By Moses Kaketo
Speaking during the launch of White Star Magic in December 2014, Bidco Uganda managing director Kodey Rao said they had invested $10 million (about Ugx. 27 billion) in the production of detergents that could change the attitude of Ugandans towards imported products.
He explained that the introduction of Magic was going to give Ugandans an option both in terms of choice and price.
A year later, Mr. Kodey Rao ‘prophes’ has come to pass.
For some time, Procter and Gamble’s (P &G) Ariel was the t leader Uganda’s detergent market having taken over from Unilever’s OMO. That has since changed. Today Bidco’s Magic leads the market by far.
The latest market data reveals Ariel is now on the edge. In fact a sizeable stock of Ariel detergent is said to be about to expire. That management recently took a bond decision to donate the detergent to large users that include schools.
Unilever’s OMO and Sunlight are also struggling. Reports suggest management has wrapped up plans to re-launch Sunlight as they seek to gain some sales. Meanwhile Mukwano’s NOMI and MAMA are in second position. The two brands are said to be very popular in Northern Uganda.
Magic’s leadership comes as a result of huge investment in market research, producing quality products and marketing. The company is said to have invested US$1million (about Ugx. 3 billion) in marketing and promotion. Unilever invested about Ugx. 900m last year, however poor implementation and ‘internal’ weakness resulted into poor results from the campaign.
Who buys all the detergents?
Ariel success was partly attributed to focus on large users and getting closer to customers-door to door using foot soldiers and men on bicycles. For example, the company used to sell Ariel worth 200m in Nakawa market, over 300m in Owino market and almost, similar amount in Kalerwe market every month. Magic discovered this secret and picked it up when Ariel or Kiboko went under.
A casual visit to leading supermarkets in Uganda reveals, customers are picking more of Magic than any detergent on the market.
It is clear brand loyalty in Uganda is slowly losing meaning. To the customer it is now all about price and quality.
The price gap between OMO, Ariel and Magic is just “too high for today’s Ugandan consumer
While Unilever sells at Ugx. 4200 for half a kilo, Magic goes for Ugx. 3500. Magic can afford to price relatively lower because it is locally produced while the other products are imported whose pricing is affected by affected dollar fluctuations and taxes.
Remember Magic has the same value proposition and quality as Ariel and OMO, if not better.
How Ariel and OMO lost to Magic
When Ariel launched in Uganda, as an entry point, they undercut market leaders OMO, by selling at a lower price. Management was complacent, they did not react. That is how the billion Dollar brand (OMO) lost to Ariel.
However, Ariel could not sustain the model, since it is an imported brand. They had to increase the price after capturing a sizeable market. Around the same time NOMI, Sunlight and other brands were launched.
In 2013 and 2014 Kiboko Enterprises Limited , the P & G official distributors in Uganda had management issues leading to strategic mistakes.
The worst was when Egypt experienced a crisis in (2013/2014). Importation became a problem leading to stock out for P & G brands in Uganda. This marked the current wows for P & G in Uganda. Kiboko has since then undergone massive restructuring.
As Kiboko Enterprises and P & G were in a ‘mess’, Bidco launched and aggressively marketed Magic. Magic was also helped by White Bar soap which had already been accepted on the market.
Unilever is planning a second coming
When Unilever realized that Mukwano industries’ NOMI ( a low-end brand )was gaining in the market, they launched a new brand, Sunlight to fight it off. This strategy, had it been well executed, would have worked. The attack plan was to have OMO fight Ariel for high-end market, while Sunlight faced off with NOMI for the low-end. The strategy failed at execution.
Due to poor execution, Sunlight is competing with OMO instead of NOMI. The management failed to position Sunlight in its right place. Taken together, Sunlight has been cannibalizing OMO.
Unilever has now realized the mistake. Management is now planning to re-launch Sunlight and position it in its proper position. The re-launch seeks to among others explain to the customer when to buy and use Sunlight and OMO.
Ordinarily, Sunlight is meant for people in Urban areas who wear their clothes once a day, but want a good smell for their clothes. On the other hand, OMO is for removing stains in clothes.
Unilever still faces tough job from Magic, because Magic seems to have two qualities- (fresh smell and stain removal).
Unilever’s other problem in Uganda has also been and still is -importing policies from Kenya to Uganda. The two markets are totally different.
It is said, Ugandans never participate in taking marketing decisions. They only submit ideas and it is upon Nairobi to adopt or ignore them.
That is why most times Unilever adverts don’t connect with the Ugandan consumer, the very reason why they have failed to make an impact.
Unlike Kenya, the Ugandan market is said to be too small. Unliver is yet to know this. They continue to flood the market with brands that appear to be the same in the eyes of the ordinary customer. Take the case of Lifebuoy and Geisha Gem guard. Because the Ugandan market is too small, the two brands end up competing against each other.
Unilever will also have to check on internal fraud which has always affected their marketing and promotions, if they are to take on the new giant-Bidco Uganda and Magic in particular.