Group 3

Stuti (231159)

Heena (231153)

Sorabh (231154)

Saket (231127)

Vaibhav (231168)

Jermond

Hindustan Unilever Limited

It is India’s largest Consumer goods company based in Mumbai, Maharashtra. It is owned by british Dutch company which owns 52% majority stake in HUL.

Mission OF HUL

Unilever's mission is to add Vitality to life. We meet every day needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life.

Unilever Mission statement defines the scope of its operations by providing personal care, hygiene and nutrition to its customer.

Customer value and building relationships with its customers is at the core of HUL’s business.

Vision of HUL

Our long term success requires a total commitment to exceptional standards of performance and productivity, to working together effectively, and to a willingness to embrace new ideas and learn continuously.

It clearly states where HUL wants to reach in future in terms of operational excellence, sales volume and innovation.

Vision and mission brings out some of the values that are the winning principles of HUL

These values are sustainable living, innovation, working together and keeping customer at the core of the value creation cycle.

Present Strategies of HUL

Present strategies of HUL are aligned with mission and vision perfectly. HUl’s present strategies are :

1. Deliver superior products, design, branding and marketing.2. Bigger better and faster innovations.3. Appeal to more consumers across needs and price points.4. Lead market development.5. Win with customers.6. Be an execution powerhouse.7. Lean, responsive and consumer led value chain.8. Drive return on brand support.9. Agile cost competitive organization.10. Oraganisation and diverse pipleline talent ready to meet growth ambitions.11. Performance with respect to values.12. Leverage operating framework for competitive advantage.

Hul’s present strategy focus on brand and innovation to win the marketplace through continuous improvement with the help of its employees which is what reflected in its mission and vision statement.

Pestle analysis

Political factors – Post liberalization of economy there has been vast changes in soap industry.

The sops given to various new entrants to set up plants in the form of sales tax concessions and other incentives.

There has been an emphasis on promotion of small scale industry to benefit small scale player.

Focus on rural industries and promotion for major trade fair and events.

Economic Factors – Various economic factors worked in favor of soap industry.

Reduced basic customs duty (BCD) on fatty acids, crude palm stearin, RBD and other palm stearin, specified industrial grade crude oils from 7.5 percent to Nil; Crude glycerin from 12.5 percent to 7.5 percent.

Increasing purchasing power of population both urban and Rural. Higher import duty on caustic soda to offset dumping by foreign companies.

Social Factors – the social factor is very important when it comes to soap industry.

With rise of education and income level, the need for personal hygiene and skin care is increasing

Lack of availability of clear water thus investing in basic sanitation will make improvement to health and soap industry.

Technological Factors

Soap industry is an capital intensive industry as well as requires constant innovation in product thus huge investments in research and development.

Heavy investment in logistic management specially supply chain management and customer relationship management.

Legal and Environmental factors

Soap industry has to identify itself as a cosmetic industry and follow Good manufacturing practice (GMP) which lay down the rules of producing safe goods and restricts use of hazardous chemicals.

Make sure that ingredients used adhere to Grade 1, 2 and 3 of BIS standards.

Porter’s 5 forces model

New Entrants – Large number of brands are operating in industry at national and local level. As it is a delicensed industry the entry of new firms is easy. Existing brand come up with new brands with little product variations catering to each segment. For example Hindustan Unilever limited offers a wide range of brand under bathing soaps industry.

Switching cost of the customer is not very high, whereas there is some amount of brand loyalty in specialty segment.

Capital required to produce standard goods is high but also enjoys high learning curve that improves with experience.

Distribution is the key factor in this industry and barriers to get hold on distribution channels proves to be a major barrier to new entrant.

Substitutes

Consumers are price sensitive. Any increase in price of premium category shifts consumer to popular category soap.

Consumers shifting from bathing soap to face wash and body wash.

Suppliers

Soda ash is a concentrated industry. Only few exporters of Palm oil from foreign countries thus they have a commanding

position. Threat of forward integration similar to Godrej who earlier supplied soap to bigger

companies and deals in its own soap brand. Bargaining power of supplier is high.

Buyer

Many substitutes available in each category. Switching cost of buyer is low and this results in price war and promotional schemes

like 2 +1. More focused towards catering women buyers. Bargaining power of buyer is high.

