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Hindustan 2
Hindustan 2
Submitted By:
Submitted To :
Saddam Hussain
HOD
PREFACE
Hindustan
Moving Consumer Goods company with a sales turnover of more than Rs.10,000 crores. At
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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.
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 express my warmest thanks & deep sense of gratitude to the individuals for their generous
help in discussing the project and giving their valuable time in successful completion of this
project. Time to time I got constructive suggestions, guidance and encouragement.
I would like to express my deep thanks to Dr. Arvind Agarwal, President, Arya Group of
Colleges and Prof. M. L. Gupta, Principal, Arya Institute of Engineering & Technology,
Jaipur for extending me the opportunity of presenting the project and providing all the
necessary resources for this purpose.
With much pride and delight I would like to express my sincere thanks to Dr. Manish Jain
(Head of the department) for his excellent guidance and valuable suggestions throughout
the project work. I express heartfelt thanks to Mr. Anshul mathur (Project Guide) for her
wonderful support and for giving me an opportunity to present project report on
MARKETING STRATEGIES AND POLICIES.
I also want to give my humble regards to Mrs.Padma sharma,Mr.Parmod sharma,Mrs.
Nisha goyal,Mr.Anshul Mathur,Mrs Ankita Pareek,Mrs.Anchal and Mrs.Priyanka for
their valuable support and believe in my work. Without their sustained interest and
encouragement, this work could not have been possible to reach the state of completion
with satisfaction. In fact it is their real devotion to the development work, which instilled in
me, the need of a passionate commitment to pursue this project.
I am also grateful to all my friends for providing critical feedback and support whenever
required. There are times in such projects when the clock beats you time and again and
you run out of energy, you just want to finish it once and forever. Parents made me endure
such times with their unfailing humour and warm wishes.
I regret for any inadvertent omissions.
SADDAM HUSSAIN
MBA IIIrd SEM.
EXECUTIVE SUMMARY
The Hindustan Unilever Ltds(HUL) Inc has taken the opportunity to offer us a broader
view of FMCG category. The Hindustan Unilever Ltd (HLL) is Indias 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 companys 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 countrys 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 thirdbiggest 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 Cincinnatibased 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
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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.
CONTENTS
Products which have a quick turnover, and relatively low cost are known as Fast Moving
Consumer Goods (FMCG). FMCG products are those that get replaced within a year.
Examples of FMCG generally include a wide range of frequently purchased consumer
products such as toiletries, soap, cosmetics, tooth cleaning products, shaving products and
detergents, as well as other non-durables such as glassware, bulbs, batteries, paper
products, and plastic goods. FMCG may also include pharmaceuticals, consumer
electronics, packaged food products, soft drinks, tissue paper, and chocolate bars.
A subset of Products which have a quick turnover, and relatively low cost are known as Fast
Moving Consumer Goods (FMCG). and Laptops. These are replaced more frequently than
other electronic products. White goods in FMCG refer to household electronic items such
as Refrigerators, T.Vs, Music Systems, etc.
In 2007, the Rs. 48,000-crore FMCG segment was one of the fast growing industries in
India. According to the AC Nielsen India study, the industry grew 5.3% in value between
2006 and 2007.
The Indian Economy is surging ahead by leaps and bounds, keeping pace with rapid
urbanization, increased literacy levels, and rising per capita income.
The big firms are growing bigger and small-time companies are catching up as well.
According to the study conducted by AC Nielsen, 62 of the top 100 brands are owned by
MNCs, and the balance by Indian companies. Fifteen companies own these 62 brands, and
27 of these are owned by Hindustan Lever. Pepsi is at number three followed by Thums Up.
Britannia takes the fifth place, followed by Colgate (6), Nirma (7), Coca-Cola (8) and Parle
(9). These are figures the soft drink and cigarette companies have always shied away from
revealing. Personal care, cigarettes, and soft drinks are the three biggest categories in
FMCG. Between them, they account for 35 of the top 100 brands.
2.
3.
Nestl India
4.
GCMMF (AMUL)
5.
Dabur India
6.
7.
Cadbury India
8.
Britannia Industries
9.
The companies mentioned are the leaders in their respective sectors. The personal care
category has the largest number of brands, i.e., 21, inclusive of Lux, Lifebuoy, Fair and
Lovely, Vicks, and Ponds. There are 11 HLL brands in the 21, aggregating Rs. 3,799 crore
or 54% of the personal care category. Cigarettes account for 17% of the top 100 FMCG
sales, and just below the personal care category. ITC alone accounts for 60% volume
market share and 70% by value of all filter cigarettes in India.
The foods category in FMCG is gaining popularity with a swing of launches by HLL, ITC,
Godrej, and others. This category has 18 major brands, aggregating Rs. 4,637 crore. Nestle
and Amul slug it out in the powders segment. The food category has also seen innovations
like softies in ice creams, chapattis by HLL, ready to eat rice by HLL and pizzas by both
GCMMF and Godrej Pillsbury. This category seems to have faster development than the
stagnating personal care category. Amul, India's largest foods company, has a good
presence in the food category with its ice-creams, curd, milk, butter, cheese, and so on.
