Exporting Purell Hand Sanitizer To India Essay

, Research Paper

EXECUTIVE SUMMARY

This report analyzes the possibility of taking Purell Instant Hand Sanitizer, a product of GOJO Industries, into the Indian market.

Purell Must Gain Greater Market Share

Purell Instant Hand Sanitizer is a portable hand washing solution that cleanses hands without the need for soap and water. In 1997, GOJO Industries entered Purell Instant Hand Sanitizer into retail sale, and the American public embraced the product. However, as large US Competitors have entered the hand sanitizer industry, which is now worth over $400 million every year, Purell s market share is diminishing. Although still the market leader in the industry, GOJO must fight for revenue opportunities. One way to do that is to take Purell into international markets.

India Provides an Opportunity

Possible Barriers

GOJO must consider possible barriers to Purell s entrance into Indian markets. These barriers include:

Recommendation

Extensive research provides evidence that marketing Purell Instant Hand Sanitizer in India would be mutually beneficial to GOJO Industries and the people of India.

Report Overview

Statement of Purpose

The purpose of this report is to recommend marketing GOJO Industries product, Purell Instant Hand Sanitizer, in India. Penetrating the Indian market would be mutually beneficial for both GOJO and India.

Product

Purell Instant Hand Sanitizer is a portable supplement to routine hand washing. Although 80 percent of disease is spread by contact with the hands, Purell kills 99.9 percent of most common germs. Therefore, Purell is and effective tool that promotes proper health and prevents the spread of disease.

In 1997, GOJO Industries, a privately owned company, introduced its hand sanitizer for retail sale. Since then, the hand sanitizer industry has exploded in the US to and industry worth $400 million per year. Many public competitors such as Dial and Colgate have entered the market. These larger competitors maintain extensive advertising budgets, which are being used to increase their respective market shares in the hand sanitizer industry. Although GOJO s Purell brand remains the market leader, its share of the market has fallen to 39.4 percent from its initial market domination of 100 percent. (FT1) Therefore, to increase its sales revenues, GOJO needs to introduce Purell internationally.

India

While this report is not a marketing case for Purell in India, it does include an in-depth cultural analysis of the country and the benefits Purell offers Austrians. Divided into XXX sections, this report will cover:

Considering these factors, marketing Purell in India is beneficial to both GOJO Industries and the people of India.

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II. Company and Product Background

History of GOJO Industries

In 1946, GOJO Industries Inc. was started at the rubber plants of Akron, Ohio. Jerry and Goldie Lippman founded the company with the desire to produce a heavy-duty hand cleaner that could be used without irritating the skin. They created a product called GO-JO, with is a grease-cutting soap that did not require water. In the following years, Mr. Lippman developed a portion-controlled dispenser, which expanded the hand cleaner market into factories and other commercial locations by reducing the cost of clean hands to employers. The GOJO brand now dominates the heavy-duty hand cleaner market. The company holds several patents on mechanical dispensing technology and chemical formulations for hand hygiene and professional skin care products. Since 1946, this privately owned company s goal to pursue well being through health skin and hand washing has remained the same.

GOJO markets its products mostly through retail stores and distributors, which bring GOJO s formulations and educational programs to consumers. Institutional customers include schools, manufacturing plants, hospitals, nursing homes, restaurants, automotive service and repair shops, arenas, recreational facilities, and commercial buildings. (FT3) The products vary in size and are customized to best suit the varying consumer s needs. For instance, GOJO s Painter Hand Cleaner is designed specifically to remove paint stains from hands.

History of Purell Instant Hand Sanitizer

One particular GOJO product has recently taken the US skin and health care industry by storm. That product is Purell Instant hand Sanitizer. GOJO Industries introduced this new product at the 1996 National Association of Chain Drug Stores Marketplace Conference in San Diego. By 1997, Purell was on the market for retail sale. Purell is a hand washing solution that effectively kills 99.9 percent of most common germs in less than 15 seconds. (FT4) Purell has been clinically proven to kill bacteria, fungi, and viruses. As shown in Figure 1, Purell Instant hand Sanitizer comes in portable sizes, convenient for customers to carry in the pockets or purses wherever they may travel (insert picture here). Having been available since the early 1980s in health care locations worldwide, GOJO tested the product in the retail realm, and the American public embraced it.