Rivalry

Market is littered over with several, leading national, and global brands and a large number of small brands, which have limited markets.

High penetration rate. Cut throat competition. High exist barriers due to high capital investments.

Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer packaged goods. Items in this category include all consumables (other than groceries/pulses) people buy at regular intervals. The most common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving products, shoe polish, packaged foodstuff, and household accessories and extends to certain electronic goods. These items are meant for daily of frequent consumption and have a high return. The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion. It has a strong MNC presence and is characterised by a well established distribution network, intense competition between the organised and unorganised segments and low operational cost. Availability of key raw materials, cheaper labour costs and presence across the entire value chain gives India a competitive advantage. The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped market potential. Burgeoning Indian population, particularly the middle class and the rural segments, presents an

opportunity to makers of branded products to convert consumers to branded products. Growth is also likely to come from consumer 'upgrading' in the matured product categories.

The fast moving consumer goods (FMCG) segment is the fourth largest sector in the Indian economy. The market size of FMCG in India is estimated to grow from US$ 30 billion in 2011 to US$ 74 billion in 2018.

Food product is the leading segment, accounting for 43 per cent of the overall market. Personal care (22 per cent) and fabric care (12 per cent) come next in terms of market share.

Growing awareness, easier access, and changing lifestyles have been the key growth drivers for the sector.

Some important facts about the FMCG industry are:

FMCG companies are behind the biggest brands in the world The FMCG industry changes fast and is constantly evolving FMCG firms thrive on employee and customer retention FMCG companies can beat the recession The FMCG industry thinks bigger – and better FMCG has a history of delivering what consumers want

Indian FMCG sector market (2009-2014) and forecasts.

Year Revenue (crore)

2009 1452002010 1812002011 2088002012 2208002013 2407002014 264800

CAGR = 16.5%

2009 2010 2011 2012 2013 20140

50000

100000

150000

200000

250000

300000

Revenue

24.8

15.2

5.7 910

Based on the past years CAGR we see that FMCG sector has seen a steady growth. The per capita income is growing in India. This leads to the increase in purchasing power of consumers which will result in increase in the revenue of FMCG sector sales.

The FMCG sector can expect an annual growth rate of 11-12% for the coming 3 years.

Year Revenue (crore)2015 2952002016 3292002017 367000

. Few factors supporting this growth rate could be :-

Increase in the rural market, which is the new consumer segment. Expansion and new launches. Premiumization.

Indian bathing soap market (2009-2014) and forecasts.

Year Revenue (crore)2009 70002010 76002011 80002012 82002013 85002014 8800

CAGR = 5%

2009 2010 2011 2012 2013 20140

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Revenue%

Based on the past years CAGR i.e 5%, we see that bathing soap sector has seen a steady growth. Seeing this we can expect an annual growth rate of 7% for it.

Year Revenue (crore)2015 94002016 100002017 10700

Few factors supporting this growth rate could be :-

Consumers are becoming more hygiene – conscious. Increase in disposable incomes in the rural areas. Launch of more value-added premium soaps has led to an increase in the demand

of cheaper (or the popular category) substitute products. Moving trend towards ayurvedic/herbal soaps due to increasing awareness about

their medicinal value, hence fast growth observed in this segment as well. Growing demand of beauty soaps amongst men also.

Break-up of demand from urban and rural for your product group to see changing patterns.

One of the factors, which affect the demand of soaps, is the penetration. In case of soaps the penetration in the rural area is 97% and that for urban area is around 99%. Thus approximately the penetration is around 98% for overall India.

The market for soap is growing at 7% a year. With increasing awareness of hygienic standards, the market for the Soaps could grow at a rate higher than 8% annually. Around 60% of the market is now sourced from the rural sector. This means that the variance

between the two segments is not very large. Since upper-end market focus is the urban areas, margins come from the urban sector. Rural consumers in India constitute 70% of the population. Rural demand is growing, with more and more soap brands being launched in the discount segment targeting the lower socio-economic strata of consumers. Soap manufacturers originally targeted their products to the lowest income strata in urban as well as rural areas, positioning their brands as a way to remove dirt and clean the body. For some brands, that positioning persists even today with a focus on removal of body odor and keeping the user healthy. However, soap positioning is moving towards skin care as a value-added benefit.If we look from the category point of view, there are three categories of Soaps: Premium, Economy & Popular. With increase in disposable incomes, growth in rural demand is expected to increase because Consumers are moving up towards premium products. However, in the recent past there has not been much change in the volume of premium soaps in proportion to economy soaps, because increase in prices has led some consumers to look for cheaper substitutes.