Britannia also ranks in the top 100 FMCG brands, dominates the biscuits category and has
launched a series of products at various prices.
In the household care category (like mosquito repellents), Godrej and Reckitt are two
players. Goodknight from Godrej, is worth above Rs 217 crore, followed by Reckitt's
Mortein at Rs 149 crore. In the shampoo category, HLL's Clinic and Sunsilk make it to the
top 100, although P&G's Head and Shoulders and Pantene are also trying hard to be
positioned on top. Clinic is nearly double the size of Sunsilk.
Dabur is among the top five FMCG companies in India and is a herbal specialist. With a
turnover of Rs. 19 billion (approx. US$ 420 million) in 2006-2007, Dabur has brands like
Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola and Real. Asian Paints is enjoying a
formidable presence in the Indian sub-continent, Southeast Asia, Far East, Middle East,
South Pacific, Caribbean, Africa and Europe. Asian Paints is India's largest paint company,
with a turnover of Rs.22.6 billion (around USD 513 million). Forbes Global magazine, USA,
ranked Asian Paints among the 200 Best Small Companies in the World .
Cadbury India is the market leader in the chocolate confectionery market with a 70%
market share and is ranked number two in the total food drinks market. Its popular brands
include Cadbury's Dairy Milk, 5 Star, Eclairs, and Gems. The Rs.15.6 billion (USD 380
Million) Marico is a leading Indian group in consumer products and services in the Global
Beauty and Wellness space.
Outlook
9
There is a huge growth potential for all the FMCG companies as the per capita
consumption of almost all products in the country is amongst the lowest in the world. Again
the demand or prospect could be increased further if these companies can change the
consumer's mindset and offer new generation products. Earlier, Indian consumers were
using non-branded apparel, but today, clothes of different brands are available and the
same consumers are willing to pay more for branded quality clothes. It's the quality,
promotion and innovation of products, which can drive many sectors.
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
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.
A number of prominent companies came into the HUL fold as result of Unilevers
international acquisitions. These included Brooke Bond (1984), Lipton (1972) and
Ponds (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.
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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
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organizational structure
Managing
Direc
tor
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
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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.
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.
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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 2006is also on the right track.
HULs 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 HULs 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 doesnt report its laundry revenues separately but puts them under the
soaps and detergent category.
In 2006, HULs soaps and detergents segment contributed around Rs5,596 crore to the
companys 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.
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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 HULs recent moves, such as promotional
campaigns and advertising, seem right, says Macquaries Sharma. Still, it is too early to
say what result their new strategies.
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PRODUCT PROFILE
HULs 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
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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.
Research Methodology
Title
MARKETING STRATEGIES AND POLICIES
(Analysis and Scope of Marketing of FMCG Products)
(with special reference to Hindustan Unilever)
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Type of Research
Research was of Exploratory and Descriptive Nature.
it
does
not
answer
questions
about
Data Collection
19
how/when/why
the
rapidly
various segments that it caters to. The study then goes on to evaluate and analyze the
findings so as to present a clear picture of trends in the Insurance sector.
The training was for a very short period of time. Thus it was difficult to analyze the
market thoroughly and come to any conclusion in such a short span of time.
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The primary business of the company is for FMCG use. The company also produces oil
meal, food product from soya & value added products from downstream processing of
commodities.
The category usage is universal and the market is quite dynamic and complex.
This market has been witnessing to several changes lately, which includes both :
CONSUMER RELATED
Changing societal norms & healthy & quality factor in all the product segments
MARKET RELATED
Growing power of modern retail trade; has given new challenges and opportunities to
the marketers
Increasing influence of dieticians and doctors in the category causing lower usage,
frequent change of the oil species and looking for healthy option
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Hindustan Unilever an established & key player in the Indian FMCG market, wants to
enhance its footprints in the growing modern retail industry
DATA ANALYSIS
PEST ANALYSIS
P: since the budget range is decontrolled, no political effects are envisaged.
E:
S:
T:
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FIVE PS 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 companys popular products include:
Bathing soaps:
Lux, Lifebuoy, Liril, Hamam, Breeze, Dove, Pears and Rexona
Laundry items:
Surf Excel, Rin and Wheel
Skin care:
Fair & Lovely, Ponds 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
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Coffee:
Bru
Foods:
Kissan, Annapurna and Knorr
Ice cream:
Kwality Walls .
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.
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 isnt 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.
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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.
Unilever Ltd(HUL)
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.
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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.
Its a combination of spiffing up its key brand, researching and improving the newer
products that havent 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. Todays consumer demanding more for less, and the winner will be that super
value marketers. Some of todays 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
consumers 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 Unilevers 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 Indias complexion-conscious consumers
.
