How Fevicol Became A Monopoly Business? | Fevicol Secret Business Strategy

Fevicol Secret Business Strategy

Any of us, must have seldom requested glue. "Give me Fevicol," is the only thing that comes out of my mouth. We mistakenly believe that every glue is Fevicol, whether we know it or not. So the question is raised. Why is this the case? Pidilite, Fevicol's parent firm, is not just India's largest adhesive maker, but also Asia's largest.

It's mind-boggling how a lawyer with no business experience established such a massive corporation. Despite the fact that there is a lot of competition, Pidilite is offering its investors a 23 percent return year after year and outperforming the market. And, most importantly, what business lessons can we learn and apply to our business and investment portfolio?

How did Fevicol start as a Business

So the narrative begins in 1959, when Balwant Parekh, a lawyer, quit his legal practise to work as a peon in a tiny carpentry business. Working there, he finds that the adhesive business in India is vast but very disorganised. The issue is, what did a man living in a warehouse with his wife do to develop a massive firm that dominates Asian markets? Animal fat-based glue was employed at the time. The product was decent, however it had several flaws. First, boil and dry the animal fat-based adhesive. Then it was ready for usage. It took a long time, was labour intensive, and was unsanitary. This carpenter was not making much money because the majority of their time was spent on producing this. Balwant Parekh created a synthetic solution of this animal-based fat glue that does not require boiling or drying. It was ten times more powerful and hygienic. Many others were producing glue in the market, but what did Fevicol do to have such a strong monopoly in the market after 60 years?

How Fevicol's Business Solved Problems

Balwant Parekh realised after researching the industry that ordinary home people have no idea what glue is. What will you do if your end user has nothing to do with your product? And it was from here that Fevicol got its name.

1st Business strategy - CDP (Consumer Decision Making Process )

When a buyer purchases a goods, he goes through a formal procedure. In most circumstances, the end customer is someone who utilises the product but does not buy it. That suggests the client did not make the decision to acquire the product. For example, when a couple goes to buy a washing machine, the husband pays for it, but the lady chooses the machine. And the store's salesperson has an impact on the wife. Similarly, Balwant Parekh discovered that the true buyers of glue are not individuals but carpenters. The CDP for purchasing adhesive is as follows:
       

Any client, i.e. a householder, will hire a carpenter to create his or her items.

Consumer Buying Behaviour of Fevicol

If you want to build a wardrobe, you would contact a carpenter and tell him, "Tell me what you need, I'll bring it, and then you can create it." In most circumstances, the carpenter will deliver all of these items and then tell you how much they are worth in rupees. Carpenters go to the hardware store, buy items, and present them to the client with a bill, explaining that this was the money for your items and that labour costs were different. The majority of the company's attention was on hardware stores, while carpenters were the primary influences in purchasing the glue. And everything changed from there. Balwant Parekh modified his whole posture after discovering that the majority of adhesive's true clients are carpenters. Fevicol begins impressing carpenters where everyone else was impressing retailers. Now the question arises. How did Fevicol accomplish these feats?

2nd Business Strategy of Fevicol

As a result, the answer is FCC (Fevicol Champions Club). All carpenters were invited to Pidilite's training centre. Carpenters were provided free tools, equipment, and wood in this group. But there was one more item they gave me: Fevicol. As a result, carpenters may utilise their imagination to come up with new ideas. They made anything they wanted there. But who would have guessed that a training club would be the next big thing? Now, when the carpenter went to the FCC hardware store, he ordered Fevicol. Why? Because he learned how to manufacture stuff out of Fevicol. The demand for Fevicol grew to the point that there was a line of stores waiting outside their plant. I know what you're thinking. How can a corporation acquire a monopoly in the market just by getting together carpenters? This does not occur. You are correct, and it is from here that Pidilite derived its strategy—Metamorphosis.

3rd strategy Metamorphosis

So pay close attention to this. Metamorphosis is a biological phrase that refers to a significant transformation. A caterpillar transforms into a butterfly, and a tadpole transforms into a frog, all through metamorphosis. But how did Pidilite make use of it? Fevicol was a construction-related industrial product that posed a significant difficulty for Pidilite.

Problems faced by Fevicol

Over-Saturation was the issue. Carpenters didn't use any other product when Fevicol became so popular. Pidilite's reliance on carpenters grew as a result of this. And that was quite risky. Pidilite then transformed Fevicol from a construction product to an over-the-counter (OTC) product. The term "over the counter" refers to a product that may be purchased without a prescription. OTC items are those that can be found at practically every store. Fevicol and Fevistick are available in every store, as you can see. How did Pidilite achieve such a remarkable transformation? Packaging Innovation is the answer. Glue is utilised in practically every situation. Whether you need to build a cabinet or glue paper. But why would someone who wants to stick paper buy a 1 kilogramme bag of paper? Pidilite created QQ Assortments after recognising this.

