36919528 hindustan unilever marketing strategies and policies
TRANSCRIPT
MARKETING STRATEGIES AND POLICIES
OF HINDUSTAN UNILEVER LIMITED
A major project report
Submitted in partial fulfillment of the requirements for BBA(GEN)
semester VI programme of Guru Gobind Singh Indraprastha
University,Delhi
By:
Mitesh Kumar Verma
Enrl.no.:0551221705
BBA(General)
Delhi College Of Advanced Studies
B-7, Shankar Garden ,Vikaspuri
New Delhi-110018
Declaration
I here declare that the major project, entitle “marketing strategies
and policies of Hindustan Unilever Limited”, is based on my original
study and has not been submitted earlier for any degree or
diploma of an institution/university.
The work of author(s), wherever used has been acknowledged at
appropriate places.
Place: Candidate’s signature
Date: Name:
Enrol.no.:
Countersigned
Name:
Supervisor
Delhi college Of Advanced Studies
CONTENTS
S NO. PARTICULARS PAGE
NO.
1 Introduction
2 History of Hindustan Unilever
Limited
3 Oganisational Structure
4 Present status
5 HUL’s new growth strategy
6 Product profile
7 SWOT analysis
8 PEST analysis
9 Future competitive strategy
10 HUL-comparitive business analysis
11 Joint Ventures
12 New initiatives
13 Research Methodology
14 Analysis
15 Conclusion
16 Bibliography
17 Questionnaire
PREFACE
Hindustan Unilever Limited (formerly
Hindustan Lever Limited) is India’s largest Fast Moving Consumer
Goods company with a sales turnover of more than Rs.10,000
crores. At least one of its products reaches two thirds of Indian
households. It has 35 brands and employs more than 15,000
people. Its promoter company Unilever, a fortune 500
multinational, holds 51.42% equity. Unilever has presence in more
than 100 countries worldwide in FMCG sector.
Hindustan Unilever Limited (HUL), a subsidiary of Unilever, is a fast
moving consumer goods (FMCG) company based in India. The
company focuses on efficient delivery to consumers with an
improved supply chain, brand building initiatives and innovation,
which has helped the company to sustain its leadership position in
the overall FMCG category in India.
This project is a sincere effort to look for the market potential in
FMCG industry. A descriptive research procedure had been applied
to come to the conclusions of the project. A detailed questionnaire
had been prepared and the responses of the concerned people had
been collected for the analysis.
ACKNOWLEDGEMENT
I am grateful to many people who have contribution to this project.
In particular I would like to thank my faculty, MS.MEENU ARORA,
who have helped me through this project in their own special &
affordable way.
My project has been a successful task because of cheerful devotion
of always lend the support, I needed of. I have been getting all the
guidance, Dr. NARENDRA MOHAN, the director of our college
and my faculty members who possibly could get through out the
making of this project from them.They always been ready & also
have to clarify all my queries from time to time.
Last but not least I would also like to thank the library members
and computer laboratory members who also have been supportive
during the making of this project by providing adequate books as &
when required for.
Finally I extend my sincere thanks to all those who have given me
encouragement throughout, without whose generosity this project
would have been difficult for me to complete.
INTRODUCTION
The Hindustan Unilever Ltd’s(HUL) Inc has taken the opportunity
to offer us a broader view of FMCG category. The Hindustan
Unilever Ltd (HLL) is India’s no.1 FMCG is able to share with their
market insights based upon unparalleled breath of consumer goods
experience.
Hindustan Unilever Ltd (HUL) has grown from strength to strength
with new technologies being introduced to make the HLL consumer
goods business, one of the most efficient in the world. The
company’s history dates back to 1931 when Unilever set up its first
Indian subsidiary, Hindustan Vanaspati Manufacturing Company,
followed by Lever Brothers India Limited (1933) and United Traders
Limited (1935). These three companies merged to form Hindustan
Lever Limited in November 1956. Effective July 19, 2007 the
company has changed the name to Hindustan Unilever Limited.
Hindustan Unilever Limited (HUL), a subsidiary of Unilever, is a fast
moving consumer goods (FMCG) company based in India. The
company focuses on efficient delivery to consumers with an
improved supply chain, brand building initiatives and innovation,
which has helped the company to sustain its leadership position in
the overall FMCG category in India.
Hindustan Unilever is Unilever's main operating business in India. It
is the country's biggest consumer goods company, and far and
away the leading advertiser. HUL inhabits virtually every sector of
the consumer goods market, including several not occupied by
Unilever in other markets such as preserves and bakery products,
and is also one of the country’s top five exporters. In addition to
FMCG products it is the country's biggest exporter of tea. It is
generally acknowledged to be one of India's best-run businesses,
although performance slowed dramatically between 2000 and
2004, prior to restructuring.
Unilever, which sells soap to more than 500 million Indians, may
see global revenue growth slow in 2010 as Procter & Gamble Co.
and ITC Ltd. step up marketing in Asia's third-biggest economy.
The world's second-largest consumer products maker has relied on
accelerating shipments of Surf Excel detergent in India to make up
for sluggish sales in Europe.Now Cincinnati- based Procter &
Gamble is stocking Indian stores with Olay skin- care products after
nearly halving the local prices of Ariel and Tide detergents in 2004.
Asia and Africa, which make up about a third of Unilever's
worldwide sales, will see their share of the company's growth fall to
2 percent in 2010 from 3.3 percent in 2007, according to Brussels-
based brokerage Petercam SA. Revenue from the two continents
rose 11.4 percent in the first nine months of last year, helping
offset 1.9 percent growth in Europe and 4.2 percent in North and
South America.
Unilever's overall sales growth will slow to 4.9 percent in 2010 from
an estimated 5.3 percent in 2007, according to the median of five
analysts in a Bloomberg survey.
