MARKETING STRATEGIES AND POLICIES OF HINDUSTAN UNILEVER LIMITEDA 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: Date: Candidate’s signature Name: Enrol.no.: Countersigned Name: Supervisor Delhi college Of Advanced Studies 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. followed by Lever Brothers India Limited (1933) and United Traders Limited (1935). The company focuses on efficient delivery to consumers with an improved supply chain. . The company’s history dates back to 1931 when Unilever set up its first Indian subsidiary. Hindustan Vanaspati Manufacturing Company. 2007 the company has changed the name to Hindustan Unilever Limited. The Hindustan Unilever Ltd (HLL) is India’s no. is a fast moving consumer goods (FMCG) company based in India. These three companies merged to form Hindustan Lever Limited in November 1956. Hindustan Unilever Limited (HUL). a subsidiary of Unilever.INTRODUCTION The Hindustan Unilever Ltd’s(HUL) Inc has taken the opportunity to offer us a broader view of FMCG category. one of the most efficient in the world.1 FMCG is able to share with their market insights based upon unparalleled breath of consumer goods experience. Effective July 19. brand building initiatives and innovation. Hindustan Unilever Ltd (HUL) has grown from strength to strength with new technologies being introduced to make the HLL consumer goods business. In addition to FMCG products it is the country's biggest exporter of tea. may see global revenue growth slow in 2010 as Procter & Gamble Co.Now Cincinnati. Unilever. step up marketing in Asia's third-biggest economy. Hindustan Unilever is Unilever's main operating business in India. including several not occupied by Unilever in other markets such as preserves and bakery products. HUL inhabits virtually every sector of the consumer goods market. which sells soap to more than 500 million Indians. It is generally acknowledged to be one of India's best-run businesses. 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.which has helped the company to sustain its leadership position in the overall FMCG category in India. although performance slowed dramatically between 2000 and 2004.based Procter & . and ITC Ltd. prior to restructuring. It is the country's biggest consumer goods company. and far and away the leading advertiser. and is also one of the country’s top five exporters. 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 Brusselsbased 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 Direc tor General Mana ger Vice President Marketing Manufacturin Sales g Finance Distribution . look good and get more out of life. sales The mission that inspires HUL's over 15. it has been recognised as a Golden Super Star Trading House by the Government of India. hygiene.000crore." HUL meets everyday needs for nutrition. They endow the company with a scale of combined volumes of about 4 million tonnes and of Rs. touching the lives of two out of three Indians with over 20 distinct categories in Home & Personal Care Products and Foods & Beverages.10. and personal care with brands that help people feel good.000 employees. is to "add vitality to life. It is a mission HUL shares with its parent company.PRESENT STATUS Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods company. including over 1. Unilever.300 managers. . HUL is also one of the country's largest exporters. covering 6. and now has facilities in Mumbai and Bangalore. HUL has traditionally been a company.soaps.000 redistribution stockiest. .000 individual shareholders and financial institutions. Lux. personal products. detergents. Kwality Wall's – are household names across the country and span many categories . coffee. Sunsilk.and about 250 million rural consumer. branded staples.3 million retail outlets reaching the entire urban population . ice cream and culinary products.which holds 51. Pepsodent. Wheel. many with post-doctoral experience acquired in the US and Europe. HUL's distribution network. Clinic. Surf Excel. HUL's brands .like Lifebuoy. Lakme.000 suppliers and associates. The operations involve over 2. which incorporates latest technology in all its operations. Brooke Bond. Close-up. tea.55% of the equity. Rin. comprising about 4. Kissan. Knorr-Annapurna. The rest of the shareholding is distributed among 380. They are manufactured over 40 factories across India. The Hindustan Unilever Research Centre (HLRC) was set up in 1958. Fair & Lovely. HLRC and the Global Technology Centres in India have over 200 highly qualified scientists and technologists. Pond's. in fact. new consumer and retail trends and aggressive marketing and promotions. Pricing. “Price cut or hike is not a long-term growth strategy.” he said. This comes even as Unilever is scouting for a potential buyer for its laundry business in the US. Indian subsidiary of the AngloDutch consumer goods company Unilever Plc.” insists Sudhanshu Vats. HUL says it is quite upbeat about the segment and says the laundry segment is one of its “key growth areas. category head.” . home care. now is focused on product innovation. is now passe. Hindustan Unilever Ltd (HUL). “Our strategy for growth.HUL’S NEW GROWTH STRATEGY After having fought a bitter price battle for market share with its rivals. is now working on a new growth strategy for its laundry business. 