At nearly four times the price of the average beauty soap, can Sebamed balance pH with pricing?

A 100 gram bar of Sebamed is priced at Rs.199. Dove, Lux and Pears are priced at Rs. 45, 28, 40, respectively.

The German skincare brand's most affordable soap, a 100 gram bar, costs Rs 199, which is 4-5 times costlier than other soaps in the Indian market.

Sebamed is trying to put the giants in the soap category – Hindustan Unilever's Lux, Dove and Pears – on a slippery slope with its marketing blitzkrieg. However, not many knew about Sebamed, which entered India in 2007, until last week.

According to Google Trends for India, on a scale of one to 100 (the latter being the highest), Sebamed was trending at five on January 1, 2021. But by January 10, it had scaled up to 100. It is clear that the bullets fired by Sebamed have had more hits and fewer misses.

First, Sebamed compared Lux with Rin, and said that both have the same pH value. Then came an attack on Dove, which HUL markets as a mild soap - healthy for the skin. Sebamed also attacked Pears, a soap which is traditionally sold more during the ongoing winter season.

"I admire its (Sebamed's) courage. Taking on HUL is not easy and I wish it all the best in its battle," says Ambi Parameswaran, founder, Brand-Building.com, a brand advisory, and an industry expert.

"Sebamed is marketed in India by USV, a pharma company with a deep knowledge of the Indian healthcare system. It (USV) has been promoting Sebamed through the medical field force as an Rx brand. It must have decided (thought) that with the heightened awareness around health and immunity, skin health may also get a boost. So, the idea was to take Sebamed from Rx to what is called OTx, to promote it directly both to the doctors and the consumers."

The soap segment in India is estimated to be around Rs 22,000 crore. Based on application, the market is segmented into beauty soap, kitchen soap, medicated soap, laundry soap, perfumed soap, novelty soap, personal soap and others. Beauty soap is the largest category and medicated soap is the fastest growing one, especially after the outbreak of the COVID pandemic.

Reports suggest that HUL (Lux, Lifebuoy, Dove) has over 42 per cent of the market share and is the largest player in the category. ITC (Vivel, Fiama Di Wills, Superia), Godrej Consumer Products (Cinthol, Godrej No.1), Reckitt Benckiser (Dettol), etc., are the other large players in the market.

Sebamed's most affordable soap, a 100 gram bar, costs Rs 199. However, if an order is placed on e-commerce platform Amazon, it costs Rs 99 (50 per cent discount). Nykaa also sells Sebamed bars at the same rate. There is, however, no such discount on the likes of Tata Cliq and Flipkart.

The obvious question, therefore, is, why is Sebamed selling soaps at Rs 199 and taking on soaps that are 4-5 times cheaper? "Premiumisation is a game HUL has been playing for a decade or more. Lux to Dove, Sunsilk to Tresemme, etc.," says Parameswaran.

The cheaper rate on Amazon or Nykaa doesn’t mean much, as store-based distribution accounts for more than 95 per cent of the soaps sold in India. Sebamed soap is mostly bought from a chemist shop through a dermatologist’s prescription.

"Most of our customers live in metros and mini metros," says Konark Gaur, CMO, Sebamed India, when we asked him about the profile of his consumers.

Coming back to the larger question, why is Sebamed taking on soap brands that sell bars at one-fifth of its price? Gaur makes it clear that it is for publicity: "Largely, we want to empower all soap users across categories so that they can make an informed decision. There are millions of consumers who ought to know (the pH values of soaps they use and what a healthy level is)."

Sebamed seems to have also added some spice in the category's marketing initiative, which otherwise relied on women in foamy bathtubs. Many analysts say that this ad disruption is as exciting as the Liril girl dancing.

However, the marketing and communication disruption may not dent HUL's pie, feels Abneesh Roy, executive VP at Edelweiss Financial Services. "HUL straddles the segment across price points with multiple brands. It has the most extensive physical retail distribution, with dominance extending on e-commerce sites and modern trade as well. We don’t expect new players to make much headway in FMCG in general and soaps in particular, given the high loyalty in personal care, high entry barriers of distribution and ad budgets."

About the selling price, Roy says, "The pricing of Dove soap is one-fifth of Sebamed. In India, the value proposition is paramount, and most Indians will find a Sebamed soap very expensive. This issue may lead to better awareness of Sebamed among a section of consumers and retailers. But the question is, will a large consumer base shift just based on a few ads and pH proposition? We don’t think so. Comparative ads in FMCG happen on a regular basis, but distribution, pricing and relevant claims are the most important parameters for long-term market share."  

Brand marketers know that the product’s price is a big stumbling block, opines Parameswaran. "Hence, the big bang campaign in print media to build credibility and impact. Taking on the market leader is always the way to go when you are a small player. They will face a legal challenge if they have not done their homework. (How can you compare Lux with Rin?) If, however, it has a good legal case, it will be able to storm the citadel of HUL."  

It is clear that Sebamed did not take on Dove, Lux and Pears to take a slice of their pie overnight. Gaur has hinted that the price of Sebamed’s cleansing soap bar will be dropped to Rs 99, and in some cases, it has already been done. He mentions that Sebamed wants to penetrate deeper into the country, while retaining its premiumness. This marketing blitzkrieg is to actually start a conversation around pH.

"The one complaint I have is that Sebamed has not fully explained why pH of a soap is so important for sensitive skin. If it had given a few more nuggets, it would have built its case better," concludes Parameswaran.