The top five players in the soap industry are:

1. ITC Ltd.2. HUL3. Godrej Consumer Products Ltd.4. Colgate Palmolive5. Emami

MARKET SHARE IN 2013:

PLAYERS MARKET SHARE (in Cr.)

ITC Ltd. 256,769 HUL 127,144 Godrej Consumer Products Ltd.

28,107

Colgate Palmolive 18,329 Emami 10,788

MARKET SHARE IN 2014:

PLAYERS MARKET SHARE (in Cr.)

ITC Ltd. 267,930 HUL 138,092 Godrej Consumer Products Ltd.

30,147

Colgate Palmolive 19,400

Emami 10,351

A review of the detailed marketing strategy for all four Ps for the top five brands in your product group.

Product Place Price PromotionLux Beauty soap Urban &

rural areas with covering almost all retails shops and malls

Not very costly, affordable

Celebrity endorsement

Dove Mild moisturizing soap

More focus on Urban areas with covering almost all retails shops and malls

Premium pricing Focus on common women look, focus on common people in ads.

Dettol Hand wash/antiseptic

Urban areas with covering almost all retails shops and malls. Rural areas to some extent

Affordable(affordable by middle class and upper middle class)

Emphasis on healthy & protected living

Lifebuoy Handwash/antiseptic Urban & rural areas with covering almost all retails shops and malls

Low (affordable by all income ranges)

Emphasis on healthy living and family protection.

Cinthol freshness Urban & rural areas with covering almost all retails shops and malls

Low to moderate(affordable by all income ranges)

Focus on freshness and men

Review:

Lux: HUL’s Lux is the top beauty soap. It is a convenience product with a touch of personal care. It has an extremely good coverage for distribution in both rural and urban areas. Price is generally affordable by lower middle class and above. From always, it has relied on celebrity endorsements. Almost all top actresses of bollywood till date have been seen in the LUX ads.

Dove is another HUL soap which offers its products as mild, gentle & moisturizing. Dove has targeted premium market and therefore is readily available in urban areas. The pricing is premium and is affordable by upper middle class and above. The ads mainly focus on a “without makeup look” which takes average looking girls from decent background as its promoters.

Reckitt Benckiser ‘s Dettol is one of the most common antiseptic hand washing soap in the market. It is well distributed in urban areas and to some extent in rural areas ( as the price has come down). Pricing was premium at early stages, but came down to make it affordable to middle class families. Advertisements mostly focus on a protected germ free environment to live in.

Lifebuoy: It is the most common antiseptic hand wash soap in India, whether it’s urban or rural. This offering from HUL is focused on health benefits. It came up as a manly soap and slowly converted itself as a family soap. Its distribution is extensive and is available almost everywhere in India. It is also called the “King of rural markets”. Price is affordable by all classes. Its tagline “Lifebuoy hai jaha, tandrusti hai waha” clearly projects its value for healthy living.

SWOT for your SBU

Strengths:

Humans always give a great priority to care for their personal body. Freshness, glowing skin and protection from germs would be preferred by the

customers always.

Weaknesses:

Customers want instant results, which is quite difficult to happen. Genuine and promising products are difficult to find as there are many products that

have come up.

Opportunities:

It has a great future growth in the rural market which has started increasing quite well.

Since there is an income growth, people would be happy to invest in personal care.

Threats:

Big players like ITC and HUL have dominated the market, not allowing small companies to stay in the market.

Big players spend greatly on advertisements which manipulate the purchasing intentions of the customer.

Past performance of the product and elements of the marketing mix

Timeline for dove:

1957- Launched in the market

1970- Popularity increased as a milder soap

1980- Started its global rollout

1990’s- Dove launches its Beauty Wash Cream.

