FUNDAMENTALS OF MARKETING

(MKT 101)
Term Assignment

On

“ANALYSIS OF MARKETING ENVIRONMENT”

(FAST MOVING CONSUMER GOODS, HINDUSTAN UNILEVER LIMITED)

POST GRADUATE DIPLOMA IN MANAGEMENT

(Term-I; Batch 2019-21)

Under the Supervision of

Dr. DEEPAK SINGH

Associate Professor- Marketing & Strategy

Submitted By:

Siddhartha Duggal

PGMB1934

JAIPURIA INSTITUTE OF MANAGEMENT

A-32 A, Sector 62, Institutional Area, Noida- 201309 (U.P.)

 About The Industry
Fast moving consumer goods (FMCG) sector is the 4th largest sector in Indian
economy with household & personal care having 50% of fmcg sales in India.
Growing awareness, easier access & changing lifestyles have been key growth
drivers in this sector. The Urban segment (accounting 55%) is the largest
contributor to the overall revenue generated by fmcg sector in India. The rural
market however has been growing at a much faster pace as compared to previous
years.

The market is estimated to reach US$ 1.1 trillion by 2020 from $840 billion in
2017. The revenues of fmcg sector reached 3.4 lakh crore in FY18 & are estimated
to reach US$ 103.7 billion in 2020. Apart from that government has allowed 100%
FDI(Foreign Direct Investment) in food processing & single brand retail & 51% in
multi brand retail.

Sector Wise Breakup Urban Rural Industry

Break up
Food &
bevrages
19% Urban
50% Healthcare
31% Rural

Household 55% 45%

personal care
 EXTERNAL ENVIRONMENT ANALYSIS FOR MARKET
LEADER HINDUSTAN UNILEVER LIMITED

MICRO ANALYSIS (PORTERS FORCES)

INDUSRTY IMPORTANT IMPACT ON THE FIRM

FORCE PLAYERS
Current direct ITC,Colgate- Competitive rivalry is high force
competitors palmolive,Dabur for Hul due to large number of
firms, high aggressiveness & low
switching costs. It is easy for
customers to switch from one firm
to another.
New direct Tata, Reliance, Johnson It is low in this scenario mainly
competitors & Johnson because of two reasons, high cost
of brand development, high
economies of scale. An already
established brand in this segment,
it would involve huge costs to
build that repo. Also Unilever
operates on economies of scale
which support pricing &
organizational efficiency which
new firms typically lack.
Indirect P&G,Nestle,Britania It is moderate to low because of
competitors low substitute availability, low
performance to price ratio of
substitutes. For ex it is easier to
access close up toothpaste from
grocery store than a medicated
vantej paste which is only
available on medical shops. Also
we may not get desired
expectations after spending that
amount in indirect substitute.
Suppliers e-kart, reliance Bargaining power of suppliers is
fresh,easyday. moderate as there is moderate size
of individual suppliers, moderate
overall supply. For ex any
suppliers change in production
level leads to limited change
availability of raw materials used
in business.
Buyers Customers, firms Bargaining power of buyers is
high in case of hul due to small
size of individual buyers, high
quality of information, low
switching cost.
 MACRO ANALYSIS (PESTEL)
FORCE POLITICAL IMPACT ON FIRMS

Political India’s environment has helped HUL, to expand in various

products & services. Merger with Tata oils mills & Lakme
helped them to enter new markets.HUL doesn’t support any
political party or government. However they have to operate
according to local laws & guidelines. This may hinder the
growth of the firm.
Economic The state of economy means consumers will buy cheap
products with quality. They are in demand. In India HUL
faces a direct competition with MNCS, also with local
producers who are successful in changing their market share
time to time.
Socio-cultural Various programs have been launched like “SHAKTI” for
women in rural areas to empower & encourage them for
independent living & improving lifestyle of families.
Increasing awareness of cleanliness through Lifeboy
handwash.
Technological More connectivity to people, apps are available that would
inform the consumers when their brand is being restocked at
nearest supermarket. For HUL,it has become easier to
manage large supply network & monitor operations.
Legal HUL makes sure that it abides all local laws made in the
state in which they are operating
Environmental Unilever promotes sustainable & renewable products. They
are designed to be safe for consumers in every location.
They have been an environment friendly firm over last
decade.
 OPPORTUNITIES & THREATS FOR HUL

Opportunities:

1) Expanding market: By penetrating into rural sector through project like

SHAKTI, start a little good water, they will be able to capture consumer
goods market at a faster pace.
2) Increasing income levels: Improved government regulations, stable political
scenario, disposable income of people is increasing thereby increasing
demand & lifestyle changes
3) Awareness of price usage rate: people are getting aware about pricing &
usage rate of products through advertisements, word of mouth, prescriptions.