Hindustan Unilever – A 75 Year Commitment
15,000 employees
1,200 managers
2,000 suppliers & associates
75 Manufacturing Locations
45 C&FAs, 4,000 Stockists
Total Coverage 6.3 Mln Outlets
Direct Coverage 1 Mln outlets
Population of INDIA: 1027 Mln
5,545 Towns
2.5 Mln outlets
6,38,000 Villages
5.0 Mln outlets
HISTORY
OF
HINDUSTAN UNILEVER LTD It was in the summer of 1888 that Unilever of England first
marketed Sunlight soap in India. This was followed by brands
like Pears and Vim. Vanaspati was launched in 1918 and
Dalda came to the market in 1937.
In 1931, Unilever set up its first Indian subsidiary, Hindustan
Vanaspati Manufacturing Company, followed by Lever
Brothers India Limited (1933) and United Traders Limited
(1935). These three companies merged to form HUL in
November 1956.
A number of prominent companies came into the HUL fold as
result of Unilever’s international acquisitions. These included
Brooke Bond (1984), Lipton (1972) and Pond’s (1986).
In 1993, Tata Oil Mills Company (TOMCO) merged with HUL.
Two years later, HUL and yet another Tata company, Lakme
Limited, formed a 50:50 joint venture, Lakme Lever Limited.
Subsequently in 1998, Lakme Limited sold its brands to HUL
and divested its 50 per cent stake in the joint venture to the
FMCG giant.
HUL formed a 50:50 joint venture with the US-based Kimberly
Clark Corporation in 1994, Kimberly-Clark Lever Ltd, which
markets Huggies diapers and Kotex sanitary pads.
HUL has also set up a subsidiary in Nepal, Nepal Lever Limited
(NLL), and its factory represents the largest manufacturing
investment in the Himalayan kingdom. In a historic step, HUL
picked up 74 per cent of the equity of Modern Foods from the
Indian government.
In 2002, HUL acquired the government s remaining stake in
Modern Foods.
FMCG major Hindustan Unilever Limited (HUL), formerly
known as Hindustan Lever Limited, employs 36,000 people,
including over 1,350 managers. It is one of the earliest MNCs
to have entered India
ORGANIZATIONAL STRUCTURE
Managing Director
General Manager
Vice President
Marketing Manufacturing
Sales Finance Distribution
PRESENT STATUS
Hindustan Unilever Limited (HUL) is India's largest Fast Moving
Consumer Goods company, touching the lives of two out of three
Indians with over 20 distinct categories in Home & Personal Care
Products and Foods & Beverages. They endow the company with a
scale of combined volumes of about 4 million tonnes and sales
of Rs.10,000crore.
HUL is also one of the country's largest exporters; it has been
recognised as a Golden Super Star Trading House by the
Government of India.
The mission that inspires HUL's over 15,000 employees, including
over 1,300 managers, is to "add vitality to life." HUL meets
everyday needs for nutrition, hygiene, and personal care with
brands that help people feel good, look good and get more out of
life. It is a mission HUL shares with its parent company, Unilever,
which holds 51.55% of the equity. The rest of the shareholding is
distributed among 380,000 individual shareholders and financial
institutions.
HUL's brands - like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair &
Lovely, Pond's, Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke
Bond, Kissan, Knorr-Annapurna, Kwality Wall's – are household
names across the country and span many categories - soaps,
detergents, personal products, tea, coffee, branded staples, ice
cream and culinary products. They are manufactured over 40
factories across India. The operations involve over 2,000 suppliers
and associates. HUL's distribution network, comprising about 4,000
redistribution stockiest, covering 6.3 million retail outlets reaching
the entire urban population ,and about 250 million rural consumer.
HUL has traditionally been a company, which incorporates latest
technology in all its operations. The Hindustan Unilever Research
Centre (HLRC) was set up in 1958, and now has facilities in Mumbai
and Bangalore. HLRC and the Global Technology Centres in India
have over 200 highly qualified scientists and technologists, many
with post-doctoral experience acquired in the US and Europe.
HUL’S NEW GROWTH STRATEGY
After having fought a bitter price battle for market share with its
rivals, Hindustan Unilever Ltd (HUL), Indian subsidiary of the Anglo-
Dutch consumer goods company Unilever Plc, is now working on a
new growth strategy for its laundry business.
“Price cut or hike is not a long-term growth strategy. Pricing, in
fact, is now passe,” insists Sudhanshu Vats, category head, home
care.
“Our strategy for growth, now is focused on product innovation,
new consumer and retail trends and aggressive marketing and
promotions,” he said.
This comes even as Unilever is scouting for a potential buyer for its
laundry business in the US.
HUL says it is quite upbeat about the segment and says the
laundry segment is one of its “key growth areas.”
“We have done key innovations across the product portfolio and it
is working for us,” says Vats. “We successfully migrated from Rin
Supreme to Surf Excel and Wheel Smart Srimati—which was rolled
out in 2006—is also on the right track.”
HUL’s market share in the laundry segment grew to around 37.8%
in the quarter ended June from 35.5% in the same period last year,
according the market research firm ACNielsen. However, this time,
the increase was not at the expense of price war with its
multinational rival Procter & Gamble Co. P&G also gained 0.5
percentage points, up to a 7.6% share. Nirma Ltd, the Ahmedabad-
based manufacturer, however, saw its market share dip by 1.7%
percentage points to 13.5%.
Wheel, a value brand that, according to Vats contributes around
50% of HUL’s laundry segment revenues, increased its market
share by 2 percentage points in the same period, with a total share
of about 18%.
According to ACNielsen, the laundry industry in India was worth
Rs7,908 crore in 2006 and rose 8.4% over 2005. HUL doesn’t
report its laundry revenues separately but puts them under the
soaps and detergent category.
In 2006, HUL’s soaps and detergents segment contributed around
Rs5,596 crore to the company’s total sales of Rs12,103 crore.