5% in the same period last year. the increase was not at the expense of price war with its multinational rival Procter & Gamble Co. a value brand that. However.” says Vats.5%. this time. “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.5 percentage points.4% over 2005. Nirma Ltd. however. the Ahmedabadbased manufacturer. According to ACNielsen. P&G also gained 0. saw its market share dip by 1. Wheel. the laundry industry in India was worth Rs7. according the market research firm ACNielsen. increased its market share by 2 percentage points in the same period. with a total share of about 18%. HUL doesn’t .8% in the quarter ended June from 35.“We have done key innovations across the product portfolio and it is working for us. according to Vats contributes around 50% of HUL’s laundry segment revenues. up to a 7.7% percentage points to 13.” HUL’s market share in the laundry segment grew to around 37.6% share.908 crore in 2006 and rose 8. . HUL’s soaps and detergents segment contributed around Rs5.103 crore. “Laundry has been an attractive segment in the past and is likely to keep growing in the near future. In 2006.” says Unmesh Sharma. The recent price war between companies led to erosion in their profitability but now.report its laundry revenues separately but puts them under the soaps and detergent category. According to Vats. an analyst at Macquarie Securities here. 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.596 crore to the company’s total sales of Rs12. the industry is stabilizing. “Consumers today are buying more clothes. . Also. “Trends suggest that the usage of detergents has gone up as a result.” says Vats. ” Still. skin care. Modern Foods ranges . analysts remain cautious. ice creams. hair care. branded staples. “Still. such as promotional campaigns and advertising. coffee. “Some of HUL’s recent moves. people want to use better and branded products. culinary products. seem right. it is too early to say what result their new strategies will yield. oral care.with premium quality of clothes. home care.” PRODUCT PROFILE HUL’s business activities are divided into four broad areas: Home and personal care personal wash.” says Macquarie’s Sharma. fabric wash. deodorants and talcs. colour cosmetic Foods tea. marine products. Ayush ayurvedic products and services. Sangam. beverages. rice BRANDS . Exports HPC. New Ventures Hindustan Lever Network. Pureit water purifiers. Close-up. KnorrAnnapurna and Kwality Walls. Lux. Rin. Fair & Lovely. Sunsilk. SWOT ANALYSIS Strength . Lakme. They include: Lifebuoy. Pepsodent. Kissan. Pond s. Clinic.HUL s brands are household names across the country. Brooke Bond. Wheel. Surf Excel. touching the lives of two out of three Indians with over 20 distinct categories in Home & Personal Care Products and Foods & Beverages. Better market penetration.. 4. Low cost of production due to economic of scale. ice creams. 26. it has been recognised as a Golden Super Star Trading House by the Government of India. is to "add vitality to life. exports.300 managers.5% from beverages. . Weakness 1. and the rest from foods. HUL is also one of the country's largest exporters." 3.6% from personal care products. 2. Continuous threat from other competitors. including over 1. Due to its long presence in India – has deep penetration – 20 consumer product category. Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods company. 10.3% of its revenues from soaps and detergents. 5.1. over 15.000 employees. and other products. That means higher profits and / or more competitioners. The company derives 44. Increasing per capita national income resulting in higher disposable income.Opportunities 1. . Threats 1. cost pressure is likely due to rising crude and freight costs. Globalization. HLL's tea business has declined marginally. Growing middle class and growing urban population. 2. 5. 3. Increasing departmental stores concept – impulse @ at cash counters. reason is that. 4. Increasing gifts cultures. no political effects are envisaged.PEST ANALYSIS P: since the budget range is decontrolled. . 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. Lifebuoy. Pond’s and Vaseline .FIVE P’S OF MARKETING Product Satisfaction suffices. Liril. Breeze. Hindustan Unilever Ltd(HUL) offer such product. delivering to her door step additional benefits which she would never have imagined possible. Hamam. Pears and Rexona • Laundry items: Surf Excel. Rin and Wheel • Skin care: Fair & Lovely. Dove. The wide variety products offered by the company include: The company’s popular product’s include: • Bathing soaps: Lux. 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. • 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: . 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.Kwality Wall’s . and then progressively moving through them. Second P of marketing is not another name for blindly lowering prices and relying on this strategy alone to increase sales dramatically. Pricing Make no mistake. Hindustan Unilever Ltd(HUL) has launched various products which cater to all customer segments. Therefore maximizing the returns involves identifying right price level for each segment. So every customer segment has different price expectation from the product. . Physical Distribution – “Place” BRAND ISN’T THE ONLY ANY MORE. . swamp prime television with best Ads. 