Threats:

1) Competition in market: increasing number of local players, it becomes

very difficult for firms to differentiate themselves from others. There is
also a threat of destroying brand image of customers.
2) Price of commodities: increase in price of commodities & substitutes will
lead to further increase in price, which will lead to decrease in sales
margin & customers will switch.
 EXTERNAL ENVIRONMENT ANALYSIS FOR PROCTER &
GAMBLE

MICRO ANALYSIS (PORTERS)

INDUSTRY FORCE IMPORTANT IMPACT ON FIRM
PALYERS
Current direct competitors ITC, Colgate-palmolive, It is high because of three
Nestle reasons
Large number of firms,
high variety of firms, low
switching costs. Large &
high number of firms
makes it difficult to
compete in the industry.
Also customers can
switch( for ex- p&g’s
Tide detergent to surf
excel).
New direct competitors Tata, Reliance, Aditya It is a moderate force
birla group mainly because of two
reasons
Moderate capital costs &
economies of scale.
New firms would find it
difficult to compete as
there is cost involved &
organizational size &
capital. Also a new
competitor may find it
hard to match the
economies of scale.
Indirect competitors Hul, nestle, patanjali Threat of indirect
competitors is moderate
due to low variety of
substitutes. For ex-
homemade personal care
 items are available in few
variants. However
customers can switch
from P&G to any other
brand due if they find a
substitute better.
Suppliers Fibertex personal care, Bargaining power of
Big bazaar, easy day suppliers is moderate to
weak issue in case of
P&G due to high overall
supply, high number of
suppliers.
It also reduces the
intensity of individual
suppliers
Buyers Customers, firms Bargaining power of
buyers against P&G is of
moderate level as brand
loyalty comes into picture
in case of personal
hygiene & cosmetics
category. However
customers have lot of
variety to select due to
low switching cost.
 MACRO ANALYSIS (PESTEL)
FORCE IMAPACT ON ENVIRONMENTAL
FORCES
Political Rising government support for E-commerce, Stable
overall government support. Political external factors
creates opportunity for generating revenues through
online stores, helps to penetrate in various markets
Economic High growth rate of developing markets, improving
disposable income levels. These economic factors
indicate growth opportunities for P&G.
Socio Cultural Social trends & changes affect P&G in terms of
behaviors of customers & people in organization.
Increasing preference for high quality goods, increasing
preference for healthful products
Technological Growing online market, business automation, increasing
fuel efficiency in transportation.

Legal Product safety regulations, environmental protection

regulations,

Environmental Increasing availability of recyclable materials, changing

weather patterns & its effects on farming,
OPPORTUNITIES AND THREATS FOR PROCTER & GAMBLE

Opportunities:

1) Increasing organic growth: by launching better products or increasing

marketing efforts P&G can grow better. For ex old spice deodorants have
been replaced by fog, Axe etc.
2) Increased purchasing power: Purchasing power of consumers have
increased in the past few years. T economy will give rise to better markets &
therefore will be targeted by firms like P&G.
3) Mergers & acquisitions: take the example of HUL, acquisition of local
competition can help gain repo & increase market share.

Threats:

1) Intense competition: P&G has to take care of competition in the market from
major players like HUL, Colgate, dabur, ITC etc. With product line
increasing it faces a major threat.
2) Private labels: many brands like D-MART, Reliance fresh have started with
their own brands & are planning their own private labels for detergents &
personal care products. These ecommerce players will also sell &
manufacture at lower costs as cost of distribution is saved.
 INTERNAL ENVIRONMENT ANALYSIS OF HUL & P&G
S.N RESOUCES/STRUCTURE/ H M L REMARKS
O CULTURE
1) Financial Resources Low Financial
resources of HUl
are 25,810 crore
wheras Financial
resources of P&G
are 1156 crore. So
financial resources
for P&G are low
as compared to
parent company as
it is more
diversified than its
competitor.

2) Physical resources Low Total value of

physical resources
are 10,200 crore,
total value of
physical resources
of P&G are 2060
crore. Physical
resources of P&G
are less than
parent company.
3) Human capital resources High Total no of
employees in hul
are 18,000,
whereas total no of
employees of
P&G are 95,000.
In this case p&g
has high HR
resources.
4) Technological Resources mediu
m
5) 4p’s+cutomer size+ brand Hul product
 value+Other resources portfolio is
divided into 4
categories food &
drinks, homecare,
personal care,
water purifiers
whereas P&G has
5 categories.
Pricing strategies
for hul are based
on different
segments whereas
they have market
& premium
oriented pricing
policy.
Distribution
network is almost
same for both of
them. P&g focuses
more in
advertising
whereas hul
focuses on online
portals,
magazines,newspa
pers. Brand value
of hul is 2,000
crore & p&g has
5734 crore.

6) Organizational Structure mediu Organizational

m structure of hul
has director, then
there are directors
of different
departments, in
case of P&G has
chairman, it is
divided into
 different
segments, then
heads of different
regions.
7) Incentive system Low Incentive system
for employees in
hul is monthly, on
spot, quarterly. In
P&G bonus
system is annual.

STRENGHTS & WEAKNESSES OF PROCTER & GAMBLE

Strengths:

1) Strong consumer good brands: Tide & pampers are some of its examples
customer loyalty &stable market share comes into picture.
2) Economies of scale: The company benefits from high process efficiencies &
high cost of effectiveness based on organizational size.
3) Efficient distribution network: Third party service providers as well as
company owned facilities are there.
4) Multinational & multi product line: being originated from US, it has a
presence of over 180 countries.

Weaknesses:

1) Low growth: rate of increase in customer base is slow as saturation curve is

reached & lower innovation is happening.
2) No change: in beauty & personal care products, market demands new
products almost every 2 months. P&G has followed but it hasn’t worked in
this segment, which is the reason of low market share.