“Laundry has been an attractive segment in the past and is likely
to keep growing in the near future. The recent price war between
companies led to erosion in their profitability but now, the industry
is stabilizing,” says Unmesh Sharma, an analyst at Macquarie
Securities here.
According to Vats, the laundry business is witnessing a surge in
demand from cities and HUL is focusing on Tier I and II cities to tap
that demand.
“Consumers today are buying more clothes,” says Vats. “Trends
suggest that the usage of detergents has gone up as a result. Also,
with premium quality of clothes, people want to use better and
branded products.”
Still, analysts remain cautious. “Some of HUL’s recent moves, such
as promotional campaigns and advertising, seem right,” says
Macquarie’s Sharma. “Still, it is too early to say what result their
new strategies will yield.”
PRODUCT PROFILE
HUL’s business activities are divided into four broad areas:
Home and personal care
personal wash, fabric wash, home care, oral care, skin care,
hair care, deodorants and talcs, colour cosmetic
Foods
tea, coffee, branded staples, culinary products, ice creams,
Modern Foods ranges
New Ventures
Hindustan Lever Network, Ayush ayurvedic products and
services, Sangam, Pureit water purifiers.
Exports
HPC, beverages, marine products, rice
BRANDS
HUL s brands are household names across the country. They
include:
Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond s, Sunsilk,
Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, Knorr-
Annapurna and Kwality Walls.
SWOT ANALYSIS
Strength
1. Hindustan Unilever Limited (HUL) is India's largest Fast
Moving Consumer Goods company, touching the lives of
two out of three Indians with over 20 distinct categories in
Home & Personal Care Products and Foods & Beverages..
2. Due to its long presence in India – has deep penetration –
20 consumer product category, over 15,000 employees,
including over 1,300 managers, is to "add vitality to life."
3. The company derives 44.3% of its revenues from soaps and
detergents, 26.6% from personal care products, 10.5%
from beverages, and the rest from foods, ice creams,
exports, and other products.
4. Low cost of production due to economic of scale. That
means higher profits and / or more competitioners. Better
market penetration.
5. HUL is also one of the country's largest exporters; it has
been recognised as a Golden Super Star Trading House by
the Government of India.
Weakness
1. Continuous threat from other competitors.
Opportunities
1. Increasing per capita national income resulting in
higher disposable income.
2. Growing middle class and growing urban population.
3. Increasing gifts cultures.
4. Increasing departmental stores concept – impulse @
at cash counters.
5. Globalization.
Threats
1. HLL's tea business has declined marginally, reason is
that, cost pressure is likely due to rising crude and
freight costs.
PEST ANALYSIS
P: since the budget range is decontrolled, no political effects are
envisaged.
E: 1) increasing per capita income resulting in higher
Disposable income
2) Growing middle class/urban population – increase in
Demand
3) Low cost of production – better penetration
S: 1) Per capita consumption expected to increase – fashion
2) Increasing gifts culture – increase in demand
T: Will have to reinforce technology to international levels
Once India is a “fully free” economy.
FIVE P’S OF MARKETING
Product
Satisfaction suffices. But delight dazzles the average company will
compete for customer by conforming to her expectation
consistently. But the winner will surpass them by constantly
exceeding her expectation, delivering to her door step additional
benefits which she would never have imagined possible. Hindustan
Unilever Ltd(HUL) offer such product. The wide variety products
offered by the company include:
The company’s popular product’s include:
Bathing soaps :
Lux, Lifebuoy, Liril, Hamam, Breeze, Dove, Pears and Rexona
Laundry items :
Surf Excel, Rin and Wheel
Skin care :
Fair & Lovely, Pond’s and Vaseline
Hair care :
Sunsilk and Clinic
Oral care :
Pepsodent and Close up
Deodorants :
Axe and Rexona
Colour cosmetics :
Lakme
Ayurvedic:
Ayush
Tea :
Brooke Bond and Lipton
Coffee :
Bru
Foods :
Kissan, Annapurna and Knorr
Ice cream :
Kwality Wall’s .
Pricing
Make no mistake. Second P of marketing is not another name for
blindly lowering prices and relying on this strategy alone to
increase sales dramatically. The strategy used by Hindustan
Unilever Ltd(HUL) is for matching the value that customer pays to
buy the product with the expectation they have about what the
production is worth to them.
Hindustan Unilever Ltd(HUL) has launched various products which
cater to all customer segments. So every customer segment has
different price expectation from the product. Therefore maximizing
the returns involves identifying right price level for each segment,
and then progressively moving through them.
Physical Distribution – “Place”
BRAND ISN’T THE ONLY ANY MORE. Marketers and finance
manager need a new term to evaluate their business:
Distribution Equity. It takes much more time and effort to build,
but once built, distribution equity is much together to erode.
The fundamental axiom of Indian consumer market is this:
You can set up a state-of –the-art manufacturing facility, hire the
hottest strategies on the block, swamp prime television with best
Ads, but the end of it all, you would be know of selling your
products. The cardinal task before the Indian market is managing is
to shoe-horn its product on retail shelves. Buyers are paying for
distribution equity not brand equity and market shares.
Why does the company need distribution equity more anything in
India? With technology and competitive pressure slash in it is
becoming increasing difficult for marketers to retain a unique
product differentiation for ling period. In a product and price parity
situation, the brand that sells more is the one that reaches the
highest number of customers.
India – The operations involve over 2,000 suppliers and associates.
HUL's distribution network, comprising about 4,000 redistribution
stockists, covering 6.3 million retail outlets reaching the entire
urban population, and about 250 million rural consumers.television
has already primed and population for consumption, and the
marketer who can get to the to the consumer ahead of competition
will give a hard – to – overtake lead. But getting their means
managing wildly different terrains-climate, language, value system,
life style, transport and communication network. And your brand
equity isn’t going to help when it comes to tackling these issues.
Own distribution network consist of clearing and forwarding (C&F)
agents & distribution stockiest. This network of distribution can
either contact wholesalers and which in turn retailers or the
distributors can contact to the retailers directly.