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. the brand that sells more is the one that reaches the highest number of customers. you would be know of selling your products. Marketers and finance manager need a new term to evaluate their business: Distribution Equity. 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. but once built. It takes much more time and effort to build. distribution equity is much together to erode. Buyers are paying for distribution equity not brand equity and market shares. In a product and price parity situation. but the end of it all. The cardinal task before the Indian market is managing is to shoe-horn its product on retail shelves. And your brand equity isn’t going to help when it comes to tackling these issues. and about 250 million rural consumers. Own distribution network consist of clearing and forwarding (C&F) agents & distribution stockiest. the prospective customers can have access to the product. and the marketer who can get to the to the consumer ahead of competition will give a hard – to – overtake lead. value system. This network of distribution can either contact wholesalers and which in turn retailers or the distributors can contact to the retailers directly.India – The operations involve over 2. language. transport and communication network.television has already primed and population for consumption. .3 million retail outlets reaching the entire urban population. Once the stock product reaches retailers. covering 6. Hindustan Unilever Ltd(HUL) distributes the product in the manner stated above. comprising about 4.000 redistribution stockists.000 suppliers and associates. life style. But getting their means managing wildly different terrains-climate. HUL's distribution network. Looking at the low penetration of few products. is much higher than Procter & Gamble Co. a distribution expansion would itself being incremental volume. The company is looking to reduce this parity level. To address the issue of product stability.Hindustan Unilever Ltd(HUL) distribution network has expanded. Hindustan Unilever Ltd(HUL) marketing costs. At Hindustan Unilever Ltd(HUL). The other reason is arch rival Procter & Gamble Co. Beside use of improved logistics. it has installed visi colors at several outlets. . This increase in distribution is going to be accompanied by reduction in channel costs. Hindustan Unilever Ltd(HUL) is also attempting to improve the distribution quality. they believe that selling FMCG is it like selling soft drinks. at 18% of total costs. 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. reaches more than a million retailers. and be prepared too take step toward the sender. “cream bathing bar for dove soap” and . Effective advertising is rarely hectoring or loudly explicit…. that produced just the value vacuum that Hindustan Unilever Ltd(HUL) was looking to fill. communication must first ensure exposure. pleasure – seeking child within himself – a graft these feeling onto the Ad campaign like “hasso to khul k hasso for close up”. the receiver must at least half want it to. Naturally. Thereafter it was the job of the advertising to communicate customer the wonderful feeling that he could experience by re-discoursing the careful.Promotion If an advertisement is to communicate effectively. The strategic response address the emotional appeal of the band to the child within the adult. Finding showed that the adults felt too conscious to be seen consuming a product actually meant for children. unself conscious. More often than not. grab her acceptance and then extract retention competing with thousands of other units of communication trying to do the same. grab her attention evoke her comprehension. To penetrate into the inner recesses of her memory. It often both attracts and generates arm feelings. a successful campaign has a stronger element of the unexpected a quality that good advertising shares with much worthwhile literature. the management plans to tap this new channel of marketing. specially targeted during festivals and events such as Valentines day. etc…. It’s a combination of spiffing up its key brand.daag ache hai for surf excel” have been sure shot winner with the audience.e. As well as outdoor and radio ads. Ad since any discussion today would be incomplete without mention ‘e’ word. Something familiar is planned for phone-book as well. www. 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 agency contract has created communication for cinemas and even ATM machines for the brand. it had also entered into various marketing relationship with other portals. It has also launched Pureit.com). Beside the company website (i. 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. researching and improving the newer products that haven’t taken off. All ICICI’ s ATM a message flashes on the screen as soon as customer insert his ATM card.unilever. 