“Litmus test” spots started in 1991, by 1996 present in 80 countries

1995-2001- came up with new range of products

2002- Campaign for real beauty

2005- Self- esteem campaign

Marketing mix:

PRODUCT

 Dove came with a new idea of moisturizing of skin which was not there before its inception. The products line of Dove is developed after carefully examining the traits and behaviors of women when it comes to  beauty and personal care. The product line of dove has a lot of products ranging from variety of skin care soaps, body wash, moisturizing lotions and hair care products to dove for men which was launched in 2010. Unilever has reached every single individual by producing a range of products according to the needs of current and prospective consumers. Dove has five different classes of product i.e. Hair care Products, Men care, Lotions, Beauty Bars/body wash and Deodorants. Dove has a range of products in its each main category i.e. in Hare Care Products it has 44 different products, in men care, in lotion, in beauty Bars/Body Wash and deodorants has sub products.

PRICE 

Soon after the establishment of Dove soap, it was highly priced because of its high quality and most of the consumers at that time did not consider buying it because of its high price but later on Unilever changed its pricing strategy and made its products inexpensive and caught the attention of upper middle and middle class consumers. Dove shampoo is a good option for repair and maintenance of hair in a

low  price . The soaps produced by Dove are packed in a similar way as other brands’ soaps are packaged therefore bringing its packaging costs low.

PROMOTION

The promotion strategy of Dove is to make the brand famous in the market for its personal care specifically beauty products. Dove promotes its products in the market as the products which enhance and maintain the beauty of women.

Dove’s markets its products heavily on print media, banners, signboards, social media and the most important TV commercials that makes Dove the strongest advertiser of its  products in the market. To grab the attention of more buyers Dove rigorously take advantage of some marketing tools like promotion counters, previous recommendations from costumers and over-the-counter advertising which is very common in recent times. Poster campaigns, flyers, magazines and face-to-face marketing are the strategies which are used by Dove to show the target market that Dove is the only brand which cares for your skin and try to solve skin problems. Unilever also amalgamate its promotional strategy with social responsibility, in many educational  projects in schools in different countries Unilever promoted its products like Dove and toothpaste. Specifically for promotion of Dove, Unilever joined hands with GS of United States of America and EDA of United Kingdom to help raise fund for the project Self Esteem Fund to raise some money for deprived women. Unilever is among the top 5 companies which spend billions of dollars on advertising every year and personal care products accounts for 75% of that. Dove’s “Campaign for Real Beauty” was a successful promotional campaign and the main idea behind this campaign was to build self-esteem and confidence in women.

PLACE

 Unilever utilizes its own distribution network to distribute its products. Unilever has an extensive supply chain management system which means that it does not rely on outsourcing and does all the activities from bringing raw material to manufacturing facilities i.e. procurement to selling the finished goods to the end consumer on its own. Unilever has several warehouses to accommodate such a large quantity of  products. Unilever’s global presence and incredibly good supply chain management create a lot of opportunities for Unilever to take advantage of profit sanctuaries in the emerging markets and developing countries. Unilever because of its economies of scale can enter any market and gain substantial market share from domestic producers. Unilever’s strategy when entering a market is to compete on low prices while providing the customers with high quality products and services.

SEGMENTATION

GEOGRAPHIC

North, South, West, East

Tier 1 cities: Delhi, Mumbai, Chennai, Kolkata, Bangalore, Hyderabad.

Tier 2 cities: Ahmedabad, Jaipur, Lucknow, Chandigarh.

DEMOGRAPHIC

GENDER: Females

AGE GROUP: Young adult women, Middle aged women.

INCOME GROUPS: Upper-Middle income groups, High income groups.

OCCUPATION: Working women, Housewives

EDUCATION: Educated and Informative

LIFESTYLE AND PERSONALITY: Skincare, Wrinkle free skin requirement, Beauty oriented.

TARGETING

Four Metropolitan cities

Urban: Women in urban areas are more aware about the anti-ageing soaps and ready to invest in that product. They want a young, glowing skin throughout. Lower-middle class and rural people look for a cheap product which caters to their daily, simple requirements; so they will not be targeted.

Age group: Females of age 25-55

Gender: Females, which are conscious about their anti-ageing problems.

Income Group: Upper-Middle income groups and High income groups, who are ready to invest on anti-ageing soap on regular basis.

Lifestyle: Educated customers, who carefully focus on their anti-ageing problems.

Brand loyal customers: DOVE is one of the most popular brands. Its customers are happy with the results. Women are more than happy to pay the price to look young. So, introducing this variant under DOVE would be welcomed by the targeted segment.