Competitive Analysis

Today, hand sanitizers are a $400 million per year industry, and the competition in the US for its market has increased significantly as the products popularity has grown. Although still the number one hand sanitizer in food service and health care settings, GOJO s market share has gradually decreased from 100 to 39.4 percent as many competitors such as Dial and Colgate have entered the US market. Figure XX shows the market shares of Purell, Colgate s Softsoap, and Dial. Industry sources speculate that hand sanitizers are a product segment to watch, considering that antibacterial products now account for 30 percent of sales of the $2.1 billion hand and bath soap market (FT 5). With regard to distribution, the leading mass-market channel for hand sanitizers appears to be drug chains, followed by discount stores and supermarkets.

III. Analysis of India, target country

India is a densely populated country of 955 million people located in Asia. The most commonly spoken language is Hindi, however as a CIA report states, English enjoys associate status, but is the most important language for national, political, and commercial communication. The Republic of India is a constitutional democracy made up of 26 states and six union territories. The legal system of India is based on English common law, with limited judicial review of legislative acts. Around 70 percent of India s population rely on agriculture forestry, and fishing, which account for about 30 percent of the Gross Domestic Product. The land breakdown is 57 percent agricultural and 16 percent forest. Most land is cultivated at subsistence level, and only one-third is irrigated. With an average population growth of 1.8 percent in recent year, India will become the world s most populous country in the next century. Although the population is great, human development indicators are among the worst in the world. This massive population presents huge opportunity for Purell in poorly developed areas. Almost one-fourth of India s people are between the ages of 5 and 14.

EXISTING DEMAND

Currently, India is encouraging economic liberalization. This policy allows state governments to play a decisive part in determining regional economic reform. Those wishing to liberalize and attract investment can streamline project clearance, legislate on land use, and reform labor markets and utilities (3). This opportunity is good for foreign direct investment, showing India is willing to allow goods into its country. The growth rate of the GDP has improved over the previous decade and now remains at 5.5 percent.

Human life expectancy is 62 years for men and 63 years for women. This compares unfavorably to China or Sri Lanka, for instance, which both have life expectancies in the 70s. Mortality rates for children have fallen significantly since 1980 (17.3% v. 8.5%), however famine and poor health care remain rampant. India spent only .7% of GDP on health care in 1990-1995, compared with 2.1% in China and an average for South Asia of 1.2%. Because overall indicators for health and nutrition are poor, Purell would help reduce many sicknesses at a low cost to the people. Because access to health care is a function of wealth, Purell could reach consumers who cannot afford other means of care.

In accordance with poor health indicators, the tourism industry is hampered by a perception of India s poor, politically unstable and requiring precautions against risks of disease. The use of simple hygiene products like Purell would slowly curb such perceptions.

Small-scale industry is a big player in India, contributing to 40% of the gross turnover in the manufacturing sector, 45% of manufacturing exports, and 35% of total exports. Production in this sector has consistently surpassed targets: in 1995/96 growth was 21.2%, compared with 11.7% for industrial production overall. Several sectors previously reserved for the small- and mid-scale sector were de-reserved in 1998.

One industry that has not benefited from this development boom is house building. One survey estimated a national housing shortage of 31 million units in 1991, and perhaps 50 million people live in what are officially regarded as slums. Lack of plumbing in most areas brings up another gap to which Purell Instant Hand Sanitizer could fill.

STRENGTHS/WEAKNESSES

The strengths of India as a developing country mostly center on its increased interest in foreign direct investment as a vehicle to move their economy forward. Annual Inflation averaged of 9 percent in 1980-1997, as India over the decades has financed a lax fiscal policy with an accommodative monetary policy. From the early 1980s, there was a growing consensus in the country in favor of economic liberalization. Political inertia and powerful vested interests initially ensured that little was done.

The major reform of the late 1990s has been the opening up of more sectors to private investment, including power, steel, oil refining and exploration, road construction, air transport, telecommunications, ports, mining, pharmaceuticals, and financial services.

This has also included the encouragement of FDI with majority equity, and red tape has been greatly reduced.

Another good economic indicator for India has been its steady rise in GN Savings and Investment as a percentage of GDP. This unfortunately has not translated in to the public sector, which results in low capital formation. India has remained largely unscathed by the Asian financial crisis.

WEAKNESES

India s main source of constraint to economic growth is the weak transport and communications infrastructure. Also, following the 1991 general election, Congress formed a minority government under P V Narasimh Rao. A program of economic reforms was initiated in the same year, after a financial crisis forced recourse to the IMF for financing.

IV MARKETING DECISIONS

Distribution will be difficult in India, as the existing transportation infrastructure is weak. Lack of finance has prompted the government to allow foreign investment in the road sector (although there have been few takers) as well as construction of toll roads. The private sector has made proposals on a build-operate-transfer basis. There are eleven major ports in India. Traffic at these ports doubled from 1894 to 1996, mainly in oil, iron ore, and coal. Capacity utilization is high, although labor and equipment productivity is low. Several states have launched BOT port schemes, and attention is also being given to developing smaller ports.