30 catteries in Mumbai have been selected. supported . In cinemas. that the company has launched. a home water purifier which supplies drinking water without boiling/need of electricity . consumers began to demand “more for same”. as well as expand the market. 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 . Today’s consumer demanding “more for less”. and luxury goods flourished. and the discounting era grew strong.with high ad – spends that Hindustan Unilever(Ltd) hopes will see it emerges stronger after the current slowdown. 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. In the 1980s. Positioning In the 1970s consumers were ready to pay “more for more”. today customer uses complicated decision making process to assess the alternative before making a purchase. the quicker becomes her search process. which promises a lighter skin tone for many of India’s complexion-conscious consumers .product have strayed away from the consumer’s long standing perception of them… Hindustan Unilever(Ltd) is an anchor in sea of consumer products.unilever. As a variety of competitive claims assails her senses. as www.com informs. . Since Hindustan Unilever(Ltd) is more clearly associated with a particular set of attributes in terms of benefits and prices. Positioning of individual product: 1) Lifebuoy is ‘one of Unilever’s oldest brands’ with more than a hundred-year history. a hot-selling “fairness” cream. “Lifebuoy has become more than just a red bar of soap – today the brand provides hygiene and health solutions for families 2) Fair & Lovely. g.HINDUSTAN UNILEVER’S MARKET SEGMENTATION Market place for any product is comprised of many different segments of consumers. their interests and activities) the benefits which consumers look for in a product or on the occasions when the product might be consumed. Markets segmentation can be defined in a number of ways such as: Demographic variables (e. Consumers are groups.e. Hindustan Unilever(Ltd) takes into account all these factors when producing a range of products. material states income etc…) The lifestyle of consumers (i. gender. each with different needs and wants. It targets different segments within the market. such as the: . Impulse segment – these products are often purchase on impulse. . Take home segment – this describes product that are normally purchased in supermarkets. used these and then. Break segment – products which are normally consume as a snatched break and often with tea and coffee. They include product such as close up. taken home consumed at a later stage. “Price cut or hike is not a long-term growth strategy.” insists Sudhanshu Vats. Pricing. in fact. home care.The Real Taste of Rejuvenation After having fought a bitter price battle for market share with its rivals. is now passe. . Hindustan Unilever Ltd (HUL). Indian subsidiary of the AngloDutch consumer goods company Unilever Plc. category head. is now working on a new growth strategy for its laundry business. .” he said.” HUL’s market share in the laundry segment grew to around 37.” says Vats. HUL says it is quite upbeat about the segment and says the laundry segment is one of its “key growth areas. now is focused on product innovation. “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.4% over 2005. In 2006.103 crore.” “We have done key innovations across the product portfolio and it is working for us. HUL’s soaps and detergents segment contributed around Rs5. According to ACNielsen.8% in the quarter ended June from 35. the laundry industry in India was worth Rs7. new consumer and retail trends and aggressive marketing and promotions.596 crore to the company’s total sales of Rs12.5% in the same period last year.“Our strategy for growth.908 crore in 2006 and rose 8. HUL doesn’t report its laundry revenues separately but puts them under the soaps and detergent category. This comes even as Unilever is scouting for a potential buyer for its laundry business in the US. The recent price war between companies led to erosion in their profitability but now. India’s premier consumer-products company. 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. wants to . India’s Top Consumer-Products Company Woos Affluent Shoppers With Global Brands Like Dove.“Laundry has been an attractive segment in the past and is likely to keep growing in the near future. the India hypermarket chain. COMPETITIVE STRATEGY As Competition Heats Up. the industry is stabilizing. That’s how Douglas Baillie likes it. Baillie. the managing director of Hindustan Unilever. India’s largest retailer and a former manager at Hindustan Unilever. . Hence Baillie’s Hypercity visits. “I can’t imagine any head from Lever House ever visiting other company offices like this. But India’s recent retail boom has created large stores and malls. Hindustan Unilever has traditionally relied on small traders and mom-and-pop corner stores to retail its products. and it’s best done incognito. so the company wants to make sure it’s in with the new marketing crowd. whose executives used to have emissaries make obeisance at Lever house in downtown Mumbai. and how shoppers are reacting to competitive brands.see how his products are stocked. This is quite a change for Hindustan Unilever.” says an amazed Damodar Mall. It’s primary market research at its most elemental. and the calls he makes on the headquarters of the big retail chains. chief executive of innovation and incubation at Pantaloon Retail. what consumers are buying. Yet early this year. Finnish . The company. soaps. sauces and tea. and shampoos to soups. and dominates most of those categories.