ranbaxy case solution

Summary
This case explores the possibility of a brand extension for Revital, the bestselling vitamin and mineral supplement and number-one nutraceutical brand in India and a top Ranbaxy Global Consumer Healthcare product. The case examines Revital’s shift from a prescription product to a popular over-the-counter (OTC) brand and explores Ranbaxy’s strategies to position Revital as the brand with the highest recall. It assesses Revital’s competitors in India’s booming nutraceutical market in a scenario where a growing economy and demanding job requirements are pushing young Indian consumers with growing disposable incomes to look to energy drinks, energy candies and products such as Revital. Stressful work conditions and lifestyle changes are resulting in an increased incidence of chronic disorders. Accordingly, more and more customers are turning to nutraceuticals as a preventive measure. No Indian company has yet launched an energy candy in the Indian market, and only imported brands are available. This case examines whether Ranbaxy should enter the nascent energy candy segment to take advantage of the potential opportunity due to the dearth of energy candies in India, evolving consumer preferences and current industry trends.
1. Is it appropriate for Ranbaxy to launch an energy candy?
Revital is the number-one nutraceutical brand in India, but there is considerable competition and new products with more ingredients than Revital has (see case Exhibit 4) are being launched. Also, there is a lack of credibility regarding nutraceuticals in the minds of consumers. While everyone requires an energy boost from time to time, an energy candy may not be the best way to get it. Although it is the leading brand in the Indian nutraceutical market, Revital is currently fighting aggressively to retain and sustain its current market standing.
PROS AND CONS OF LAUNCHING AN ENERGY CANDY ProsYoung Indian population
Booming market
Increased demand for healthy products
Growing acceptance of energy drinks
Rising awareness of nutraceutical products
Tough work schedules
Changing lifestyles
Increased disposable income
Cons
Not a scientifically proven market
No well-defined customer segment
Possibility of overuse
Niche market
Difficult to control consumption by children
2. What should be the segmentation, targeting and positioning for this energy candy? Segmentation, targeting and positioning for products like energy candy are not determined by any demographic, but by a “state of mind.” An innovative and unique product like an energy candy in India needs a creative and “outside-the-box” communication strategy to reach out to prospective customers.
Segmentation: Energy candies have significant caffeine content and can be used by those over 18 years of age. The prospective customer segment should be active and motivated, with a dynamic lifestyle. This segment can be demographically defined as middle-class, upwardly mobile urban youth, working professionals, students and those in the 18-40 age bracket. People belonging to this segment lead a hectic, physically demanding professional life. They are receptive to the advertisements of energy-boosting products that can help them to be physically and mentally fit and alert
Targeting: It may not be right to decide the target market for products like energy candies on the basis of geographic areas or psychographic factors, as these products tend to cut across lifestyles, demographics and socioeconomic boundaries. Here, it is advisable to set the target market on the basis of behavioural segmentation. Behavioural segmentation describes an individual’s relationship with a product and their use and benefit sought from it. Energy candy is not unlike other nutraceutical products and is primarily a product to be taken to counter mental or physical fatigue. Anyone who is stressed out and needs a boost of energy can be targeted by this product. Evidently, as mentioned earlier, the target group includes those aged 18-40 of both genders who lead a hectic and physically demanding lifestyle. The target market for this product can also be athletes and sportspeople because of the boost it could give to their performance. India has the youngest population in the world, with a median age of 25, as a 2010 report suggests. This provides a very large potential market for products like energy candies in India.
Positioning: Ranbaxy has to decide how it wants its energy candy to be perceived, relative to other nutraceutical and energy product brands in the market. It needs to create a distinct image for the brand in the minds of consumers vis-à-vis other brands. Current consumption habits in the energy drink segment show that a person consumes the product when feeling lethargic, studying or while in a pub. Red Bull is positioned as a lifestyle drink that appeals to the “extreme” crowd or those who love to live on the edge. Similarly, Ranbaxy can position its energy candy as giving consumers an immediate energy boost with sustained performance at times of physical and mental exertion. The product should be positioned to imply that soon after consumption, the consumer feels a boost of energy and improves their efficiency in getting work done.
3. Evaluate the possible obstacles to the success of this brand extension.
Price Point: The prices of energy drinks and other nutraceutical products are exorbitant compared with conventional food products in India. In a highly price-sensitive market like India, this can place severe limitations on the demand for new products. The pricing strategy of the product must be such that it encourages prospective buyers to buy it on a regular basis.
Promotion Strategy: As this energy candy would be the first Indian product in this category, it would require a good promotional strategy to ensure appropriate positioning among prospective customers. It may not be possible to develop a promotional strategy to keep the perceptions of the original brand intact while shaping perceptions of the energy candy. Although candies are seen as low-involvement purchases, where consumers do not give much thought to their selection and often make the purchase out of boredom, this product requires consumers to more consciously choose their candy.
Distribution Strategy: The mechanisms involved in the distribution of a pharmaceutical product and that of a confectionery/FMCG are very different. Drugs in India cannot be sold at general/department stores, and Ranbaxy’s current distribution network does not include general retail stores, which may be the major points of purchase for products like energy candy.
Legalities: The Indian pharmaceutical sector is under many legal regulations, whereas this is not the case with most products in the nutraceutical and confectionery markets, which are controlled by the Food and Drug Administration. Further, the regulatory framework governing the nutraceutical market in India has not been implemented as of August,2013. As a result, checks on the safety, efficacy and quality of nutraceutical products are limited, which could result in increased risks to consumer health. The claims made by various products are often invalidated and are usually left to the discretion of safety officers, which leads to an increased likelihood of corruption. This also acts as a deterrent to large foreign players planning to enter the Indian market.