Once the stock product reaches retailers, the prospective
customers can have access to the product.
Hindustan Unilever Ltd(HUL) distributes the product in the manner
stated above.
Hindustan Unilever Ltd(HUL) distribution network has expanded.
Beside use of improved logistics, Hindustan Unilever Ltd(HUL) is
also attempting to improve the distribution quality. To address the
issue of product stability, it has installed visi colors at several
outlets. This helps in maintaining consumption in summer when
sales usually drops due to the fact that the heal effects product
quality and thereby off takes.
Looking at the low penetration of few products, a distribution
expansion would itself being incremental volume. The other reason
is arch rival Procter & Gamble Co. reaches more than a million
retailers.
This increase in distribution is going to be accompanied by
reduction in channel costs. Hindustan Unilever Ltd(HUL) marketing
costs, at 18% of total costs, is much higher than Procter & Gamble
Co. The company is looking to reduce this parity level. At
Hindustan Unilever Ltd(HUL), they believe that selling FMCG is it
like selling soft drinks.
Promotion
If an advertisement is to communicate effectively, the receiver
must at least half want it to, and be prepared too take step toward
the sender. Effective advertising is rarely hectoring or loudly
explicit…. It often both attracts and generates arm feelings. More
often than not, a successful campaign has a stronger element of
the unexpected a quality that good advertising shares with much
worthwhile literature.
To penetrate into the inner recesses of her memory,
communication must first ensure exposure, grab her attention
evoke her comprehension, grab her acceptance and then extract
retention competing with thousands of other units of
communication trying to do the same.
Finding showed that the adults felt too conscious to be seen
consuming a product actually meant for children. The strategic
response address the emotional appeal of the band to the child
within the adult. Naturally, that produced just the value vacuum
that Hindustan Unilever Ltd(HUL) was looking to fill. Thereafter it
was the job of the advertising to communicate customer the
wonderful feeling that he could experience by re-discoursing the
careful, unself conscious, pleasure – seeking child within himself –
a graft these feeling onto the Ad campaign like “hasso to khul k
hasso for close up”, “cream bathing bar for dove soap” and
daag ache hai for surf excel” have been sure shot winner with
the audience.
It has also launched Pureit, a home water purifier which supplies
drinking water without boiling/need of electricity , As well as
outdoor and radio ads, ad agency contract has created
communication for cinemas and even ATM machines for the brand.
All ICICI’ s ATM a message flashes on the screen as soon as
customer insert his ATM card. Something familiar is planned for
phone-book as well. In cinemas, Hindustan Unilever(Ltd)has a
message on-screen just before the lights are dimmed to give them
a chance to get their product There will also be after dinner
sampling in restaurants – to begin with, 30 catteries in Mumbai
have been selected.
Ad spend in 2000 was about 14% of sales and the management
said that plans to maintain as spend at this level in the current
year also.
Ad since any discussion today would be incomplete without
mention ‘e’ word, the management plans to tap this new channel
of marketing. Beside the company website (i.e. www.unilever.com),
that the company has launched, it had also entered into various
marketing relationship with other portals, specially targeted during
festivals and events such as Valentines day, etc….
It’s a combination of spiffing up its key brand, researching and
improving the newer products that haven’t taken off, supported
with high ad – spends that Hindustan Unilever(Ltd) hopes will see it
emerges stronger after the current slowdown, as well as expand
the market.
Positioning
In the 1970s consumers were ready to pay “more for more”, and
luxury goods flourished. In the 1980s, consumers began to demand
“more for same”, and the discounting era grew strong. Today’s
consumer demanding “more for less”, and the winner will be that
super value marketers…. Some of today’s most successful
companies recognize those customers are more educated and able
to recognize true customer value…
Positioning is simply concentrating on an idea – or – even a word
defines that company in the mind of the consumer. It is more
efficient to market one successful concept to one large group of
people than 50 product or service ideas to 50 separate group…
repositioning is a must when customer attitude have changed and
product have strayed away from the consumer’s long standing
perception of them…
Hindustan Unilever(Ltd) is an anchor in sea of consumer products.
As a variety of competitive claims assails her senses, today
customer uses complicated decision making process to assess the
alternative before making a purchase. Since Hindustan
Unilever(Ltd) is more clearly associated with a particular set of
attributes in terms of benefits and prices, the quicker becomes her
search process.
Positioning of individual product:
1)Lifebuoy is ‘one of Unilever’s oldest brands’ with more than a
hundred-year history, as www.unilever.com informs. “Lifebuoy
has become more than just a red bar of soap – today the
brand provides hygiene and health solutions for families
2)Fair & Lovely, a hot-selling “fairness” cream, which promises
a lighter skin tone for many of India’s complexion-conscious
consumers
.
HINDUSTAN UNILEVER’S MARKET SEGMENTATION
Market place for any product is comprised of many different
segments of consumers, each with different needs and wants.
Markets segmentation can be defined in a number of ways such as:
Demographic variables (e.g. Consumers are groups, gender,
material states income etc…)
The lifestyle of consumers (i.e. their interests and activities)
the benefits which consumers look for in a product or on the
occasions when the product might be consumed.
Hindustan Unilever(Ltd) takes into account all these factors
when producing a range of products. It targets different
segments within the market, such as the:
Break segment – products which are normally consume as a
snatched break and often with tea and coffee.
Impulse segment – these products are often purchase on
impulse, used these and then. They include product such as
close up.
Take home segment – this describes product that are
normally purchased in supermarkets, taken home consumed
at a later stage.
The Real Taste of Rejuvenation
After having fought a bitter price battle for market share with its
rivals, Hindustan Unilever Ltd (HUL), Indian subsidiary of the Anglo-
Dutch consumer goods company Unilever Plc, is now working on a
new growth strategy for its laundry business.
“Price cut or hike is not a long-term growth strategy. Pricing, in
fact, is now passe,” insists Sudhanshu Vats, category head, home
care.