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.
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29
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 STRATEGY
As Competition Heats Up, Indias 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 doesnt attract
much notice from other shoppers in Mumbais Hypercity, the India hypermarket chain.
Thats how Douglas Baillie likes it. Baillie, the managing director of Hindustan Unilever,
Indias premier consumer-products company, wants to see how his products are stocked,
what consumers are buying, and how shoppers are reacting to competitive brands. Its
primary market research at its most elemental, and its best done incognito.
Hindustan Unilever has traditionally relied on small traders and mom-and-pop corner stores
to retail its products. But Indias recent retail boom has created large stores and malls, so
the company wants to make sure its in with the new marketing crowd. Hence Baillies
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 cant 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, Indias largest retailer and
a former manager at Hindustan Unilever.
30
31
Now Hindustan Unilever is under siege from aggressive Indian and foreign competitors
such as Procter & Gamble (PG), Nivea, and LOral. In the last year, ACNielsen data
shows, Hindustan Unilevers 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 Unilevers operating margins, down from 21% a few
years ago to just 11.84% now. Thats why the company is wooing consumers in big retail
stores. These newly affluent shoppers present the best hope for the companys future in
India. According to retail consultant KSA Technopak, organized retail, currently just 3.5% of
Indias total $336 billion retail
2017.
Hindustan Unilevers 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
Unilevers finance director. Hindustan Unilevers strategy is to market its premium products
through the hundreds of megastores springing up across India.
That dovetails with parent company Unilevers 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 Unilevers brands will be available across global markets, fitting in
quite nicely with Indias 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 Zimbabweborn British national, became the first foreigner in four decades to head the Indiancompany.
32
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
Unilevers 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 companys 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.
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.
`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.
34
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.
Our strategy
Competitive strengths
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.
35
Competitive Strengths
36
Shakti
Three shakti initiatives
1,25000
villages.
Impact of community
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.
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Lifebuoy is one of Unilevers 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. Prahalads 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 didnt 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.
40
JOINT VENTURE
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 INITIATIVE
Bringing High-End Dove To India
Baillie is fighting back. Over the past six months, Hindustan Unilever launched a high-end
range of Ponds skin care and Dove hair care products from Unilevers 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 brandsFair & Lovely, a hot-selling
fairness cream, which promises a lighter skin, tone for many of Indias complexionconscious 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 Unilevers brand is still tops.
Baillie is also getting aggressive on foods, focusing on the Knorr brand of soups and curry
mixesideal for the Indian market. Analysts believe the companys 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
42
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 companys 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 singleminded in identifying itself with Indian aspirations and needs in every walk of life.
43
PERFORMANCE REVIEW
44
45
46
Analysis :-
shows that most of the business is generated from the whole seller whose monthly
turnover is less than 5 lacs.
47
Analysis :-shows that the major selling category of in the market is Tobacco and the
second seat is occupied by Biscuits after that there are many categories but tobacco
occupies the major market share that is 40%.
48
ANALYSIS:-
as per the figure and analysis parle leads the market , with in 3 years of time itc
managed to capture 10% of the market
49
Analysis :it is clear that the demand of sun feast glucose biscuit is more in the market which
means that glucose biscuit is the best seller in the sun feast family then is cookies,
cream, coconut
50
ANALYSIS:Shows that consumer scheme are preferred in the market by the whole sellers due to
higher demand of that product.
51
300
250
200
150
100
50
0
Series1
HIGHLY
SATISFIED
SATISFIED
LESS
SATISFIED
NOT
SATISFIED
300
195
170
85
52
QUALITY SATISFACTION
375
400
350
300
263
250
200
150
90
100
50
0
22
POOR
GOOD
BETTER
EXCELLENT
ANALYSIS-:
shows that quality of Unilever products were found excellent
53
SWOT ANALYSIS
Strength
Weakness
Opportunity
Threats
As the company is new in the industry it faces competition by the older player
who offers extra discount to the market.
Faces competition from the local player.
Increasing cost due to inflation.
54
CONCLUSION
Unilever holds second position in the branded FMCG segment in Jaipur.
TAJA TEA is the best seller in TEA segment of Unilever products.
Consumer schemes are more preferred in the market then retailer schemes.
Being fresher in the confectionary market Unilever managed to capture around
10 % of market share in the branded confectionary.
clairs is the best seller in Unilever confectionary business.
Most of the retailers and whole sellers were satisfied by the companys
services.
Quality of Unilever Food products are highly accepted in the market.
Unilever has a very strong distribution channel.
This company project has demonstrated HINDUSTAN UNILEVERS 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 Unilevers in its indorse its
strong potential to continue to do well.
55
56
57
QUESTION NAIRE
1. Do you use FMCG products?
Yes
No
No
Bathing soaps
Skin care
Foods
Deodorants
others
No
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BIBLIOGRAPHY
www.unilever.com
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