POSITIONING

125

4

1- Dove2- Lifebuoy3- Cinthol4- Medimix5- Dettol6- Lux

OBJECTIVE

To launch a product that would be welcomed by women to overcome their anti-ageing problem, without lowering their quality.

Strong advertising is needed to gain popularity among the women. To increase the market size as most of the brands have already covered different

variants; so bringing in an anti-ageing soap would be a good idea. Sale of 10 crore units (after 5 years) Promotion cost 25 crores Turnover of 20 crores in one year

Profit and Loss statement of Dove

6

3

(in crores)

Year 1 Year 2 Year 3

Total Sales   40 42 44.1

Less:        

Excise Duty 12% 4.8 5.04 5.29

R&D and market analysis cost

20, 5, 5, 5 respectively

8 2.1 2.2

Cost of raw material & manufacturing

(15% , 15%, 15%, 15% year wise)

6 6.3 6.62

Initial cost setting up of machines and factory(Spread over next 4 years)

Total cost = 20 crores

5 5 5

Marketing, advertising and Sales expenses

40%, 35%, 30%, 25% respectively

16 14.7 13.23

Administration and other expenses

5% 2 2.1 2.2

Margin for various intermediaries

20% 8 8.4 8.82

Total Cost   49.8 43.64 43.36

Total Profit/Loss   -9.8 -1.64 0.74

Break even graph (in crores)

2015 2016 20170

10

20

30

40

50

60

Series1cost

• Total sales of dove soap segment is around 255 crore and it has 3 variants already in place. So, accordingly we can say 85 crore from each variant. Since we are launching a new variant we suppose our sales to be nearly 50%.

• Excise duty is fixed by government and is 12 % of sales.

• R&D cost is estimated to be around 20 % for the first year. The cost of R&D will definitely decrease over the years which we have taken to be around 5%.

The cost of raw material is taken to be 15% which will be fixed throughout the years. Initial cost for capacity building and additional machineries is taken to be 20 crores

which will be spread over for next 4 years. Initially the marketing cost is taken to be 40%, considering the fact that the new

product is to be launched. Later the cost for marketing will subsequently decrease, as the product starts selling.

Admin and other expenses are taken to be 5% which will be constant throughout the years.

Finally the margin for various intermediaries is taken to be 20%. Here 15% margin will be given to retailers and 5% margin will be given to the distributors.

Subsequently we will get the break even sale in the 3rd year.

CONTROL

Monitoring:

Through a proper review and feedback system of the work done by the sales force. Clearly stating the target to be met by the sales force on daily, weekly and monthly basis.

Implementing a proper redressal system in case any complaint or problem is faced by the consumer.

Frequent contacts with the distributors and the sales force to focus on achieving the objectives set by the company.

Corrective action

Free trials:  It is imperative for us for making the free trial as easy to use as possible for consumers, while also proactively engaging prospects throughout the trial experience.  We have to consider how much it costs for the company to support the free trial. 

Contests and offers: Introducing contest and offers for the consumers can provide a lot of insights into our marketing strategy and may help us achieve our expectations.

Contests will serve a great tool for building fan base for the new product. It will enable the company to engage the audience.

Contests are a rich source of data, which in turn will give us the opportunity to learn a bit more about the exact needs of the consumers.

Organizing contests will empower consumers to do the product’s marketing for us. Hence we have to come up with a promotional plan that encompasses multiple marketing channels and sharing via social media. Such contests will enable an amplification of Diet Café Coke’s marketing message that was not previously possible.

Incentives for the salespersons: In case the new product does not meet the expected sales target, the workforce might get de-motivated. Hence in order to boost their confidence as well as sales, incentives and bonuses should be offered on achievement of the targeted sales.

Aggressive advertising: In order to increase the visibility of the new product, Coca Cola should implement aggressive promotion policies like setting up more billboards, hoardings, more banners near favourite fast food outlets, more T.V. commercials and greater presence in the social media.

Coupons: The whole purpose of introducing coupons is to reduce or eliminate the hesitation that consumers may feel when they are considering purchasing a Dove soap. That hesitation factor may be price, but it can come from another reason altogether. The main objective behind couponing for our product is to offer a discount for that first purchase and build loyalty for repeat purchases at the full price. All we will be trying to do is launching a new product line for Dove soap and want to provide an incentive for people to try it.