“Our strategy for growth, now is focused on product innovation,
new consumer and retail trends and aggressive marketing and
promotions,” he said.
This comes even as Unilever is scouting for a potential buyer for its
laundry business in the US.
HUL says it is quite upbeat about the segment and says the
laundry segment is one of its “key growth areas.”
“We have done key innovations across the product portfolio and it
is working for us,” says Vats. “We successfully migrated from Rin
Supreme to Surf Excel and Wheel Smart Srimati—which was rolled
out in 2006—is also on the right track.”
HUL’s market share in the laundry segment grew to around 37.8%
in the quarter ended June from 35.5% in the same period last year.
According to ACNielsen, the laundry industry in India was worth
Rs7,908 crore in 2006 and rose 8.4% over 2005. HUL doesn’t
report its laundry revenues separately but puts them under the
soaps and detergent category.
In 2006, HUL’s soaps and detergents segment contributed around
Rs5,596 crore to the company’s total sales of Rs12,103 crore.
“Laundry has been an attractive segment in the past and is likely
to keep growing in the near future. The recent price war between
companies led to erosion in their profitability but now, the industry
is stabilizing.
COMPETITIVE STRATEGYAs Competition Heats Up, India’s Top Consumer-Products Company
Woos Affluent Shoppers With Global Brands Like Dove, While
Cooking Up Its Foods Biz
The middle-aged Briton strolling the aisles and checking out the
products doesn’t attract much notice from other shoppers in
Mumbai’s Hypercity, the India hypermarket chain. That’s how
Douglas Baillie likes it. Baillie, the managing director of Hindustan
Unilever, India’s premier consumer-products company, wants to
see how his products are stocked, what consumers are buying, and
how shoppers are reacting to competitive brands. It’s primary
market research at its most elemental, and it’s best done
incognito.
Hindustan Unilever has traditionally relied on small traders and
mom-and-pop corner stores to retail its products. But India’s recent
retail boom has created large stores and malls, so the company
wants to make sure it’s in with the new marketing crowd. Hence
Baillie’s Hypercity visits, and the calls he makes on the
headquarters of the big retail chains.
This is quite a change for Hindustan Unilever, whose executives
used to have emissaries make obeisance at Lever house in
downtown Mumbai. “I can’t imagine any head from Lever House
ever visiting other company offices like this,” says an amazed
Damodar Mall, chief executive of innovation and incubation at
Pantaloon Retail, India’s largest retailer and a former manager at
Hindustan Unilever.
Facing Competition From P&G And
Others
The reason for this new found egalitarianism is that the $3 billion
Hindustan Unilever is facing serious competition. The company,
which is practically synonymous with India, makes everything from
detergents, soaps, and shampoos to soups, sauces and tea, and
dominates most of those categories. Yet early this year, Finnish
handset maker Nokia (NOK) dislodged it as the multinational with
the highest revenues in India, after ringing up India-based sales of
$3.5 billion.
Now Hindustan Unilever is under siege from aggressive Indian and
foreign competitors such as Procter & Gamble (PG), Nivea, and
L’Oréal. In the last year, ACNielsen data shows, Hindustan
Unilever’s lead in hand soaps, including the popular Lux, is down
from 55.2% to 54%. Favorite detergent brands like Surf Excel and
Rin are barely hanging onto their 37% share. Hindustan Lever tea
brands like Brooke Bond and Lipton have dipped from a combined
market share of 29.2% to 24.3%.
All this has taken a toll on Hindustan Unilever’s operating margins,
down from 21% a few years ago to just 11.84% now. That’s why
the company is wooing consumers in big retail stores. These newly
affluent shoppers present the best hope for the company’s future
in India. According to retail consultant KSA Technopak, organized
retail, currently just 3.5% of India’s total $336 billion retail
market, will grow to 28% by 2017.
Hindustan Unilever’s managers hope their revenues from big retail
will increase from 5% today to over 25% in 2012. “It is a big game
for us,” says D. Sundaram, Hindustan Unilever’s finance director.
Hindustan Unilever’s strategy is to market its premium products
through the hundreds of megastores springing up across India.
That dovetails with parent company Unilever’s new global
realignment of products.Parent Unilever will develop the brands
and streamline product offerings across the world, while its
subsidiaries will sell the products.
This means that all of Unilever’s brands will be available across
global markets, fitting in quite nicely with India’s turn towards
more international products being sold in supermarkets.
Yet this is still a dramatic change for Hindustan Unilever which, not
long ago, was the most successful and profitable company in the
Unilever group, the crown jewel whose managers had free rein to
develop and build brands suitable for the local market. The
takeover of Hindustan Lever by Unilever became evident in March,
2006, when Baillie, a Zimbabwe-born British national, became the
first foreigner in four decades to head the Indiancompany.
From Local Player To MultinationalOvernight the change sent shock waves through India. For many
decades most Indians thought Hindustan Lever was a local
company, not a multinational, and the cream of India’s
management graduates made their careers there. Then in
February, 2007, the company, then known as Hindustan Lever, was
rechristened Hindustan Unilever to reflect its parentage.
Baillie first had to sort out some past problems. For instance, in
2002 the company adopted Unilever’s global strategy of focusing
on just 30 power brands instead of the total basket of 110 more
local brands. While the strategy aimed to conserve management
energy, it also left the field wide open for competitors to attack
Hindustan Unilever in the niche soap and detergent markets where
its smaller brands held sway.
And there was some stiff competition from rival Procter & Gamble;
a 2004 price war with P&G in the detergent business forced
Hindustan Unilever to slash prices on its premium brand Surf Excel.
The effect: The company’s sales and operating profits stagnated at
$2.5 billion for five years while operating profit plunged 37%, to
$274 million in 2004. Last year operating profits reached $357
million, thanks to price increases. But the rich margins of the past
have not returned.