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. makes everything from detergents. which is practically synonymous with India. These newly affluent shoppers present the best hope for the company’s future in India.3%. Hindustan Unilever’s managers hope their revenues from big retail will increase from 5% today to over 25% in 2012. currently just 3. Hindustan Unilever’s lead in hand soaps. Hindustan Lever tea brands like Brooke Bond and Lipton have dipped from a combined market share of 29.5 billion. “It is a big game . ACNielsen data shows.2% to 24.handset maker Nokia (NOK) dislodged it as the multinational with the highest revenues in India.84% now. Favorite detergent brands like Surf Excel and Rin are barely hanging onto their 37% share.5% of India’s total $336 billion retail market. down from 21% a few years ago to just 11. Now Hindustan Unilever is under siege from aggressive Indian and foreign competitors such as Procter & Gamble (PG). organized retail. is down from 55.2% to 54%. All this has taken a toll on Hindustan Unilever’s operating margins. That’s why the company is wooing consumers in big retail stores. will grow to 28% by 2017. According to retail consultant KSA Technopak. and L’Oréal. including the popular Lux. In the last year. after ringing up India-based sales of $3. Nivea. The takeover of Hindustan Lever by Unilever became evident in March. Sundaram. 2006. was the most successful and profitable company in the Unilever group. fitting in quite nicely with India’s turn towards more international products being sold in supermarkets. a Zimbabwe-born British national. Hindustan Unilever’s strategy is to market its premium products through the hundreds of megastores springing up across India. This means that all of Unilever’s brands will be available across global markets. That dovetails with parent company Unilever’s new global realignment of products. when Baillie.” says D. . Yet this is still a dramatic change for Hindustan Unilever which. while its subsidiaries will sell the products. the crown jewel whose managers had free rein to develop and build brands suitable for the local market. became the first foreigner in four decades to head the Indiancompany. not long ago. Hindustan Unilever’s finance director.for us.Parent Unilever will develop the brands and streamline product offerings across the world. 2007. was rechristened Hindustan Unilever to reflect its parentage. and the cream there. then known as Hindustan Lever. of India’s Then in management graduates made their careers February.From Local Player To Multinational Overnight the change sent shock waves through India. the company. not a multinational. . For many decades most Indians thought Hindustan Lever was a local company. . And there was some stiff competition from rival Procter & Gamble.Baillie first had to sort out some past problems.5 billion for five years while operating profit plunged 37%. 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. thanks to price increases. While the strategy aimed to conserve management energy. to $274 million in 2004. The effect: The company’s sales and operating profits stagnated at $2. But the rich margins of the past have not returned. 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. a 2004 price war with P&G in the detergent business forced Hindustan Unilever to slash prices on its premium brand Surf Excel. Last year operating profits reached $357 million. For instance. the company’s home and personal care businesses account for 80% of revenues and 85% of profits at .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. where foods bring in half the revenues globally.” He also wants to expand the foods business in conjunction with the parent. In India. Tata Tea is exultant.” Rivals like P&G and Nivea have also copied Hindustan Unilever’s best innovation: the small shampoo sachets it pioneered in the 1980s. 2007.5%. Nitin Paranjpe. 2006. If India is a great story. Tata Tea’s market share increased from 16. frozen bread—than it has launched. it has phased out more food products—wheat flour.7% in March.Hindustan Unilever. to 19.1% to 19. Managing . Indeed. Currently. we aren’t the only ones seeing it. executive director in charge of the home and personal care business. confectionery. while Hindustan Unilever slipped from 26. which sold for less than 2 cents each and which expanded the market for Hindustan Unilever products among India’s rural masses. According to ACNielsen. while the company’s track record in foods has been dismal. the Tata Group’s beverage company Tata Tea overtook Hindustan Unilever as India’s largest selling tea brand. In June.9% in July. But today even L’Oreal has sachets of its Fructis shampoo. 