SALES PROMOTION AND MARKETING STRATEGIES OF FMCG

A PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF

THE REQUIREMENT FOR THE DEGREE OF BACHELOR
OF COMMERCE
BY
DHIREN MURMU

UNIVERSITY ROLL NO : 211605413832

COLLEGE ROLL NO: BCFIN20456
REGISTRSTION NO: KU2021721
SESSION: 2020-2023

Under The Supervision of

Dr. SK. ANWAR ALI
(Assistant professor)

Faculty of Commerce
Karim City College, Jamshedpur – 831001
 Faculty of commerce
Karim City College Jamshedpur

CERTIFICATE OF APPROVAL

The foregoing project report entitled “SALES PROMOTION

AND MARKETING STRATEGIES OF
FMCG", is hereby approved as a creditable study of the
project topic and has been presented in a satisfactory manner
to warrant its acceptance as a prerequisite to the degree to which
it has been submitted. It is understood that by this approval, the
undersigned does not necessarily endorse any conclusion
drawn or opinion expressed therein but approved the project
report for the purpose for which it is submitted.

PROJECT SUPERVISOR EXTERNAL EXAMINER

Dr. SK. ANWAR ALI

(Assistant Professor)

FACULTY OF COMMERCE
Karim City College, Jamshedpur
 ACKNOWLEDGEMENT

I express my deep sense of gratitude and indebtedness to my project supervisor Dr.

SK. ANWAR ALI for providing precious guidance, inspiring discussions, and
constant supervision throughout the course of this work. His timely help,
constructive criticism and efforts made it possible to present the work
contained in this project. I am also thankful to our HOD Dr. Md.Moazzam
Nazri for his constant guidance, scholarly supervision, stimulating discussion,
suggestions and encouragement.
My sincere thanks to all faculty members of Commerce who helped directly or
indirectly in the completion of this project.
I am also thankful to our Honourable Principal Dr. Mohammad Reyaz for his
inspiration and providing support in the process of completion of this project.
Last but not least I feel pleasure and privileged to fulfill my parents’ ambition and I
am greatly indebted to them forbearing the inconvenience during my B.Com
Course.

Name of the Student: Dhiren Murmu

University Roll No: 211605413832
Registration No: KU2021721
College Roll No: BCFIN20456
Session: 2020-2023
 CONTENT
Sl. No. Particulars Page No.
1 List of Abbreviation
2 Abstract
Objective of Study
Research Method
Finding
ch
List of Abbreviations
List of Table
 Abstract

The fast-moving consumer goods (FMCG) industry represents one of the most competitive and dynamic
sectors in the global market. This project explores the essential elements of sales promotion and marketing
strategies employed by FMCG companies to achieve sustainable growth, market dominance, and consumer
loyalty.

The research delves into the multifaceted world of FMCG products, investigating the unique challenges and
opportunities that FMCG companies encounter in their quest for market success. It encompasses a
comprehensive analysis of sales promotion techniques and marketing strategies that have proven effective in
this sector.

Key areas of focus include:

1. Consumer Behavior Analysis: Understanding the intricate decision-making processes that influence
consumers when purchasing FMCG products. This analysis is pivotal for tailoring marketing strategies and
promotions to meet consumer expectations.

2. Product Positioning and Branding: Investigating how FMCG companies create strong brand identities and
positioning strategies that resonate with target audiences and differentiate them from competitors.

3. Distribution Channels: Exploring the significance of efficient distribution networks in ensuring that
FMCG products reach the right markets at the right time.

4. Pricing Strategies: Assessing the diverse pricing strategies used by FMCG companies, including
penetration pricing, value-based pricing, and dynamic pricing, and their impact on sales and profitability.

5. Promotions and Advertising: Analyzing various promotional campaigns and advertising approaches
employed by FMCG companies, such as social media marketing, influencer partnerships, and in-store
promotions.

6. Digitalization and E-Commerce: Investigating the growing importance of e-commerce platforms and
digital marketing in the FMCG sector, and their role in reaching a wider consumer base.

