Numeric Investors

Diversey, founded in 1923, in Chicago, currently sales in 160 countries. It started its operations in India during the year 1998 as one of the major providers of cleaning, sanitation and hygiene products and solutions to institutional customers across the industries in India market. It established itself as pioneer in providing the cleaning, sanitation and hygiene needs of the large government and private institutional clients from different industries in India. The clientele spread across various industry segments like hotels, airports, metro, railways, hospitals, shopping malls, offices of the MNCs companies etc. Challenges in Indian Industry:- The cleaning industry in India is majorly unorganized sector accounting for almost 70% of the market. The perception of cleaning as a daily chore rather than a science followed by the lack of awareness on the criticality and sustainable benefits of hygiene and cleaning resulted in lot of resistance and reluctance on the part of the institutional customers, in accepting the need to shift from labor-oriented cleaning process to technology-oriented cleaning products and services. Diversey wanted to change this mind-set in India market. It gained more than 30% of the market share in the organized cleaning market segment by 2012. It was the only company in India, which was in the business of providing end-to-end cleaning product and services solutions to the customers and it had a nearest global competitor in Ecolab, who also entered the India market directly in 2008. In the cleaning equipment segment, Diversey competed with 4-5 key namely Roots Multiclean, Eureka Forbes, Diversey, Dulevo and Karcher. However, unlike Diversey, most of these equipment players focused only on offering the cleaning equipment products. Point of differentiation – A total solution provider, which combined the cleaning, sanitation and hygiene product offering with consulting services to improve operational efficiency for its customers. – Offering cleaning products, which did not involve any banned chemicals or harmful substances. -Offering the best quality product to its customers and provided supplementary education and awareness on need based usage of the same Segmentation 1. According to type of industry:- building service contractors, hospitality & healthcare, retail & food service and food & beverage 2. According to size of customer:- it divided its customer according to the size within any industry as a. International large accounts as customer having presence in multiple countries b. Large domestic local accounts as five star hotels, large corporate hospitals, large Indian corporates c. Mid-size units as hotels, hospitals and offices; and d. Smaller units as roadside eateries, offices, shops Goal A sales turnover of INR 10,000 million by 2015. Problem Identification There are primarily five main issues that have been identified. 1. How to benchmark the products and services against the local competition, especially against the low-cost and low-quality local players, who were offering low-quality but cheaper products for cleaning purpose. 2. How to change the social mindset of majority of the Indian customers, who believed that cleaning and hygiene was a day-to-day chore, which did not require anything else other than any simple cleaning agent. 3. How to convey the importance of applying the right type and composition of chemical solution for each of the specific need, i. e. he one-size-fits-all mindset of the Indian customers. 4. How to create a distribution channel, which could change the existing relationship and convert ‘Dhobis’ to Diversey. 5. How to manage the inventory of slow moving but time critical spare parts for the cleaning equipments Strategic options To capture market share in organized sector 1. Communicate the eventual low cost of use of Diversey products in the long run to by linking it to the costs reduced due to reduced maintenance costs. 2. Focus on attracting the attention of customers of hospitality, edical-care, airlines etc on the health aspect through advertisements and print ads in magazines served in hotels, airlines etc. which is achieved far better by using diversey products. This in turn would lead to increased demand of diversey products as the customers would be more health-conscious and force the above industries to cater to their demand which would be fulfilled by diversey’s products. 3. Press on the fact that diversey gives personalized end to end serv ice and after sales service according to the needs of the clients. Communicate that diversey uses world class products which are highly safe and effective. Hence it increases the life of the surface on which the product is used and does not affect the health of the applicant. To capture market in unorganized sector 1. It’s important to change the mindset of people to shift from water-based cleaning to chemical-based cleaning which could be achieved by giving free demonstrations at their homes by hiring trained cleaning gangs. 2. Increase brand awareness through advertisements which focus on the health and germ protection advantage by the use of diversey products over the use of cleaning by water. And specially focus on children protection from germs which would drive families spending into diversey products. 3. Create awareness through social media through videos and blogs highlighting the superiority of diversey products over pochas and involve young minds into it who will be the future prospective buyers. 4. Portray diversey products as safe which can be used by all members of the family, reduces time to clean and gives effective results. . Use R&D to come up with a multi-purpose product which could satisfy one-fits-all mindset of the people. Diversification 1. Provide cleaning service to clients by hiring cleaning gangs or recruiting and training people as training gangs on daily or weekly or monthly basis as per client’s requirements. 2. Enter into business of cleaning houses by launching in tier 1 and tier 2 cities where people could use diversey products to clean their clothes which could bring in customers by eliminating dhobis and in turn promote diversey products. 3. Foray nto the business of providing waste handling and storage equipments as this business would supplement their core business. Inventory reduction 1. Standardization of products and use of common parts to make different products would reduce inventories 2. Identification of parts of products and not stocking those which could be manufactured quickly after the demand of the product. 3. Tracking of demand of each product from each region over time should be done which would give a fairly rough estimate of the inventories to be kept for that product.