Friday, August 25, 2017

Homelites Matches : Extra Long, Extra Strong Safety Matches

Brand: Homelites
Company: ITC

Brand Analysis Count: #578

Matches Industry is an interesting one to study. The Rs 1500 crore industry is now in the declining stage of the industry life cycle. The decline of once indispensable product category was prompted by the popularity of gas lighters, decline of cigarette sales and increasing cost of production. 
According to media reports, the safety matches market has declined by almost 25% last year.

Homelites is a brand which came into existence in 1987. The brand was owned by Wimco which was world's largest match manufacturer. Wimco was a market leader at that time which had the most popular match brand - Ship. 

The decline of Wimco started in 2003 when ITC decided to enter the market with AIM brand. With the huge distribution muscle, ITC was quickly able to dethrone Ship and establish AIM as the market leader. The fact that ITC's cigarette sales network cover the length and breadth of the country ensured that AIM got an upper-hand over its competitor. 

In 2005, ITC bought Wimco and now dominates the Indian Matches market. ITC follows the outsourcing model for this product. The product is sourced from small manufacturers and branded and sold through ITC's distribution channel.

Homelites was created to break the price-sensitivity of the market. Matches are considered to be a low involvement product with price and distribution holds the key to success. Earlier 92% of the market was dominated by 50 paise price point. Now it is Rs1.

Homelites was positioned on the long-lasting benefit. The product had extra-long match handles and was carbonized to give extra-performance. And it was priced at a premium of Rs 2 per pack. 
I also happen to find a very good creative ad for this brand on youtube.

According to reports, 54% of purchases of this product category happens at home. With the popularity of gas stoves and gas lighters, there is a chance that this product category may decline further. Probably the usage would be limited to the lighting of the lamp for religious purposes.  Theory says that one of the strategies to survive in a declining industry is to try and reinvent. Wonder if there is a scope for such a strategy in this case.