7. Sustainability and Ethical Practices: Examining the rising consumer demand for sustainable and ethically-
produced FMCG products, and how companies are incorporating these principles into their marketing
strategies.

8. Case Studies: Presenting real-world case studies of successful FMCG companies that have effectively
implemented sales promotion and marketing strategies to gain a competitive edge.

This project aims to provide valuable insights into the FMCG industry, offering guidance for companies
seeking to enhance their sales promotion and marketing strategies. By considering the dynamic nature of the
FMCG sector, the research seeks to help businesses adapt and thrive in this ever-evolving market, ultimately
achieving higher sales and sustainable growth.
 OBJECTIVE OF THE STUDY :
 Chapter-1
Introduction

1.1 Background on FMCG Industry

The Fast-Moving Consumer Goods (FMCG) industry represents a cornerstone of the global economy, a
sector that touches the lives of billions every day. FMCG products encompass a wide array of goods that are
typically characterized by their rapid turnover and high consumer demand. These items, ranging from daily
necessities like toiletries and packaged foods to household cleaning products, beverages, and personal care
items, are integral to modern living.

The FMCG industry plays a pivotal role in the global marketplace, serving as an essential link between
manufacturers and consumers. It stands as a testament to the dynamism of consumer behavior and the
relentless pursuit of convenience and quality. The FMCG sector's significance is underscored by several key
aspects:

Certainly, here's a more detailed expansion of the key points in the background on the FMCG (Fast-Moving
Consumer Goods) industry:

1. Ubiquity:

The FMCG industry's ubiquity is a defining feature. These goods are present in every corner of the globe,
regardless of cultural or economic differences. From rural villages to urban metropolises, FMCG products
find their way into households, grocery stores, convenience stores, and online marketplaces. This universal
accessibility reflects the industry's ability to cater to diverse consumer needs and preferences.

2. Consumer-Centric:

10
 At its core, the FMCG industry revolves around consumers. Products in this sector are specifically
designed to meet daily needs and address common challenges in people's lives. Consumer behavior is
closely monitored and analyzed to identify changing preferences and emerging trends. This consumer-
centric approach drives product innovation, packaging design, and marketing strategies. Companies in this
industry understand that success hinges on satisfying and engaging consumers effectively.

3. Economic Impact:

The economic impact of the FMCG industry is profound. In many countries, it contributes significantly to
Gross Domestic Product (GDP) and provides employment opportunities across various stages of the supply
chain. Manufacturing, distribution, and retail sectors all benefit from the sheer volume and demand for
FMCG products. Moreover, the industry's role in international trade is notable, as these goods are frequently
exported and imported to cater to diverse consumer markets.

4. Innovation and Competition:

The FMCG industry is marked by relentless competition and a constant drive for innovation. Companies
within this sector are continually vying for consumer attention and loyalty. Innovation spans various aspects,
including product formulations, packaging, marketing strategies, and distribution channels. Brands invest
heavily in research and development to introduce new products, improve existing ones, and stay ahead of
competitors. This competitive environment benefits consumers by offering a wide array of choices and
driving product improvement.

5. Supply Chain Efficiency:

Efficient supply chain management is paramount in the FMCG industry. The nature of these products,
with their short shelf life and high consumer demand, requires a seamless and agile supply chain.
Manufacturers must coordinate production, distribution, and delivery to ensure that products reach retailers
and consumers promptly. This efficiency is achieved through advanced logistics, inventory management,
and technology adoption, allowing for timely restocking and reduced waste.
11
These characteristics collectively illustrate the essential role of the FMCG industry in modern society. It is
an industry deeply rooted in consumer lifestyles, a critical driver of economic growth, and a relentless
innovator and competitor in the global marketplace. Understanding these key aspects provides a solid
foundation for exploring the sales promotion and marketing strategies employed by FMCG companies to
thrive in this dynamic environment.