80% of Indian shampoo sales come from sachets. Hindustan Unilever executives are realistic about the new era in which it now operates. admits that it’s now “tougher to hold on to market share. the world's largest consumer-goods maker..'' Hindustan Unilever Ltd. Bernstein in New York. will continue to gain share in the next five years in India. lost ground in shampoo. .and Rotterdam-based parent.Director Percy Siganporia says the gain is “a dream comes true for us. according to Ali Dibadj. an analyst at Sanford C. 52 percent owned by the London.” FUTURE COMPETITIVE STRATEGY 2010 Expectations P&G. who rates the stock ``outperform. The price of palm oil. ``It has the ability to take losses in this segment as long as it grows its sales. `Profitable' Cigarettes The tobacco maker ``has a very profitable cigarettes business which will help it to invest and expand its personal. who has a ``neutral'' rating on the stock.'' said Anand Shah. used to make soaps and foods. This strategy will still satisfy investors. an analyst at Angel Broking in Mumbai. has surged 70 percent in the past year.care portfolio. the largest Indian cigarette maker and partly owned by British American Tobacco Plc. ITC.bath soap. toothpaste and tea in the quarter ended Sept. compared with the year earlier. Its share of the shampoo market declined by more than a percentage point to 47.7 percent. . 30. according to the company.'' Rising prices of raw materials have made it more difficult for consumer-goods makers to pass on higher costs. 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. the company said. He expects the stock to drop to 180 rupees ($4.9 rupees. India is Unilever's biggest market in Asia. The company has a market value of about $11. bathing soaps and shampoo.8 billion. analyst Unmesh Sharma. HUL-UNIQUELY CREATE VALUE Our strategy POSITIONED TO Competitive strengths . who has an ``underperform'' rating on Hindustan Unilever. It has sold soap in the country since 1888 and controls about half of the sales of products such as skin creams.57) in the next year from 190. generating about 6 percent of annual sales. profitability will continue to be under pressure.``Given the competition.'' said Macquarie Securities Ltd. Grow a profitable foods and top end business. . Leverage positive impact of growing Indian economy on consumer spending. Innovation pyramid and R&D capabilities to straddle the Versatile distribution network Strong corporate responsibility and governance Strong local and talent base Strategy Grow ahead of the market by leading market development activities. 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 . Personal Products. currently~44000 women cover 1.25000 villages. The Group operates through seven segments: Soaps and Detergents. Impact of community • business and social impact can go together. HINDUSTAN UNILEVER LIMITED COMPARATIVE BUSINESS ANALYSIS Hindustan Unilever Limited Formerly known as Hindustan Lever Limited. • Shakti vani: one-to-many communication for category growth • ishakti: customized interaction with remote consumers. foods and beverages.Shakti Three shakti initiatives • Shakti entrepreneur. Ice Creams and Other. The products include home and personal care products. Exports. industrial . Foods. Beverages. The Group's principal activities are to manufacture and market consumer products. • partnerships with diverse stakeholders. salt. coffee. Home and personal care products consists of personal and fabric wash. seeds. Industrial and agricultural products includes specialty chemicals. thermometers and plantations. marine products and mushrooms. oral care. brand building initiatives and innovation. household. atta and rawa. leather. fertilisers. The company focuses on efficient delivery to consumers with an improved supply chain. tomato products. Foods and beverages includes tea. Its brands are spread across 20 consumer product categories. cooking fats and oils. yeast. This analysis compares Hindustan Unilever Limited with three other companies in closely related industry sectors.and agricultural products. skin and hair care. deodorants. bakery fats. The . animal feeds. plant growth nutrients. rice. ice creams. which has helped the company to sustain its leadership position in the overall FMCG category in India. perfumery. processed-tri-glycerides and agri commodities. footwear and carpets. Hindustan Unilever markets consumer goods throughout India. fruit and vegetable products. bulk chemicals. colour cosmetics and baby care. however rural income are growing faster with 70% population here.THE BIG INDIAN ROMANCE Rural population larger than europe(800 million) Low growth in agriculture. Structural changes in the economy which are affecting this are: Disintermediation in the agricultural market price discovery mechanism has benefited farmers.company faces competition from international. local and regional players. . RURAL.income growth is crucial. retargeted. they add. the authors of Marketing that Works. Though the company was ‘extremely innovative’ the way it handled the rural communications plan was very traditional. Morgan and Shellye Archambeau.