Pricing will be a sensitive topic for export, considering the massive amount of poverty-stricken peoples. Annual inflation rests on an average of 9 percent, and in 1998 was at 14 percent.

Promotion strategy will center on India s free and diverse press, which publishes in Hindi, English, and vernacular languages. There are about 1,250 daily newspapers with a combined circulation of over 15 million, as well as thousands of periodicals and journals. There is also a rapid growth in demand for satellite and cable television. Advertising and promotion ability is high in India.

V.LEGAL DECISIONS

Although many states like Andhra Pradesh and Karnataka have shown considerable initiative in raising additional finance; most states have made little progress. During 1997-1998, 16 states resorted to overdrafts with the RBI, of which three had payments on their behalf halted when they failed to clear their accounts.

The de-licensing of most industries has been welcomed by India to encourage competition. Only fifteen sectors, including luxury and defense-related items, as well as industries reserved for the small-scale sector, remain subject to licensing, which is also being phased out. Trade policy has been cautiously liberalized, with the conversion of some import quotas into tariffs and phase reductions in import tariff rates.

VI. MANUFACTURING AND OPERATIONS

As previously mentioned, some states have issued bonds and encouraged private investment in irrigation, roads, bridges, software development, and agricultural and horticultural projects. Most manufacturing projects take place in the high-growth private-sector industry concentrated in three main areas: around Mumbai and into Gujarat; around Delhi, including Haryana and western Uttar Pradesh; and the corridor from Bangalore to Chennai. Andhra Pradesh is also emerging as a center of growth. Several studies indicate that the gap between a few richer states and the rest of India is widening. Maharashtra and Delhi have far higher net state domestic products, followed by Goa, Haryana, Punjab and Gujarat. Tamil Nadu and Karnataka have been successful in drawing in foreign direct investment.

VII. PERSONNEL STRATEGY

Of the 28 million workers in organized employment in India, 70% work for the state, but the state accounts for only around one-third of economic output and less than one-third of investment. The vast majority of public-sector enterprises are unproductive, massively overstaffed, and debt-ridden. A high level of unionization has restricted labor reforms and technological advances that could threaten jobs, therefore deterring investors. Because of such a large population working for the government, productive new manufacturing facilities should be a welcomed change for the current state employee.

India has a large number of educated and vocationally qualified people although they comprise a small fraction of the population. Adult literacy in the country is estimated at 52 percent, with 39 percent for females and 64 percent for males. Thus, the number if illiterate people in India remain vast. There are also large regional variations in literacy rates.

The proportion of eligible age group enrolled in primary schools in India rose from 61 percent in 1960 to over 98 percent in 1991. The rate of enrollment in higher education for males and females rose from 3 percent to 9 percent in the same time period. Accordingly, India has 2 million engineers and scientists, 10 million graduates from 185 universities, and a total of almost 50 million people educated to higher secondary level. The number of unemployed graduates is high, however, suggesting that India should concentrate more resources on increasing education opportunities at lower levels in rural areas. A large proportion of India s educated population is highly qualified, fluent in English, and cheap to employ.

VII FINANCIAL DECISIONS

Quotas are being replaced by tariffs, which are, in general, very high. In the 1992/1993 budget, a start was made on cutting import duties by lowering the maximum rate from 150% to 110% (it is now 40%), and there is a program to cut tariffs sharply in annual installments in the coming years. Political pressure for protectionism remains, and moves to cut more sensitive tariffs have been halted.

Some exports are subject to licensing, while some items consumed domestically, such as tea, are subject to quota restrictions. Only a few items, such as tropical wood and beef, are banned for export.

Bibliography

Company Background. Online. GOJO Industries, Inc. Available: http://www.gojo.com/history.html. March 20, 1999.

FAQ. Online. GOJO Industries, Inc. Available: http://www.purell.com/faq. March 20, 1999.

Hardin, Angela Y. 1998. GOJO: Getting a Handle on its Purell Market. Crain s Cleveland Business, June 22, 6.

Lexis -Nexis . Online. UNC-CH Electronic Indexes and Databases. Available: http://library.unc.edu/htbin/build_ER_frame?http://web.lexis-nexis.com/universe. April 12, 1999.

Nones, Rachelle. 1998. It s Germ Warfare for Hand Sanitizers. Supermarket News. May 4, 170.

Nones, Rachelle. 1998. Retailers Experiment with hand Sanitizers. Supermarket News. May 4, 170.

Purell. Online. GOJO Industries, Inc. Available: http://www.purell.com/. March 20, 1999.