• Nikhil Sakhardanday

PESTLE Analysis - Hindustan Machine Tools (HMT)

Political Factors:

• HMT from its incorporation days (Since 1953) has enjoyed support of continuous
governments at the center. For almost 2 odd decades it was the sole manufacturer of wrist
watches in India.
• During this same time, Indian government imposed heavy duties and restrictions on the
import of watches into India. This benefited HMT immensely.
• After Year 1980 the scenario started changing, the government at the center started
focusing on sectors such as Information Technology (IT) and Telecommunications, besides
bringing several trade liberalizations including the softening of import restrictions. This
helped in the import of Quartz watches being made available in the country at affordable
prices.
• After 1991, due to economic liberalization and the advancement of newer technologies,
HMT’s market share reduced drastically, and it failed to adapt to the competition in the
market.

Economic Factors:

• HMT was a market leader in mechanical watches. They made good profits by reaping the
benefits of economies of scale through its mass-production strategy.
• But since technology started evolving, quartz watches came into the Indian market. They
launched HMT Sona and HMT Vijay but positioned them in the premium watch category.
• When the demand for quartz watches was high, HMT kept its price in the premium segment
whereas, its major competition Titan, saw this as an opportunity to gain the market share by
selling quartz watches at an economic cost.
• HMT remained adamant on the pricing, they should have stuck to manufacturing its
Mechanical watches only.

Social Factors:

• 1990’s saw the arrival of Titan Industries in the Indian Watch Industry.
• They bought a sense of style and luxury at an affordable price; they lured the customers to
shift from the then industry leading HMT Watches to Titan. People started associating Titan
to be a reliable and a pocket friendly brand.
• HMT failed to understand the consumer behavior and eventually started losing their market
share to Titan since their watches were plain and consumers associated HMT to watches
worn by older generation. HMT did not change their strategy w.r.t consumer behavior and
eventually lost the market share to Titan.

Technological Factors:

• Consumer’s preference indicated a distinct shift towards quartz watches. Hindustan

Machine Tools market share started declining due to this. The shift of consumer preference
from mechanical to quartz and various other varieties brought the decline of market share.
 • Other market players then brought paradigm shift in the Indian watch market by offering
quartz technology with international styling.
• HMT paid no attention on research and development. They were unable to Understand
Changing Consumer Preferences.
• HMT presumed that quartz watches would have a limited market in the country and
continued to produce mechanical watches. Subsequently, they stopped advertising quartz
models.
• In this intense competition with shortening product life cycles, innovations play a key role in
determining a product’s long-term success.

Legal Factors:

• HMT had a very poor distribution network in India. Initially, since HMT was the only watch
manufacturer, many wholesalers saw this as an opportunity to sell HMT watches at a
premium price. This eventually lost its hold over its wholesalers and retailers stores and
costing not being unified among its stores.

Environmental Factors:

• The market and business environment are ever changing, and HMT failed to evolve in tune
with it.
• The company’s management could not cope with the changing business environment in the
country. Lackluster approach to the advertising and sticking to the old business practices had
severe impact on the company’s sustainability.
• It went into losses when production at its Srinagar factory stopped. It had to face working
capital shortage as it had to feed around 500 employees without any production.

NIVEA Marketing
1) Describe what is meant by a business being ‘consumer led’?

The business of “Consumer Led” is the approach taken by the company primarily to lead the
targeted customers to their product and each the product by providing an affordable location. In
the business world this idea is reflected in the promotion strategy. NIVEA Visage Young’s
marketing strategy was led by the consumer. Using various channels below the line, the
company explored several ways to get the views of young people and their mothers. These are
the following: The key to the company's promotional strategy was to use product samples. This
helps customers to smell, touch, feel and try the product at the same time. In 2008, more than a
million samples of NIVEA's new product were donated. These samples were obtained from a
sample of stores, websites or good bags donated at a street show. All of this has been the
company's promotional strategy for keeping their products in the hands of customers. NIVEA
Visage Young has launched an online magazine called FYI (fun, young and independent) with the
aim of promoting product awareness among the people. The main purpose of the magazine's
launch was to empower young girls to grow younger and enjoy their brand-new independence.
NIVEA Visage Young connected with FYI and subsequently acknowledged the power of social
networking sites among young audiences. After that the company has pages on several social
networking sites like Facebook, MySpace and Bebo. The company has been approaching the
media as part of promotional ways to grow their business and customers in the market (NIVEA:
Use of Marketing Mix in Product Launch).
 2) What are the key parts of the marketing mix? Explain how each works with the others.

The key elements of the NIVEA Visage Young marketing mix are product, price, location, and
promotions. These key components of marketing mix have played an important role in the
development of any product in the market. The first feature is the brand, which has been redesigned
with its updated feature designed specifically for the needs and preferences of the NIVEA Visage
Young piece. The product has been redefined to convey the message of social responsibility and
corporate sustainability that has been so central to the values of young women. By embracing the
formula of natural ingredients such as sea salt and minerals, NIVEA has established its roots by
building its own brand that reflects its market position. The product is derived from a marketing
strategy that incorporates all the other elements in the marketing mix. The price was always higher
than the distribution channel's strategy of advertising most leather products through street vendors.
Rising prices also create an effective price and quality relationship that distinguishes these products
from other skin treatments. After this marketplace played a very important role in the marketing
strategy. NIVEA has expanded its product range to more efficient areas so that the customer can
easily access their products. The promotional site has a huge impact on the sales of any product.

3) Explain why the balance of the marketing mix is as important as any single element.