Tougher To Hold On To Market Share
Baillie says he intends to get the company back “into the
competitive growth zone and do this in a manner that we can
consistently deliver.” He also wants to expand the foods business
in conjunction with the parent, where foods bring in half the
revenues globally. In India, the company’s home and personal care
businesses account for 80% of revenues and 85% of profits at
Hindustan Unilever, while the company’s track record in foods has
been dismal. Indeed, it has phased out more food products—wheat
flour, confectionery, frozen bread—than it has launched.
Hindustan Unilever executives are realistic about the new era in
which it now operates. Nitin Paranjpe, executive director in charge
of the home and personal care business, admits that it’s now
“tougher to hold on to market share. If India is a great story, we
aren’t the only ones seeing it.” Rivals like P&G and Nivea have also
copied Hindustan Unilever’s best innovation: the small shampoo
sachets it pioneered in the 1980s, which sold for less than 2 cents
each and which expanded the market for Hindustan Unilever
products among India’s rural masses. Currently, 80% of Indian
shampoo sales come from sachets. But today even L’Oreal has
sachets of its Fructis shampoo.
In June, the Tata Group’s beverage company Tata Tea overtook
Hindustan Unilever as India’s largest selling tea brand. According
to ACNielsen, Tata Tea’s market share increased from 16.7% in
March, 2006, to 19.9% in July, 2007, while Hindustan Unilever
slipped from 26.1% to 19.5%. Tata Tea is exultant. Managing
Director Percy Siganporia says the gain is “a dream comes true for
us.”
FUTURE COMPETITIVE STRATEGY
2010 Expectations P&G, the world's largest consumer-goods maker, will continue to
gain share in the next five years in India, according to Ali Dibadj,
an analyst at Sanford C. Bernstein in New York, who rates the stock
``outperform.'' Hindustan Unilever Ltd., 52 percent owned by the
London- and Rotterdam-based parent, lost ground in shampoo,
bath soap, toothpaste and tea in the quarter ended Sept. 30,
compared with the year earlier, according to the company. Its
share of the shampoo market declined by more than a percentage
point to 47.7 percent, the company said.
ITC, the largest Indian cigarette maker and partly owned by British
American Tobacco Plc, is also making inroads. It started selling
more brands including Fiama Di Wills shampoo and Superia soap
last year as the government raised tobacco taxes.
Profitable' Cigarettes
The tobacco maker ``has a very profitable cigarettes business
which will help it to invest and expand its personal- care portfolio,''
said Anand Shah, an analyst at Angel Broking in Mumbai, who has
a ``neutral'' rating on the stock. ``It has the ability to take losses in
this segment as long as it grows its sales. This strategy will still
satisfy investors.''
Rising prices of raw materials have made it more difficult for
consumer-goods makers to pass on higher costs. The price of palm
oil, used to make soaps and foods, has surged 70 percent in the
past year.
``Given the competition, profitability will continue to be under
pressure,'' said Macquarie Securities Ltd. analyst Unmesh Sharma,
who has an ``underperform'' rating on Hindustan Unilever. He
expects the stock to drop to 180 rupees ($4.57) in the next year
from 190.9 rupees. The company has a market value of about
$11.8 billion.
India is Unilever's biggest market in Asia, generating about 6
percent of annual sales. It has sold soap in the country since 1888
and controls about half of the sales of products such as skin
creams, bathing soaps and shampoo.
HUL-UNIQUELY POSITIONED TO CREATE VALUE
Our strategy
Competitive strengths
Innovation and R&D capabilities to straddle the
pyramid
Versatile distribution network
Strong corporate responsibility and governance
Strong local and talent base
Strategy
Grow ahead of the market by leading market development
activities.
Leverage positive impact of growing Indian economy on
consumer spending.
Grow a profitable foods and top end business.
Grow the bottom line ahead of the top line.
Strong commitment to sustainable development.
Competitive Strengths
Corporate Social Responsibility-Aiding In The Development Of The Country
Shakti
Three shakti initiatives
Shakti entrepreneur; currently~44000 women cover
1,25000 villages.
Shakti vani: one-to-many communication for category
growth
ishakti: customized interaction with remote
consumers.
Impact of community
business and social impact can go together.
partnerships with diverse stakeholders.
HINDUSTAN UNILEVER LIMITED -
COMPARATIVE BUSINESS ANALYSIS
Hindustan Unilever Limited Formerly known as Hindustan Lever
Limited. The Group's principal activities are to manufacture and
market consumer products. The Group operates through seven
segments: Soaps and Detergents, Personal Products, Exports,
Beverages, Foods, Ice Creams and Other. The products include
home and personal care products, foods and beverages, industrial
and agricultural products. Home and personal care products
consists of personal and fabric wash, household, oral care, skin and
hair care, deodorants, perfumery, colour cosmetics and baby care.
Foods and beverages includes tea, coffee, cooking fats and oils,
bakery fats, ice creams, tomato products, fruit and vegetable
products, rice, salt, atta and rawa, marine products and
mushrooms. Industrial and agricultural products includes specialty
chemicals, bulk chemicals, fertilisers, animal feeds, seeds, plant
growth nutrients, processed-tri-glycerides and agri commodities,
yeast, leather, footwear and carpets, thermometers and
plantations.
This analysis compares Hindustan Unilever Limited with three other
companies in closely related industry sectors.
The company focuses on efficient delivery to consumers with an
improved supply chain, brand building initiatives and innovation,
which has helped the company to sustain its leadership position in
the overall FMCG category in India.
Its brands are spread across 20 consumer product categories.
Hindustan Unilever markets consumer goods throughout India. The
company faces competition from international, local and regional
players.
RURAL- THE BIG INDIAN ROMANCE
Rural population larger than europe(800 million)
Low growth in agriculture;however rural income are growing
faster with 70% population here,income growth is crucial.
Structural changes in the economy which are affecting this
are:
Disintermediation in the agricultural market price
discovery mechanism has benefited farmers.