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. Government grants and subsidies. “HUL missed an opportunity for increased marketing productivity when they repositioned. and relaunched Lifebuoy. Howard L. Lodish. .” write Leonard M. ” The advertising spends have not been linear for the company. Sundaram.” Advertising strategy came for mention when the company reported the second quarter results. Director (Finance & IT). according to the authors. HUL.” reads an observation in a chapter titled ‘entrepreneurial advertising that works’. A better strategy. he added. 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. “Lifebuoy has become more than just a red . a few days ago. and screened some options to roll out one option that everyone was happy with. The company’s advertising and promotional spends during the quarter fell to Rs 336 crore.The company basically worked with “one agency. Mr D. Lifebuoy is ‘one of Unilever’s oldest brands’ with more than a hundred-year history. Ogilvy and Mather (O&M). from the earlier Rs 345 crore. said: “We have been phasing our advertising spends depending on the launches and relaunches of brands. 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. Prahalad’s The Fortune at the Bottom of the Pyramid . and thus has increased sales of its low-cost. has been able to link the use of soap to a promise of health as a means of creating behavioural change.” says the site. as explained by Mr Lodish et al.” . targeted “10.K. in a paragraph on innovation. “or the villagers themselves might also be able to generate very effective communications vehicles.bar of soap – today the brand provides hygiene and health solutions for families. through its innovative communication campaigns. The O&M strategy.” The authors are of the view that government workers who have been interacting with villagers might have come up with some excellent ideas. “Differentiating soap products on the platform of health takes advantage of an opening in the competitive landscape for soap. HUL. mass-market soap.” reads a quote in the book from C. Prahalad notes. many times it is difficult to change the procedures without creating significant political problems. 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.So. 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. which is one of the many discussed in the book. 2008. “As a big company.” 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.” The HUL example. The strategic tie-up aims to build long term capabilities and bring ‘in-store’ execution focus in servicing the Company’s Modern Trade customers. . logistics for merchandising materials and in store execution. Other Acquisition Hindustan Unilever has acquired several Indian FMCG companies so far. This includes: . It has leading edge capabilities in servicing Modern Trade focused on shelf filling. 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”. 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. “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.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. 000 consultants. . trained and guided by HLN's expert managers and trainers. all independent entrepreneurs.• • • • Tata Oil Mills Company Brooke Bond Lipton India Modern Foods It acquired Kissan brand from UB group. Lakme cosmetics brands from Tata. It has also launched Pureit. Dollops ice cream brand from Cadbury India. Hindustan Unilever Network is the direct selling channel of the company. a home water purifier which supplies drinking water without boiling/need of electricity. It has about 350. where Indian customers love to touch and feel products.NEW INITIATIVE Bringing High-End Dove To India Baillie is fighting back. These premium brands retail not in neighborhood small stores but in supermarkets and hypermarkets. 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. . Sumeet Budhraja. Baillie is also getting aggressive on foods. focusing on the Knorr brand of soups and curry mixes—ideal for the Indian market. but they are more focused and regaining their aggressiveness. Analysts believe the company’s current strategy of concentrating on premium products and marketing them in the large retail stores is a winning one. . The advertising campaign.Hindustan Unilever is also milking one of its top brands—Fair & Lovely. which promises a lighter skin. and sunblock lotions. at onethird the price of established Indian brands such as Aqua guard.” He points to the demand for safe drinking water in India. a hot-selling “fairness” cream. tone for many of India’s complexion-conscious consumers. That has spawned a host of competitive fairness creams. says that Hindustan Unilever “could have addressed a lot more categories. which suggests that regular use of the cream helps women gain confidence and makes them eligible for marriage. consumer analyst at Mumbai brokerage First Global Securities. which Hindustan Unilever exploited with the launch of water purifier Pureit in 2005. soaps. has made the brand a winner. But Hindustan Unilever’s brand is still tops. In the quarter ended June. care for the destitute and HIV-positive. HUL is focusing on health & hygiene education. and water management. 2007. with net profit up 29.These efforts have delivered some promising results. HUL has also responded in case of national calamities / adversities and contributes through various welfare measures. 