1. Quality

If you want a more expensive glue, go with Fevicol, and if you want something less expensive, go with Falcofix. That is to say, there is a product for every sort of buyer. So there's no problem with retention.

2. Quantity

In this business, the game of Quantity is played differently from the game of Quality. Many individuals believe Fevicol distributes tiny tubes so that they may market their product to people of various ages. But there's a twist in the tale. Pidilite, however, does not profit from 10-20 Rs Fevicol or 5 Rs Fevikwik. So, if they don't make any money, why do they do this? Only a small amount is sold in order to upsell you. This is a long-term game, which is why no one notices it. For example, suppose you're ten years old and have a ten rupee Fevicol bottle with which to stick paper or Fevistick. You bought a 60 Rs bottle for a school assignment when you were 16 years old. Now that you're huge, and you've been using fevicol for a long time, what will you use to construct your furniture? Fevicol. What are you going to use for water proofing? Pidilite's product is called Dr Fixit.

In other words, Fevicol does not generate money by selling little quantities, but it does take up a modest amount of space in your head and life. So, if someone uses their items for a long period, they will undoubtedly benefit. If you had invested one lakh rupees in Pidilite's stocks in 2010, you would now have more than four crores. So, how did Pidilite provide these returns to their investors? As a result, the solution may be found in Fevicol's next business plan.

4th The strategy is - Killing Roots before Buildup

When your competitors have already taken a portion of the market, there is competition in the market. But what if it doesn't work out? Before launching, Pidilite annihilated its competitors. But how do you do it? So Pidilite's inorganic and quick acquisition is the answer. Pidilite is made up of almost 20 different brands. Pidilite, on the other hand, creates a relatively small percentage of them. Pidilite has purchased M-Seal, Steelgrip, Roff, and Falcofix. So when individuals buy any glue, all of the profits go to Pidilite. Pidilite completed the majority of the acquisitions prior to 2013. Pidilite's stock was barely worth 200 rupees at the moment. It is now selling at 2700 Rs. How fortunate they are to have invested at the appropriate moment. I, too, am disappointed; I wish I had invested at the correct moment. We've seen a lot of Fevicol advertising, but none of them featured a hero or heroine. Have you ever wondered why this is the case? As a result, the solution may be found in Fevicol's future business plan.

5th strategy is - P2B Replacement(Product To Brand Replacement)

Fewer individuals are aware that Fevicol and M-Seal are brands rather than goods. Polysynthetic rasin is the real product name for Fevicol. Epoxy compound is the real product name for M-Seal. You are taken aback. Right? This is a brand-to-brand substitution. You won't see a movie star in a Fevicol or M-Seal commercial. Because Pidilite sells emotions rather than products. And emotions arise when a comman man sees a comman man in an advertisement and recognises himself in his narrative. Fevicol's commercials are straightforward, elegant, and heartfelt. Why? Because there's a marketing adage that says "facts tell, but stories sell." And, most importantly, what are the business lessons we can take away and apply to our own company?

Business lessons from Fevicol

1) Never Ignore the Buying Roles

Many persons are engaged in the sale of a single product, which we refer to as Buying Roles. The majority of those who drink it do not purchase it. And the person who buys it does not make the decision on his own. A family visits a mall, and the toddler tells his mother, "Mummy, I want to eat Burger." 'Let's go to McD,' says mother to father. The burger bill is paid by the father, and the entire family eats. The father paid the money, the child ate the burger, but the mother swayed the father's decision. Fevicol understood these buying responsibilities when they debuted their product and effectively positioned it. And it's because of this that Fevicol may be found in every home. This takes us to the second business lesson.

2) Know you Game and Play it Hard

Pidilite could grow in whatever direction they pleased. Everyone was familiar with the firm. They sold glue, although they may have have sold cement, paint, or steel. However, they did not do so. Every company should be aware of the rules of the game. Pidilite was well aware that their game is Adhesive. As a result, they did not seek employment elsewhere. Play it Hard once you've found your game. This leads us to the third business lesson.

3) Become Water Not Rock

Always keep in mind that rigidity kills. Rigidity, I repeat, kills. Water takes on the form of the container in which it is contained. And this is critical in the corporate world. Time affects the fate of businesses that do not move with it. There are several instances to choose from. Nokia, Kodak, Polaroid, and Reliance Communications are some of the most well-known companies in the world. Pidilite could be strict if they chose, yet they understood their clients and made packaging improvements. As a result, their product is accessible to anybody. Those who desire a low-cost product are placed in the low-cost category, while those who want a high-cost product are placed in the premium category. And it's because of this that they have such a strong monopoly in the market.