventured into skin care services.

Kaya Skin Clinic
For years, Harsh Mariwala, the Chairman and Managing director of Marico Industries, wanted to have a presence in the skincare business where several other FMCG companies were already present. But he was looking for the right product to enter the high-margin skincare segment. In late 2002, a New York-based company asked Mariwala if he would be interested in selling laser hair removal machines. Initially, Mariwala was not very keen because he felt the product could be commoditised easily. But what surfaced was the idea of a service offered around such machines. That was how the skincare business got identified; finally they scaled this idea into a chain of skin care clinics. From incubating the idea till execution, all was done within a year.

Widening the Horizons
Selling a product is like selling a hope but service gives the experience. Marico opted for blue ocean strategy, they took a decision to enter in the novel area of skin care service distinguishing from the overly crowed product market (Red ocean) .Kaya was designed to endow with holistic and customized result-oriented skincare solutions/treatments to its clients. Important facet was that their brand extension from products to skin care services was relevant to their core business. The move marked the FMCG major's foray into the branded services category, entering a nascent market untapped by other players.

Tapping the Trends
Marico had 50% of market share in hair oil segment, which made it a market leader in the category. Marico was trying to capture more market share by providing innovative products like Parachute Therapy, Parachute Lite, and Parachute Jasmine etc. But for their organic growth, they needed to look out of the fish pot .The annual audit report by Ernst & Young (2007 reports), Indian Spa & Wellness, estimated 110,000 Mn INR and growth at 25-30 per cent per annum. Indian markets were flooded with unorganized beauty parlours and few organized players like Lakme and L’Oreal. But, services provided were well-worn methods like painful waxing, threading etc. Sensing the hidden patterns of trends, Marico grabbed the opportunity and got the advantage of being the first movers in the market.

Winning Strategies
Marico just didn’t stop at the concept, but also wanted to make sure that their brand delivers. The biggest challenge for Kaya was to not only ensure customer satisfaction but also provide state of the art services as well as safety.

So, while the clinic's skin practitioners were trained for about 60 days, the 250-odd dermatologists had undergone at least 30 days of training. In fact, "skin practitioners" were required to be trained for a mandatory 500 hours before they were allowed to face a customer.

The next step then was to establish a standardized way of working, which is where the relevance of training, audit, timely solutions all comes in.
What followed later was customer awareness campaign, as a significant number of people were still unaware of cosmetic dermatology. Moreover, there was a taboo associated with using machines on skin.

Kaya came out with a 360 degree advertisement approach; where it heavily emphasized on digital media. It also introduced a digital campaign where key words could be linked from Google to the Kaya website. Moreover, dermatologists in the company responded to Tweets, Yahoo Q&A’s and live chats on the company's website (popularly known as Kaya Interactive). It had also launched a clinic group on social networking site Facebook.
Not just advertisements, Marico created awareness through celebrity endorsements and publicity in health and wellness magazine.

In India, Kaya faces competition from smaller neighborhood beauty parlors and smaller chains like VLCC. The small parlors have a better reach to local market in tier-1 as well tier-2 cities; which ensure a larger coverage but Kaya has its defined targets. Considering the fact that population they could not access is not their target; Kaya is much ahead of its competition.

Expansion Plans
Given the discretionary nature of consumer spending at Kaya, most of the growth during the quarter has come from new clinic expansion.
Started as a prototype clinic in Mumbai in September 2003, Kaya has grown at an unprecedented pace. Today, Kaya has 85 clinics across 26 cities in India and 13 clinics in the Middle East.
Diversifying and expanding at such a fast pace is making the roads for rivals difficult to enter into the same segment. During the year, Kaya clocked revenues of 1000 Mn INR. But more than its increasing contribution to group revenues, Kaya holds the promise of boosting the company’s bottom lines, thanks to its distinct service model.

Rest is History...
To boost its product revenue stream, Kaya began prototyping its “shop-in-shop” model through kiosks at malls. They are now also present in locations like Shoppers’ Stop, Hypercity and Lifestyle. Typically, kick-starting a Kaya a clinic takes 10-13 Mn INR (including technology investments and interiors) in a metro city.
The clinic breaks even in about nine months in a metro and takes a little bit longer in smaller cities.

Kaya attributes the success of the brand to two key factors. The first is its approach of offering solutions to consumers through the best technology available. It claims to possess over 20 new technologies in the Indian market. The second is its unique selling proposition of the real skin expert working towards making women look their beautiful best every day.
The graph above shows that Kaya contributes significantly to Marico’s Revenue mix. This tells the success story of Kaya!

Renovations and Innovations
Marico is incrementally evolving the Kaya with interesting concepts like “KAYA FOR MEN”. Men had become appearance-conscious and ‘Metro-Sexual’ men make the trends. KAYA FOR MEN has presented the concept that men need “what women want”!!

To capture the various occasions where appearance matters, Kaya has introduced packages like bridal package, hair care package, summer package and many more customized solutions.

Further enjoying the brand Kaya Marico has launched KAYA PRODUCTS in skin care segment. Kaya includes contribution from product sales, which accounts for ~13% of its revenues. Marico has further en-cashed the brand with KAYA LIFE, which provides weight management services.

To renovate itself, Kaya keeps on adding new machines and technology to provide complete solutions to its clients.

Future ahead
Kaya is at right place, in the right time. Marico’s strategy has been shaped into a perfect solution, which is working for well for the brand. But Kaya still has to penetrate in the market. Competitors are far behind but extraordinary customer service is the key as today’s customers are aware and negative ‘word of mouth’ can ruin the brand. However, this market is growing and Kaya has potential to become the cash cow for Marico!


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