Government grants and subsidies.employment
grants-Rs 40000cr
Did Hindustan Unilever Get Its Rural Pitch Right?
A new book from Wharton School Publishing is critical of Hindustan
Unilever’s advertising strategy in India.
“HUL missed an opportunity for increased marketing productivity
when they repositioned, retargeted, and relaunched Lifebuoy,”
write Leonard M. Lodish, Howard L. Morgan and Shellye
Archambeau, the authors of Marketing that Works. Though the
company was ‘extremely innovative’ the way it handled the rural
communications plan was very traditional, they add.
The company basically worked with “one agency, Ogilvy and
Mather (O&M), and screened some options to roll out one option
that everyone was happy with,” reads an observation in a chapter
titled ‘entrepreneurial advertising that works’.
A better strategy, according to the authors, would have been to
develop “a number of different communications executions using
different creative sources and then testing them as part of the
early rollout.”
Advertising strategy came for mention when the company reported
the second quarter results, a few days ago. Mr D. Sundaram,
Director (Finance & IT), HUL, said: “We have been phasing our
advertising spends depending on the launches and relaunches of
brands.” The advertising spends have not been linear for the
company, he added. The company’s advertising and promotional
spends during the quarter fell to Rs 336 crore, from the earlier Rs
345 crore.
Lifebuoy is ‘one of Unilever’s oldest brands’ with more than a
hundred-year history. “Lifebuoy has become more than just a red
bar of soap – today the brand provides hygiene and health
solutions for families,” says the site, in a paragraph on innovation.
“Differentiating soap products on the platform of health takes
advantage of an opening in the competitive landscape for soap,”
reads a quote in the book from C.K. Prahalad’s The Fortune at the
Bottom of the Pyramid .
HUL, through its innovative communication campaigns, has been
able to link the use of soap to a promise of health as a means of
creating behavioural change, and thus has increased sales of its
low-cost, mass-market soap, Prahalad notes.
The O&M strategy, as explained by Mr Lodish et al, targeted
“10,000 villages in nine states where HUL stood to gain the most
market share… They spent a lot of effort in designing low cost
ways of communicating with their rural target.”
The authors are of the view that government workers who have
been interacting with villagers might have come up with some
excellent ideas; “or the villagers themselves might also be able to
generate very effective communications vehicles.”
So, why didn’t HUL try alternative campaigns when rolling out its
initiative? “Probably the biggest reason is that they always did
their communications the same way – even for innovative
programs,” wonder the authors. “As a big company, many times it
is difficult to change the procedures without creating significant
political problems.”
The HUL example, which is one of the many discussed in the book,
concludes by stating that globally very progressive and innovative
firms can also benefit from being “more entrepreneurial and less
traditional in how they manage their advertising and
communication.”
JOINT VENTURE
Hindustan Unilever Sets Up Joint Venture With Smollan Holdings
Hindustan Unilever Limited (HUL) has decided to set up a Joint
Venture (JV) with Smollan Holdings of South Africa and the JV will
be operational from January 1, 2008. The strategic tie-up aims to
build long term capabilities and bring ‘in-store’ execution focus in
servicing the Company’s Modern Trade customers.
The new company has been named as Hindustan Unilever Field
Services Private Limited (HUFS) and will work exclusively on behalf
of HUL in Modern Trade channel only. The operations will begin
with the existing Modern Trade in-store execution team of HUL
moving into HUFS.
Smollan Holdings is one of the leading ‘in-store execution and field
services’ companies internationally. It has leading edge
capabilities in servicing Modern Trade focused on shelf filling,
logistics for merchandising materials and in store execution.
“Modern Trade in India is growing and evolving very rapidly and
our strategy for winning in this growing retail market is to win at
point-of-purchase with our shoppers & by delivering best-in-class
service to our Modern Trade customers. This JV will bring in world
class execution excellence in the market and build the right
capabilities to deliver the company’s marketing strategy in Modern
Trade”.
Other AcquisitionHindustan Unilever has acquired several Indian FMCG companies
so far. This includes:
Tata Oil Mills Company
Brooke Bond
Lipton India
Modern Foods
It acquired Kissan brand from UB group; Dollops ice cream brand
from Cadbury India; Lakme cosmetics brands from Tata. It has also
launched Pureit, a home water purifier which supplies drinking
water without boiling/need of electricity.
Hindustan Unilever Network is the direct selling channel of the
company. It has about 350,000 consultants, all independent
entrepreneurs, trained and guided by HLN's expert managers and
trainers.
NEW INITIATIVEBringing High-End Dove To India
Baillie is fighting back. Over the past six months, Hindustan
Unilever launched a high-end range of Pond’s skin care and Dove
hair care products from Unilever’s international portfolio. These
premium brands retail not in neighborhood small stores but in
supermarkets and hypermarkets, where Indian customers love to
touch and feel products.
Hindustan Unilever is also milking one of its top brands—Fair &
Lovely, a hot-selling “fairness” cream, which promises a lighter
skin, tone for many of India’s complexion-conscious consumers.
The advertising campaign, which suggests that regular use of the
cream helps women gain confidence and makes them eligible for
marriage, has made the brand a winner. That has spawned a host
of competitive fairness creams, soaps, and sunblock lotions. But
Hindustan Unilever’s brand is still tops.
Baillie is also getting aggressive on foods, focusing on the Knorr
brand of soups and curry mixes—ideal for the Indian market.
Analysts believe the company’s current strategy of concentrating
on premium products and marketing them in the large retail stores
is a winning one. Sumeet Budhraja, consumer analyst at Mumbai
brokerage First Global Securities, says that Hindustan Unilever
“could have addressed a lot more categories, but they are more
focused and regaining their aggressiveness.” He points to the
demand for safe drinking water in India, which Hindustan Unilever
exploited with the launch of water purifier Pureit in 2005, at one-
third the price of established Indian brands such as Aqua guard.