1.2Introduction

The Fast-Moving Consumer Goods (FMCG) sector represents one of the most dynamic and competitive
industries in the global marketplace. FMCG products are those everyday essentials that find their way into our
households on a regular basis, encompassing a wide range of items such as food and beverages, personal care
products, cleaning agents, and more. The constant demand for these products makes the FMCG sector a
cornerstone of the consumer economy, with companies perpetually striving to innovate and gain a competitive
edge in an ever-evolving landscape.

The success of FMCG companies hinges not only on the quality of their products but also on their ability to
effectively promote and market them. Sales promotion and marketing strategies play a pivotal role in driving

12
consumer engagement, influencing purchasing decisions, and ultimately shaping the fortunes of FMCG
brands.

This project embarks on a comprehensive exploration of the sales promotion and marketing strategies
employed within the FMCG sector. We delve into the multifaceted dimensions of this critical aspect of
business, aiming to uncover the intricacies and strategies that fuel the growth and profitability of FMCG
companies. Our study will encompass a wide array of topics, ranging from market analysis and consumer
behavior to promotional tactics, distribution channels, and regulatory compliance.

In this era of rapid globalization and digital transformation, the FMCG industry faces both unprecedented
opportunities and formidable challenges. The emergence of e-commerce, changing consumer preferences, and
heightened awareness of sustainability and ethics have reshaped the way FMCG products are marketed and
sold. Therefore, it becomes imperative for businesses operating in this sector to adapt and innovate continually.

Through this project, we seek to shed light on the dynamic landscape of FMCG sales promotion and
marketing. By examining best practices, emerging trends, and case studies from industry leaders, we aim to
provide valuable insights that can guide FMCG companies in their pursuit of market dominance and consumer
loyalty.

Our exploration will not only benefit industry practitioners and stakeholders but also contribute to the broader
understanding of how marketing and promotion strategies impact consumer behavior and shape the global
consumer goods market. As we navigate this journey through the world of FMCG marketing and sales
promotion, we invite you to join us in unraveling the strategies and innovations that power the success of these
everyday products in an increasingly competitive world.

1.3 Objective of a Comprehensive Study

The Objective of A Comprehensive Study on the sales promotion and marketing strategies of Fast-Moving
Consumer Goods (FMCG) products encompasses several key goals and outcomes. Such a study aims to
provide a thorough understanding of the FMCG sector, its challenges, and opportunities, while also offering
actionable insights for businesses looking to enhance their sales and marketing efforts. Here is a detailed
explanation of the objectives of this study:

13
1. Market Analysis: To assess the current state of the FMCG market, including its size, growth rate, and key
players. Understanding market trends and dynamics is crucial for identifying opportunities and threats.

2. Consumer Insights: To gain a deep understanding of consumer behavior, preferences, and purchasing
patterns within the FMCG sector. This includes identifying factors influencing consumer choices, such as
price sensitivity, brand loyalty, and product quality.

3. Competitive Landscape: To analyze the strategies employed by competitors in the FMCG sector,
including their promotional and marketing tactics. This analysis helps businesses identify gaps and areas
where they can differentiate themselves.

4. Effectiveness of Sales Promotion: To evaluate the effectiveness of various sales promotion strategies,
including discounts, coupons, rebates, contests, and loyalty programs. Determine which strategies yield the
best results in terms of sales and customer engagement.

5. ROI Assessment: To measure the return on investment for different marketing and promotional activities.
This involves tracking the costs associated with each strategy and comparing them to the resulting sales and
revenue.

6. Segmentation and Targeting: To segment the market based on demographics, psychographics, and buying
behavior. This helps in tailoring marketing and promotional efforts to specific customer segments for
maximum impact.

7. Distribution Channel Analysis: To examine the distribution channels used in the FMCG sector, including
traditional retail, e-commerce, and direct-to-consumer models. Determine the most effective channels for
reaching target audiences.

8. Product Packaging and Presentation: To assess the role of packaging and presentation in influencing
consumer choices. Identify opportunities for improving product packaging and design.

9. Regulatory Compliance: To ensure that all marketing and promotional activities adhere to relevant
regulations and industry standards, particularly in areas like labeling, advertising, and health claims.

