GSK's megabrand Horlicks has launched a premium variant - Horlicks Gold in select cities. The new variant is priced around 30% premium over the regular Horlicks. The new variant's USP is the presence of double nutrients and a premium looking packaging.According to news reports, Horlicks Gold has better taste and aroma compared to regular one.
Horlicks has been on an extension spree in the last couple of years launching both product-line extensions and brand extensions. The brand touted itself to be a megabrand which endorses a wide range of products across categories. The latest is the foray of Horlicks into Premium Health Drink market.
Infact there is no such category in the Indian market. Most of the brands are priced in similar lines and it is the first time that a brand is aiming to create a premium segment in the Malted Health Drink market. The move also marks a shift in the segmentation strategy of Horlicks. Horlicks has used predominantly Age based segmentation for all its product development . It used gender as a segmentation when it launched Women's Horlicks. Now the brand has used Income as a segmentation variable. Although Age, Gender , Income etc comes under Demographic segmentation, using Income as a segmentation is first in this category of products.
The challenge for this variant is to convince the customer to pay a premium for Horlicks Gold. In the store shelf both Horlicks regular and Horlicks Gold will be dispayed and what will prompt consumer to chose Gold over Regular is the critical question. I don't think that double nutrients or packaging is a strong enough reason for consumers to pay a 30% premium. Does that mean Regular Horlicks is inferior product to Gold ? Is the brand targeting first-time users or expect the regular users to switch to the premium brand ? These questions will be cleared once the brand starts communicating.
Horlicks is now in a extension trap. The brand in pursuit of market share is using extensions as a strategy . Too many extensions are bound to confuse the customers. As I understand, Horlicks Gold is aimed at the entire family . But this Premium variant so far fails to offer a very powerful differentiation to justify its premiumness over its own Regular variant. That can be a problem for Horlicks. Its too early to make a prediction but in the store both these variants looks the same except for the price. It is now upto the brand communication to do the convincing.
I can't agree with you more. While it may be a good thing that GSK has adopted the Blue Ocean Strategy by segmenting the TG by income, the brand has to take some concrete steps to ensure that the benefit of Gold is established clearly to the consumer...WITHOUT MAKING the regular Horlicks offering obsolete.
ReplyDeleteOne possible way of doing this is to activate and sample the new product on ground. A human interface at the point of purchase may just be that small push that this niche brand needs.
Dear Professor,
ReplyDeleteGreat work and your articles leave the reader with very refreshing thoughts.
Editor, Brandawaaz.com Editorial Team
.. its very interesting to see how the horlicks brands fares its journey with so many sub-brands like:
ReplyDelete1) horlicks 123 - segmentation based on age
2) horlicks junior - segmentation again on age
3) horlicks fo females - segmentation based on gender
4) horlicks premium - segmentation on income
Horlicks gold doesn't have any extra nutrient over the regular "cheaper" horlicks.
ReplyDeleteYou may check this by visiting the market and reading the nutritional info and comparing it with others.
Double nutrients is a false message
Though positioned as a premium product, some consumers might make a shift to the new brand.These may include existing Horlicks users.
ReplyDeleteI fear GSK is cannibalizing its own product. We can only wait and watch.
I totally agree with your point that the new premium pricing and branding of Horlicks Gold will make customers think in the angle that is the original Horlicks is really not worth.
ReplyDeleteSame can be extended to cars also where adding a boot to a hatch does not go very well with the image of the sedan, and Toyota has done the other way by introducing Etios sedan before the hatch.
But Horlicks could not have done that here due to its existing product but could have gone on create a new premium brand and create a niche market for itself
My 2 cents:
ReplyDelete1. Standard Horlicks has 23 vital nutrients and horlicks gold has 26 vital nutrients. It also has a better malt quality (roasted malt) as compared to Standard Horlicks. It is positioned as 'best ever Horlicks' and is definitely a superior offering over the standard horlicks (with better aroma and malt quality as well)
2. Even if there is cannibalization, and 20% of horlicks drinkers convert to horlicks gold, it gives and incremental 6% value growth (considering the 30% premium) to the brand, so who is complaining?
@author, thanks for the info.I still feel that differentiation between the variants is not that strong. are consumers going to check to that detail ??
ReplyDeleteIt is very interesting to see the Ad video clip shown in different channels regarding GSK'S latest Hrolicks Gold. Earlier LINTAS their advertising agency, used Darsheel for Horlicks ad., but said about improving memory, concentration, etc, showing left side of the brain, which is nothing to do for concentration, etc. It should be right brain. This was pointed out by me and they withdrew that advertisement.
ReplyDeleteNow, they are showing the correct side of the brain, i.e. the right side of the brain.
Thanks for making the correction