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. and rural development. most recent being the village built by HUL in earthquake . and Baillie is pleased with the modest turnaround. women empowerment.6%. the company’s sales grew 13%. It is also involved in education and rehabilitation of special or underprivileged children. 000 Shakti entrepreneurs covering 500. By the end of 2010. and relief & rehabilitation after the Tsunami caused devastation in South India. the company embarked on an ambitious programme. touching the lives of over 600 million people.000 women entrepreneurs in its fold. Shakti also includes health and hygiene education through the Shakti Vani Programme. The vision is to make a billion Indians feel safe and secure. thereby improving their livelihood and the standard of living in rural communities. The programme endeavours to induce adoption of hygienic practices among rural Indians and aims to bring down the incidence of diarrhoea.000 villages. In 2001. The program now covers 15 states in India and has over 31. Shakti aims to have 100. HUL is creating micro-enterprise opportunities for rural women.000 villages and directly reaching to 150 million rural consumers. . reaching out to 100. Through Shakti. and creating access to relevant information through the iShakti community portal.affected Gujarat. HUL is also running a rural health programme – Lifebuoy Swasthya Chetana. It has already touched 70 million people in approximately 15000 villages of 8 states. Shakti. 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 .If Hindustan Unilever straddles the Indian corporate world. 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 . unilever.Google. 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.com. procedures etc. # Internet-www. wherever required.com # Magazines-Business Today # Newspapers-The Economic Times . HUL and its competitor history. and L’Oréal on HLL. www. Nivea. current issues. 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).RESEARCH METHODOLOGY Achieving accuracy in any research requires in depth study regarding the subject. Primary data was collected by the Questionnaire & Personal Interview Method Sources of secondary data : Used to obtain information on. policies. # Some dealers were also interviewed to know their prospective.Procedure of research methodology # Target geographic area was Delhi. Interviews with the honour of retailer of HUL were also conducted. # To these geographical area questionnaire was given. # Finally the collected data and information was analysed and compiled to arrive at the conclusion and recommendations 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. Cost involved in collecting the data was high. .LIMITATIONS While undertaking my study I was encountered with some limitations: Limited time was provided to complete the study. 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. Target geographic area was limited to Delhi. . Manage cost inflation effectively to improve margin through pricing.ANALYSIS INTERPRETATION AND 3rd consecutive yearof accelerated growth in FMCG portfilio. Build on competitive capabilities across the business system. Successfully implement the food strategy. Build momentum to the water business.Growth broad based and across all categories. FMCG market expected to maintain current growth levels. .cost saving and better mix. Strong commitment to governance and CSR. and of great benefit to the company in furthering its competitive advantage.CONCLUSION This company project has demonstrated “HINDUSTAN UNILEVER’S MARKETING STRATEGIES AND POLICIES” that has proved to be extensive through. 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. . Aaker (1996) “Building Strong Brands”. David A. “Managing Brand Equity”. The Free Press. The Economic Times – “Brand Equity” Market survey and questionnaires www. The Free Press.com . “Focus” Harper Collins Publishers Ltd.BIBLIOGRAPHY • • • • • • • A L Ries (1996). Aaker (1991).unilever. Philip Kotler (Eighth Edition) “Marketing Management”. Prentice Hall of India Ltd. David A. Are you aware of any campaign of the above brands? . Do you use FMCG products? Yes No 2. Where do you buy FMCG products from? Super stores Retail Stores Others 4. Which brand of FMCG products do you use? Hindustan Unilever P&G Nivea Others 3.QUESTIONNAIRE 1. Yes No 5. Which Hindustan Unilever’s product do you usually prefer or use? Bathing soaps Foods others Skin care Deodorants 6. Describe Hindustan Unilever in one word? 8. Do you think Hindustan Unilever’s product is easily available in market ? Yes No 7. Your comments on Hindustan Unilever’s product? _______________________________________________ . PARTICULARS PAGE NO.CONTENTS S NO. 1 2 Introduction History Limited 3 4 5 6 7 8 9 10 Oganisational Structure Present status HUL’s new growth strategy Product profile SWOT analysis PEST analysis Future competitive strategy HUL-comparitive business analysis of Hindustan Unilever . 11 12 13 14 15 16 17 Joint Ventures New initiatives Research Methodology Analysis Conclusion Bibliography Questionnaire .
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