These efforts have delivered some promising results, and Baillie is
pleased with the modest turnaround. In the quarter ended June,
2007, the company’s sales grew 13%, with net profit up 29.6%.
Reason enough to keep patrolling those store aisles.
SERVICE TO SOCIETY
HUL believes that an organisation's worth is also in the service it
renders to the community. HUL is focusing on health & hygiene
education, women empowerment, and water management. It is
also involved in education and rehabilitation of special or
underprivileged children, care for the destitute and HIV-positive,
and rural development. HUL has also responded in case of national
calamities / adversities and contributes through various welfare
measures, most recent being the village built by HUL in earthquake
affected Gujarat, and relief & rehabilitation after the Tsunami
caused devastation in South India.
In 2001, the company embarked on an ambitious programme,
Shakti. Through Shakti, HUL is creating micro-enterprise
opportunities for rural women, thereby improving their livelihood
and the standard of living in rural communities. Shakti also
includes health and hygiene education through the Shakti Vani
Programme, and creating access to relevant information through
the iShakti community portal. The program now covers 15 states in
India and has over 31,000 women entrepreneurs in its fold,
reaching out to 100,000 villages and directly reaching to 150
million rural consumers. By the end of 2010, Shakti aims to have
100,000 Shakti entrepreneurs covering 500,000 villages, touching
the lives of over 600 million people.
HUL is also running a rural health programme – Lifebuoy Swasthya
Chetana. The programme endeavours to induce adoption of
hygienic practices among rural Indians and aims to bring down the
incidence of diarrhoea. It has already touched 70 million people in
approximately 15000 villages of 8 states. The vision is to make a
billion Indians feel safe and secure.
If Hindustan Unilever straddles the Indian corporate world, it is
because of being single-minded in identifying itself with Indian
aspirations and needs in every walk of life.
PERFORMANCE REVIEW
Leadership Across Diverse Fmcg Category
Record Performance
Financial Overview -2007
*FIGURES BASED ON FY 2007 AUDITED RESULTS
OBJECTIVE OF THE STUDY
To identify the marketing strategies and policies of
Hindustan Unilever Limited
To analyse the influence of rival company’s strategies on
the performance of Hindustan Unilever Limited
To analyse the various strategies adopted by the
company to gain competitive advantage
RESEARCH METHODOLOGY
Achieving accuracy in any research requires in depth study
regarding the subject. As the prime objective of the project is to
compare Hindustan Unilever Ltd’s(HUL) with the existing
competitors in the market and the impact of Procter & Gamble
(PG), Nivea, and L’Oréal on HLL, the research methodology
adopted is basically based on primary data via which the most
recent and accurate piece of first hand information could be
collected.
Primary data was collected by the
Questionnaire &
Personal Interview Method
Sources of secondary data:
Used to obtain information on, HUL and its competitor history,
current issues, policies, procedures etc, wherever required.
# Internet-www.unilever.com, www.Google.com
# Magazines-Business Today
# Newspapers-The Economic Times
Procedure of research methodology
# Target geographic area was Delhi.
# To these geographical area questionnaire was given, the
questionnaire was a combination of both open ended and closed
ended questions.
# The date during which questionnaires were filled was between
three week.
# Some dealers were also interviewed to know their prospective.
Interviews with the honour of retailer of HUL were also conducted.
# Finally the collected data and information was analysed and
compiled to arrive at the conclusion and recommendations given.
LIMITATIONS
While undertaking my study I was encountered with some
limitations:
Limited time was provided to complete the study.
Cost involved in collecting the data was high.
Target geographic area was limited to Mumbai.
To fix an appointment with the dealers was also very difficult task
and even after that many time people was not turn up for the
appointment.
Because of illiteracy, it was a time consuming method in which
continuous guidance was required.
Questionnaire method involves some uncertainty of response.
Co-operation on the part of informants, in some cases, was difficult
to presume.
It is possible that the information supplied by the informants may
be incorrect. So, the study may lack accuracy.
ANALYSIS AND INTERPRETATION
3rd consecutive year of accelerated growth in FMCG portfolio.
Growth broad based and across all categories.
FMCG market expected to maintain current growth levels.
Successfully implement the food strategy.
Build momentum to the water business.
Build on competitive capabilities across the business system.
Manage cost inflation effectively to improve margin through
pricing, cost saving and better mix.
Strong commitment to governance and CSR.
CONCLUSION
This company project has demonstrated “HINDUSTAN UNILEVER’S
MARKETING STRATEGIES AND POLICIES” that has proved to be
extensive through, and of great benefit to the company in
furthering its competitive advantage.
In this project it possible to see the success of Hindustan Unilever’s
in it’s indorse its strong potential to continue to do well.
Good Technology
Uniform Pricing
Good Strength
More Coverage Area
Frequent /Regular Product Launch
Market Leader (with 47% share)
BIBLIOGRAPHY
Philip Kotler (Eighth Edition) “Marketing Management”,
Prentice Hall of India Ltd.
The Economic Times – “Brand Equity”
Market survey and questionnaires
www.unilever.com
QUESTIONNAIRE
NAME ___________________________________________
ADDRESS ________________________________________
AGE
Below 25 years 25 to 40 40 to 55 Above 55 years
CONTACT NO.
1. Do you use FMCG products?
Yes No
2. Which brand of FMCG products do you use?
Hindustan Unilever
P&G
Nivea
Others
3. Where do you buy FMCG products from?
Super stores
Retail Stores
Others
4. Are you aware of any campaign of the above brands?
Yes No
5. Which Hindustan Unilever’s product do you usually prefer or use?
Bathing soaps Skin care
Foods Deodorants
others
6. Do you think Hindustan Unilever’s product is easily available in market ?
Yes No
7. Describe Hindustan Unilever in one word?
_______________________________________________
8. Your comments on Hindustan Unilever’s product?
______________________________________________
______________________________________________.