10. Trend Identification: To identify emerging trends and innovations in the FMCG sector, such as
sustainability, digital marketing, and e-commerce trends. This enables businesses to stay ahead of the curve.

14
11. Sustainability and Ethical Considerations: To evaluate the impact of marketing and promotional
strategies on sustainability and ethical practices. Determine if aligning with ethical and sustainable values
can enhance brand reputation.

12. Recommendations and Strategy Development: To provide actionable recommendations based on the
study's findings. This includes developing a comprehensive marketing and sales promotion strategy tailored
to the FMCG sector and the specific needs of the business.

13. Performance Metrics: To define key performance indicators (KPIs) for tracking the success of marketing
and promotional efforts. Establish benchmarks and goals for improving sales and brand visibility.

14. Long-term Growth: To help businesses formulate long-term growth strategies in the FMCG sector,
taking into account evolving consumer preferences and market dynamics.

In summary, the objective of a study on the sales promotion and marketing strategies of FMCG products is
to provide businesses with a holistic view of the market, consumer behavior, and competition. It aims to
equip them with actionable insights and data-driven recommendations to optimize their promotional efforts,
enhance sales, and achieve sustained growth in this highly competitive industry.

1.4 Area of Study

The area of study on the sales promotion and marketing strategies of Fast-Moving Consumer Goods
(FMCG) encompasses a wide range of topics and research areas. A comprehensive study in this domain
aims to provide a deep understanding of various aspects related to FMCG products, marketing, and
consumer behavior. Here is an extensive breakdown of the areas that could be explored within such a
project:

1. Market Overview and Trends:

- Analysis of the FMCG market size, growth rate, and segmentation.
- Identification of current market trends and their impact on consumer behavior and purchasing decisions.
- Assessment of regional and global market variations.

2. Consumer Behavior and Preferences:

15
 - Study of consumer buying patterns, preferences, and decision-making processes related to FMCG
products.
- Analysis of factors influencing consumer choices, including price sensitivity, brand loyalty, product
quality, and lifestyle considerations.
- Examination of cultural and demographic factors affecting consumer behavior.

3. Competitive Landscape:
- Analysis of key players in the FMCG sector, including multinational corporations, local brands, and
emerging startups.
- Evaluation of competitive strategies, including pricing, advertising, and product differentiation.
- Identification of market leaders and challengers.

4. Marketing and Promotional Strategies:

- In-depth analysis of various marketing and promotional strategies employed in the FMCG sector.
- Examination of traditional advertising, digital marketing, social media campaigns, influencer marketing,
and experiential marketing.
- Assessment of the effectiveness of different promotional tactics.

5. Sales Promotion Techniques:

- Study of sales promotion techniques such as discounts, coupons, buy-one-get-one-free (BOGO) offers,
loyalty programs, and contests.
- Evaluation of the impact of sales promotions on sales volumes and brand loyalty.
- Analysis of the cost-effectiveness and ROI of various promotional methods.

6. Distribution Channels and Supply Chain:

- Analysis of distribution channels used in the FMCG sector, including retail, e-commerce, direct-to-
consumer, and wholesale.
- Evaluation of supply chain efficiency and strategies for optimizing distribution.

7. Product Packaging and Presentation:

- Assessment of the role of product packaging and presentation in consumer purchasing decisions.
- Exploration of packaging innovations and design trends.
- Strategies for enhancing shelf visibility and product appeal.

8. Regulatory Compliance and Ethical Considerations:

16
 - Examination of industry regulations related to labeling, advertising, health claims, and environmental
impact.
- Consideration of ethical and sustainable practices in marketing and production.
- Strategies for maintaining compliance and improving corporate responsibility.

9. Market Segmentation and Targeting:

- Segmentation of the market based on demographics, psychographics, and behavioral factors.
- Development of targeted marketing campaigns tailored to specific consumer segments.

10. Technology and Innovation:

- Exploration of technological advancements affecting the FMCG sector, such as e-commerce platforms,
data analytics, and supply chain automation.
- Strategies for incorporating technology and innovation into marketing and sales efforts.