The characteristics of the marketing mix are equally important to ensure balance when the company
is focused on marketing the product in the market. The NIVEA Company has adopted four marketing
mix Ps to identify the strengths and weaknesses of the combination of these marketing mixing tools.
It would be best for you to have an excellent product at an affordable price and be available in an
accessible location with advanced promotional strategies. If possible, if the products are sold
surprisingly at least at a reasonable cost and have a public interest but the product is placed in such
a way that no one can find it in the market. To overcome these challenges, combining it with
individual marketing materials in a balanced way so that the company can grow faster. INIVEA
Company creates a new product range in the market by analyzing market conditions. The company
has established a benchmarking framework among all marketing tools to grow their business and
satisfy their customers in the market. The company has focused on each marketing item in a
balanced way of consistent growth in the competitive season (NIVEA: Use of Marketing Mix in
Product Launch).

4) Analyze the marketing mix for NIVEA why you think this is so

VISAG E Young. What are its strongest points? Explain NIVEA after researching the market also
developed a product list with a new formula, packaging, design and a new market name. The
company focuses on marketing strategy with a strong emphasis on a balanced view of marketing
mixing tools. This balanced marketing combination has provided an additional benefit for the
company in developing their business. According to market research young consumers were looking
for cosmetic benefit skin removal solution. s rather than a NIVEA Visage Young is presented with skin
care aimed at those girls who do not want any drug-based product. But the products of the
competition were more focused on the problems. This was an additional competitive advantage for
NIVEA. The Company's pricing strategy seeks to ensure that initially the product list is at a lower
price so that the company can obtain a higher share of the market and purchases. With the
availability of product lists at this low price, it has encouraged customers to make a buying habit.
This has been a great benefit to the company. NIVEA has emphasized the area and the company's
promotional strategies. NIVEA places their products in areas where consumers can easily access
their products. Pu t their products in retail stores that are usually available to customers. In line with
this to increase awareness of their products to consumers, the Company has improved its products
by making better use of advanced promotion strategies. These have been an added benefit to the
company in the market development of their business (NIVEA: Use of Marketing Mix in Product
Launch).

How Technology, Globalization, and Social Responsibility play a key role in

shaping the business environment in today’s day and age.
Impact of Technology:

With the advancement in technology, customer connect has improved multi-folds. It has helped in
gathering insights from customer’s perspective, either in the form of direct communication or via
data gathering tools and social media content. This has allowed business to advertise more
effectively and has led to the digital and social media marketing. In today’s day and age because of
advancement of technology, almost all types of goods are being sold and are made available at your
doorstep.

Technology also opens new avenues for selling products for businesses. Many e- commerce
platforms for both B2C and B2B are now accessible. Sites like Amazon, Flipkart, Myntra that serve as
multi product selling platforms as well as Big Basket, Country Delight that sell specific types of
products exist, allowing business to leverage such platform during the COVID pandemic and boost
sales.

Companies are also able to leverage technologies like inventory management and ERP systems to
help them optimize their supply chain and manage stock levels better to cut costs. As new methods
of production are being made available, it helps companies to cut costs and provide better products.

New technologies also allow for better security both in the form of physical and data security.
Another new technology that is being used by retail chains internationally and e-retailers like
Lenskart/ in India is AR / VR. This allows a customer to try on products without physically needing to
have them / wear them. As technology evolves its impact on business in all domains will grow
exponentially.

Globalization:

Globalization in the true sense has allowed companies from outside to sell products in the company
making the market more competitive. This benefits the consumer in the form of better-quality
products are competitive rates. It also helps businesses collaborate to create better products using
their respective benefits.

Joint Ventures between Maruti Suzuki and strategic partnerships between companies like Tata
global beverages and Starbucks or franchisee models like Jubilant Food works and Domino’s are
good examples of how focused companies collaborated with good Indian companies with knowledge
of Indian markets to benefit each other.

Globalization has also given rise to specialization. For example, china today is known as the
manufacturing hub of the world and is able to undercuts all other countries in in consumer
electronics and a plethora of low / nonvalue added products. Similarly, countries like Germany focus
of value-added products while countries like India and Malaysia focus on selling services like IT and
finance to the rest of the world.

Globalization can be a double-edged sword however and if not if not regulated properly by govt. can
damage the business ecosystem of the country.

Social Responsibility: -

Business with strong CSR carves out a favourable image for themselves in the minds of customers.
TATA group is well reputed and known in India for its various generous donations. Wipro group too
with it’s chairman donating more than 50% of his yearly earnings.

This leads to a better relationship with customers and a good brand image or persona. This
automatically attracts customers. It also helps in attracting talented employees who dream of
working at companies with good reputations and a long track record. Additionally, it benefits the
society.

Good CSR can help a company while poor / No CSR can create a blockade in the mind of customers
which becomes increasingly hard to overcome.

Additional examples: -

Infosys Foundation, the CSR arm of IT services conglomerate Infosys. The company spent nearly Rs.
360 crores towards various CSR schemes this year. COVID-19 relief work dominated the activities,
with education and health-related programmes following. Infosys Foundation primarily works with
non-governmental organizations as the nodal agency for implementing projects.

Godrej Consumer Products Ltd. (GCPL) spent Rs. 19.49 crore on CSR initiatives in FY 2019-20. Disease
prevention, waste management, livelihood with a focus on women are some of the areas of focus
for its flagship corporate citizenship initiatives.

GCPL CSR is partnering with the Government of India to eliminate malaria by 2030. The company’s
flagship project EMBED (Elimination of Mosquito Borne Endemic Diseases) works with the
government and NGOs for intensive behaviour change in Madhya Pradesh, Uttar Pradesh, and
Chhattisgarh.