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Mamaearth’s IPO: High on Emotion, Higher on Marketing Expenses And Low on Distinctiveness, Lower on Reliability?

Amongst the buzz about Mamaearth’s IPO, concerns about their marketing expenses, lack of manufacturing and just lots of emotional stories have started to arise.

Mamaearth’s IPO: High on Emotion, Higher on Marketing Expenses And Low on Distinctiveness, Lower on Reliability?

We were shocked to see how most baby products, be it lotion or shampoo contained toxins which have proven to be harmful to the little ones. We were worried sick and it wasn’t just our baby we were worried about but also for all the little ones we knew in our friend circle. That’s when we decided to do something about it & create products which were completely safe & certified toxin free. A brand, by a parent, for the parent. A brand which develops products from world-class research and attempts to solve every little problem that we as parents face.

What a heartwarming tale, tugging at our heartstrings with a poignant saga of parental concern! Mamaearth, the brainchild of Varun and Ghazal Alagh, has undoubtedly resonated with parents who are worried about the well-being of their kids by emphasizing the need of using skincare products that are free of toxins. Their touching narrative, which they have posted on their website, tries to reflect their genuine desire to protect babies from dangerous substances like chemicals which have been a part of everyday products. More than 1.5 million clients have shown interest in Mamaearth since its founding in 2016 with a modest INR 90 lakh investment.

Even though Mamaearth’s emotional narrative is appealing, a little further research reveals some disturbing details. According to the company, they have special formulations that are devoid of toxins and are carefully crafted for parents who are selective and cautious. However, the exclusivity of their products is called into question by their lack of patents. I find it surprising that Mamaearth chose not to protect what they created in a field where proprietary formulae are prevalent. It casts suspicion on how truly unique their products and solutions are.

The conflict between their emotional appeal as well as the demand for reliable, verifiable facts is at the core of the matter at hand. Although their commitment to offering safe goods is admirable, customers need to understand that the sentimental value of their marketing does not always correspond to revolutionary or unique products for skin care, hair care or babies.

You might wonder what specifically sets Mamaearth’s products apart considering the amount of sales they boast of. Well, it appears the only thing truly special about Mamaearth is their extraordinary knack for storytelling as well as emotional manipulation of the public at large.

They have mastered the art of delivering a compelling narrative which plays on parents’ fears as well as concerns, pulling at their heartstrings with their relatable and personalised tales of parental love and responsibility. It is undoubtedly a clever tactic – after all, who would not want to buy products which promise the highest level of safety and care for their little ones?

However, as rational, logical, and educated people, let us not be swayed or fooled just by looking at their emotional theatrics. Behind the scenes, Mamaearth’s grand claims seem to be nothing more than a clever marketing ploy, a smokescreen which has been designed to distract consumers’ focus from the lack of substance beneath the surface. It seems Mamaearth’s true skill lies in the art of illusion, instead of in revolutionary product innovation.

Mamaearth's IPO – A Beautiful Dream or a Disaster ?

Honasa Consumer, Mamaearth and the Problematic IPO

The parent business of the well-known skincare line Mamaearth, Honasa Consumer, was recently in the news following its revealed intentions to raise an astounding Rs 2,900 crore by means of an initial public offering. However, since its Draft Red Herring Prospectus was turned in to the Securities and Exchange Board of India on December 29, the general public’s scrutiny has become more intense.

The staggering sum of money Honasa spends on advertising and promotional activities is just one of the many startling findings that comes from DRHP. The company spent an astounding Rs. 390 crore on marketing in 2022 alone, which represents a substantial 42% of its entire revenue of Rs. 932 crore. This is not an isolated event; in 2021, Honasa spent Rs 180 crore on advertising, which again accounted for a little over 42% of the company’s revenue (Rs 426 crore), in spite of suffering losses of Rs 1,330 crore.  

An industry expert analyzed these financials and remarked, “Mamaearth reminds us of the edutech startup BYJU’s whose promotional expenses touched Rs 2,200 Cr in FY21 even as the company incurred losses to the tune of Rs 4,500 Cr.”