11. Sustainability and Corporate Social Responsibility:

- Analysis of consumer attitudes toward sustainability and ethical practices in the FMCG sector.
- Strategies for integrating sustainability into marketing and promotional messaging.

12. Performance Metrics and KPIs:

- Establishment of key performance indicators (KPIs) to measure the success of marketing and
promotional efforts.
- Development of metrics for tracking sales growth, brand awareness, and customer engagement.

13. Long-term Growth Strategies:

- Formulation of long-term growth strategies that adapt to evolving consumer preferences and market
dynamics.
- Consideration of diversification, product innovation, and international expansion.

14. Case Studies and Best Practices:

- Examination of successful FMCG marketing and sales campaigns through case studies.
- Identification of best practices and lessons learned from industry leaders.

In summary, a comprehensive study on the sales promotion and marketing strategies of FMCG products
should cover these diverse areas to provide a holistic understanding of the FMCG sector and equip
businesses with the knowledge and insights needed to excel in this competitive industry.

17
1.5 Need of study

The need for a study on the sales promotion of Fast-Moving Consumer Goods (FMCG) products is crucial
for various reasons. Conducting such a study can provide valuable insights and data-driven strategies for
businesses operating in the FMCG sector. Here are some key reasons why a study on the sales promotion of
FMCG products is necessary:

1. Market Dynamics and Competition: The FMCG sector is highly competitive, with numerous brands vying
for consumer attention. A study can help businesses understand the current market dynamics, including the
strategies adopted by competitors, and identify opportunities for differentiation and growth.

2. Consumer Behavior and Preferences: Consumer preferences and behaviors in the FMCG sector are
constantly evolving. A study can help companies gain a deeper understanding of what drives consumer
choices, including factors like price sensitivity, brand loyalty, and product quality.

3. Promotional Strategies Effectiveness: By analyzing past and current promotional campaigns, a study can
assess the effectiveness of different promotional strategies such as discounts, buy-one-get-one-free (BOGO)
offers, loyalty programs, and influencer marketing. This can help in optimizing future promotional efforts.

4. ROI Assessment: Companies invest a significant amount of resources in sales promotion. A study can
help measure the return on investment (ROI) for various promotional activities, allowing businesses to
allocate their budgets more efficiently.

5. Product Packaging and Presentation: The way FMCG products are packaged and presented can
significantly impact consumer choices. A study can evaluate the role of packaging in sales and suggest
improvements or innovations.

6. Channel and Distribution Strategies: FMCG products are sold through various channels, including retail
stores, e-commerce, and direct-to-consumer models. A study can help in determining the most effective
distribution channels and optimizing the supply chain for maximum efficiency.

7. Market Segmentation: Segmenting the market based on demographics, psychographics, and buying
behavior can help tailor promotional strategies to specific consumer groups, increasing the chances of
success.

18
8. Compliance and Regulation: The FMCG sector is often subject to various regulations, especially related
to labeling, health claims, and advertising. A study can ensure that promotional activities are compliant with
these regulations to avoid legal issues.

9. Trends and Innovations: The FMCG sector is characterized by rapidly changing consumer trends and
technological innovations. A study can help companies stay updated on these trends and incorporate
innovative approaches into their sales promotion strategies.

10. Sustainability and Ethical Considerations: Consumers are increasingly concerned about the
environmental and ethical aspects of FMCG products. A study can help companies assess the impact of their
promotional strategies on sustainability and ethical practices, which can influence consumer choices.

In conclusion, a study on the sales promotion of FMCG products is essential for staying competitive,
understanding consumer behavior, and optimizing promotional efforts in a dynamic and highly competitive
market. It allows businesses to make informed decisions and adapt to changing market conditions to achieve
long-term success.

