Lux is one of the oldest toilet soap brands launched by Hindustan Unilever in India. Lux has been consistently positioned on the beauty platform through celebrity endorsements. However, the brand has been facing stagnant sales, reduced market share and increased competition in the past few years. The brand has tried to evolve its positioning and communication strategy to match evolving consumer needs, increasing competition and high penetration but without much success.

The Fast Moving Consumer Goods (FMCG) industry is also known as the Consumer Packaged Goods (CPG) industry as it involves manufacturing, distribution and marketing of goods, which are regularly consumed. According to a report by the McKinsey Global Institute (MGI), India will be one of the world's largest consumer markets by 2025. A survey by MGI titled—The `Bird of Gold': The rise of India's consumer market—said that India will catapult to the fifth largest consumption market by 2025. The FMCG sector of India is expected to value US$43 bn by 2013 and US$74 bn by 2018 according to a report by FICCI-Technopak, 2009.

The size of the organized FMCG industry in India is currently worth Rs. 86,000 cr (over US$19 bn) and has been growing at a steady CAGR of 4% for the last three years. It grew by 12% in 2009 despite the economic downturn and is expected to grow by 14% in 2010. The FMCG sector broadly consists of: personal care and household care products and food & beverages and is generally classified into: organized and unorganized segments. Soaps are the largest product category within the FMCG sector with bathing and toilet soaps having a volume share of 30% (Refer Table1). The soap category is vertically divided into three segments: premium, popular and economy/ sub-popular. The soap industry is characterized by monopolistic competition. The category is growing at 2-3% per annum as the Rs. 2,900 cr industry has reached saturation levels in both urban and rural markets. The challenge for the marketers is to develop value-added soap products. In this cluttered market, brands attempt to differentiate themselves by user benefits (soft skin, skin protection—Godrej Fairglow), product features (clean, fresh scent) and image (Lux is associated with `beauty'). P&G introduced its international brand `Camay' as a beauty enhancing product. Each participant in the industry has limited control over pricing and the market is highly price-sensitive, i.e., small changes in pricing can alter market shares.

Hindustan Unilever is the market leader in the Rs. 4,800-cr branded Indian toilet soap market and two of its prominent brands, Lifebuoy and Lux, had market shares of 20% and 15% respectively in 2009. HUL had over 50% (53.2%—AC Nielsen, September quarter 2007) market share and Godrej Consumer Goods was at a distant second in 2007. The other major players in this category include: Dabur India, Wipro Consumer Care & Lighting, Colgate Palmolive Ltd. and ITC Limited which entered the fray in 2008. HUL has, however, been steadily losing its share since January 2008. Introduction of cheaper soaps in the market and aggressive marketing strategies adopted by the remaining players have contributed to this fall in the market share.

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