Honasa’s unexpected entry into Corporate Social Responsibility (CSR) initiatives is another intriguing aspect. The company spent a modest Rs 50 lakh on CSR in 2022, however in 2021 it allotted zero funding for the same. This shift in focus begs the question of what the business is trying to accomplish and whether this is actually an earnest attempt to change public opinion or just a ruse. Examining their financial structure, it is interesting to discover that, despite owning an adequate amount of equity share capital, the company’s directors as well as promoters, Varun and Ghazal Alagh, did not receive a salary from it. This unusual practise draws attention and raises more questions about Honasa Consumer’s internal operations.

The model of outsourcing used by Mamaearth is possibly the most shocking finding from their DRHP. “We outsource the manufacturing of all our products to third-party manufacturers,” the document clearly states.

In other words, Mamaearth does not manufacture anything in-house; they do not even own a manufacturing facility. This startling revelation transforms Mamaearth from a product manufacturer company into what can only be described as a marketing company. A whopping forty percent of its revenue is poured into marketing ad advertising its label, leaving one to wonder about the core essence of the products which they vouch for and promote so vehemently.

In light of these revealed suspicions as well as facts, Honasa Consumer’s IPO plans raise serious questions with regard to the sustainability and transparency of its business strategy. The stark discrepancy between their marketing expenditures as well as their actual manufacturing capabilities raises concerns surrounding the true value proposition which is offered by Mamaearth products. As both potential investors as well as consumers scrutinize these findings, the IPO is likely to face an uphill battle in trying to convince the public of the company’s long-term viability, quality as well as authenticity of claims.

Will Mamaearth be Able to Succeed Amid Controversies? This Article will Tell you About their Current Position And The Challenges they Face.

Raising Questions: Seeking Substance Behind Emotional Marketing!

Mamaearth has succeeded in carving out a position for itself in the crowded market filled with various products, by appealing to parents’ emotions. According to their website, the creators have serious concerns regarding chemicals that are found in baby products, which led them to set out on a mission to make the world a safer place for young children. Customers find great resonance in this story, but as we dig deeper, doubts concerning the veracity of their statements surface.

Mamaearth’s extravagant promises are one of the most critical problems. They proudly declare that all of their product’s ingredients are listed on the packaging itself to ensure full disclosure, while they brag about their total forthrightness. The problem with this is that they have no way of guaranteeing this transparency if they are not manufacturing their goods themselves and instead are simply outsourcing them to third-party manufacturers. Their lack of an independently operated manufacturing facility begs questions about how well-versed they are in the selection and quality of the materials that are used to create their formulas.

Furthermore, their claims of these formulas of being unique, different from the products available in the market and being “toxin-free” start to sound less credible.  Without any patents protecting their so called “carefully crafted” formulations, anyone has the capacity to replicate their products using the same ingredients, which they so proudly claim to not keep hidden. This begs the main question: what sets Mamaearth apart in a market which is flooded with similar offerings with probably a lower price point? Their unique selling proposition seems to disappear when it is scrutinized through the lens of intellectual property rights.

Concerns are also raised by Mamaearth asking for emotional attachment to their brand through elaborate stories. Although it is a really effective strategy, emotional marketing should be grounded in reality. Consumers require verifiable proof of the business’s commitment to quality as well as safety—not merely pleasant narratives. Mamaearth’s excessive marketing costs, which account for a sizable portion of their earnings, give the impression that the company is striving for ways to maintain its reputation, but do they actually make investments in the craftsmanship, quality and realibility of their products?

Transparency becomes critical when Mamaearth’s parent company, Honasa Consumer, gets ready for its first public offering. Both consumers and investors should be provided with thorough information about their manufacturing method, originality, where the supplies they use are from, and whether the claims they make are genuine. In the event that Mamaearth fulfills all of its promises, it is not only necessary but also imperative to have an open and truthful discussion about the issues, concerns and doubts mentioned above.

Ultimately, Mamaearth’s emotional appeal is dependent on how honest and reliable its foundation is. Mamaearth needs to demonstrate its legitimacy when customers as well as investors who are interested examine the company’s products as well as actions closely. We are not going to able to accurately assess the extent of their dedication to their clients until all of these queries have been addressed in a straightforward and forthcoming manner.

Transparency is the cornerstone upon which trust is constructed, not just an advertising slogan. Furthermore, Mamaearth needs to make sure that their emotional appeal proves to be as substantial as they claim it to be, since trust is crucial in the market for specially dealing with baby products, skin care and hair care.

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