BUSINESS ECONOMICS

ASSIGNMENT

DETERMINANTS OF DEMAND
DETTOL HAND WASH

Submitted To: Submitted By:

Dr. Manoj K. Sharma Vani Sood
MBA Core Sec-A
PRODUCT: Dettol Hand wash.

PRODUCT INTRODUCTION: Launched in India in 1933, Dettol has been a leader in germ protection
helping safeguard the health of families around the world through better hygiene. From a low
penetration in India (estimates around 10% of all households) for liquid hand wash penetration of liquid
hand wash is has gained momentum. In liquid hand wash category, Dettol holds 52% market share. The
antiseptic brand Dettol is a product of Reckitt Benckiser Group plc (RB), a British multinational consumer
goods company.

Headquarters: Slough, England, UK

Revenue: £11.512 billion (2017)
Founder: Johann Benckiser; Isaac Rec
CEO: Mr. Rakesh Kapoor

DETERMINANTS OF DEMAND:

The determinants of demand are factors that cause fluctuations in the economic demand for a product
or a service. The various determinants of demand of Dettol Hand wash are:

1. PRICE OF THE PRODUCT: Price has an inversely proportional relationship with demand. As price
decreases there is a subsequent increase in demand and vice versa. The increase in demand of
Dettol Hand wash is evident because of 50% market ownership even on minimalistic increase in
price over the years. The current MRP for Dettol Handwash is Rs. 82 for 200 ml.

2. INCOME OF THE CUSTOMERS: When there is an increase in income of the customers, a

simultaneous increase is observed in the demand of the product. When income falls, so will
demand as the customers need to be able to afford the product. But there is a probability that
that even after significant income rise, the demand might not follow a similar trend. As in the
case of Dettol, the fact that it is an affordable alternative helps in increasing demand.
3. CONSUMER TASTES AND PREFERENCES: They play a major role in influencing the individual and
market demand of a product. The tastes and preferences of consumers are affected due to
various factors, such as lifestyle, habits, and change in fashion, standard of living or
environment. Favorable change leads to an increase in demand, unfavorable change lead to a
decrease. The consumers might reduce the consumption of old products and add new products
for their consumption. When the public’s desires, emotions, or preferences change in favor of a
product, so does the quantity demanded. Now-a-days consumers prefer Hand wash over Soaps
which has helped in increasing demand. Hand wash market(close to 2000 crore), but it stands on
a high growth( CAGR of 37% in 3 years) when compared to soaps (2017 statistics).

4. PRICE OF SIMILAR PRODUCTS: The price-demand relationship marks a significant contribution in

oligopolistic market where the success of an organization depends on the result of price war
between the organization and its competitors.

The comparative study of price and market share of various liquid hand wash available in the
market is given below.

DETTOL 52% Dettol Original

Liquid Hand Wash -
200 ml ₹ 78
LIFEBUOY 34% Lifebuoy Total Hand
Wash 215ml
₹ 65.60
SAVLON 13% Savlon Double
Strength Handwash
- 220ml ₹ 82.00

The trend clearly shows that although price of a similar product is significant in determining
 demand, it is not the only factor responsible for a demand increase.

5. NUMBER OF BUYERS / GROWTH OF POPULATION: The more buyers lead to an increase in

demand. The number of consumers affects overall, or “aggregate,” demand. As more buyers
enter the market, demand rises. That's true even if prices don't change. Logically, with the
increase in buyers in the market, the demand of Dettol or any other product will subsequently
increase.

6. EXPECTATIONS: Buyers’ current demand will increase if they expect higher future prices or
higher future income and vice versa. Suppose if the price of Dettol hand wash or income of
customer is expected to increase, there is a relative chance that the customer will buy an extra
bottle beforehand.

7. MORE VARIANTS AND VARIABLE SIZED DISPENSERS: More variants will attract different
customers and consequently the demand will increase.

8. BRAND VALUE: Since Dettol is a trusted brand; a lot of consumers tend to use Dettol over othe
products if given a choice. Even today, Dettol continues to be one of the most trusted
protectors of health ranking among the top 10 Most Trusted Brands in India since the last 10
years. The fact that customers are able to trust Dettol is responsible for growing demand.

9. ADVERTISING: Powerful AD campaigns, aimed at highlighting the fact that How Dettol is not
only effective but is trustworthy, like #MaaMaane Dettol Ka Dhula greatly affect demand by
catching the attention of consumer. Consumers are highly sensitive about advertisements as
sometimes they get attached to advertisements endorsed by their favorite celebrities. Last year
it launched the Dettol Banega Swachh India, a five-year hygiene progamme, with Amitabh
Bachchan. Later, it roped in Bollywood actress Vidya Balan as campaign ambassador for a new
initiative under this programme.
10. DISTRIBUTION OF INCOME IN THE SOCIETY: Influences the demand for a product in the market
to a large extent. If income is equally distributed among people in the society, the demand for
products would be higher than in case of unequal distribution of income. However, the
distribution of income in the society varies widely. Equal distribution of income will provide
more potential buyers for Dettol, thus the demand will increase.

11. GOVERNMENT POLICY: Government efforts in bringing sanitation issues to various schools in
India (along with private partners) has led to a significant increase in the demand of Dettol.
Similarly, the credit policies and tax rates of a product also induce the demand for a product.
At present, Dettol falls under the category of GST on HSN Code 34013090 which accounts for
18% on base-price of around 66, for a 200 ml bottle of Dettol hand wash. The added tax is Rs. 12
(approx.), which is not on a higher end.

12. CLIMATIC AND ENVIRONMENTAL CONDITIONS: It affects the demand of a product to a greater
extent. Humid and dusty areas will have more demand for Dettol Hand wash.

13. ONLINE AVAILABILITY: Since, Dettol Hand wash is easily available online with different discount
schemes, it is likely to have increased demand due to the ease of online shopping.

14. VISIBILTY IN MARKET: Since Dettol has stores across India, it has more visibility in the market as
compared to other hand wash brands, which increases demand.
15. COMMERCIAL TIE-UPS: If a product is sold on a large scale for commercial purposes, for
instance filling up liquid soap dispensers in offices and education institutions by Dettol, the
demand for it will increase manifolds as the consumers will be likely to by the same product for
use at other places.

16. SOCIAL INITIATIVE: Efforts like celebrating Global Hand Washing day in schools on October 15
every year, where each year approximately 200 million people are involved in celebrations
across over 100 countries globally and organizing workshops in schools across India, to educate
students on proper ways of hand washing, bathing and surface cleaning. With such initiatives,
Reckitt Benckiser plans to reach around 8 lakh students in 1,600 schools by 2019 which will
significantly increase demand for Dettol.
An initiative by RB to make 200 villages in Uttar Pradesh and Bihar open defecation free, the
company will do this along with respective state governments and non-governmental
organizations under the Swach Bharat Abhiyan. While the initiative is noble indeed, there is no
denying that RB is also plugging into its own need to build its consumer base through the
programme.

17. NEW PRODUCT DELIVERY INNOVATION: Dettol introduced a No-Touch Hand Wash last year, a
first in the category, to drive home better hygiene standards. Dettol Squeezy, which is priced at
less than half that of its regular pump bottle of liquid hand wash (available for Rs 69-70 for a 215
ml pack). These recent product innovations have entered into a different niche through some
product technological advancement adding a different layer to the overall hygiene parameters.