19
 CHAPTER-2

LITERATURE REVIEW

A comprehensive literature review on Fast-Moving Consumer Goods (FMCG) provides an in-

depth understanding of the industry, including its definition, characteristics, market dynamics,
sales promotion strategies, marketing strategies, and consumer behavior.
Below is a detailed literature review on FMCG:

2.1 DEFINITION AND CHARACTERISTICS OF FMCG:

FMCG, which stands for Fast-Moving Consumer Goods, represents a broad category of
everyday products that are characterized by rapid turnover and relatively low cost per unit.
These goods are essential for daily life and are consumed frequently. FMCG products are often
perishable and have a short shelf life, making them subject to regular replenishment. Key
characteristics include rapid consumption, low unit value, wide distribution, and frequent
purchases.

The FMCG sector spans diverse product categories, including food and beverages,
personal care products, household items, cleaning products, and over-the-counter
medications. Due to its widespread consumer relevance, the FMCG industry is a
significant driver of economic activity and a staple of modern life.

2.2 Type of FMCG

Fast-Moving Consumer Goods (FMCG) represent a significant sector in the global economy, characterized
by products with a short shelf life and high consumer demand. Effective sales promotion and marketing
strategies are crucial for FMCG companies to gain a competitive edge in this highly competitive market.
This review of literature aims to provide an in-depth analysis of the various aspects of sales promotion and
marketing in the FMCG sector, drawing insights from studies and research conducted up to September 2021.

1. Overview of the FMCG Sector:

20
 - FMCGs encompass a wide range of products, including food, beverages, personal care items, and
household products.

- The sector is characterized by high competition, low profit margins, and frequent product innovations.

- Consumer behavior in the FMCG sector is influenced by factors such as brand loyalty, price sensitivity,
and convenience.

2. Sales Promotion Techniques:

- Sales promotions are temporary marketing strategies aimed at stimulating immediate sales.

- Common sales promotion techniques in the FMCG sector include discounts, coupons, free samples,
loyalty programs, and contests.

- Research suggests that sales promotions can lead to short-term sales spikes but may also erode brand
equity if overused.

3. Effectiveness of Sales Promotion in FMCG:

- Numerous studies have investigated the impact of sales promotions on FMCG sales.

- It is generally agreed that promotions can boost sales volume, but their long-term effects on brand loyalty
and profitability vary.

- Research by Blattberg and Neslin (1990) introduced the concept of the "promotional lift" to measure the
incremental sales generated by promotions.

4. Consumer Behavior in Response to Sales Promotions:

- Consumer psychology plays a crucial role in the effectiveness of sales promotions.

- Price sensitivity and deal-proneness are key factors influencing consumer response.

- Research by Inman et al. (1990) identified various consumer segments based on their response to
promotions, such as brand loyalists, deal enthusiasts, and price-sensitive shoppers.

5. Marketing Strategies in FMCG:

21
 - Beyond sales promotions, FMCG companies employ various marketing strategies.

- Branding, packaging, advertising, and distribution are critical components.

- The concept of "brand equity" is pivotal, with consumers forming strong associations with brands that
influence their purchase decisions.

6. Digital Marketing in FMCG:

- The digital revolution has transformed FMCG marketing.

- Social media, e-commerce, and data analytics play vital roles in targeting and engaging consumers.

- Personalization, influencer marketing, and online reviews have gained prominence in shaping consumer
choices.

7. Challenges and Trends in FMCG Marketing:

- FMCG companies face challenges related to sustainability, health consciousness, and changing consumer
preferences.

- Ethical and environmental concerns drive the need for responsible marketing and sustainable packaging.

- Direct-to-consumer (DTC) models, subscription services, and e-commerce continue to reshape the
industry.

8. Globalization and International Marketing:

- Many FMCG companies operate globally, necessitating adaptation to diverse markets.

- Cultural, regulatory, and economic differences influence marketing strategies.

- Standardization versus localization is a crucial consideration.

9. Measuring Marketing Effectiveness:

- Metrics such as return on investment (ROI), customer lifetime value (CLV), and market share are used to
evaluate marketing effectiveness.

22
 - Advances in data analytics enable real-time monitoring and optimization of marketing campaigns.

10. Regulatory Framework:

- FMCG marketing is subject to various regulations related to labeling, advertising, and product safety.

- Compliance is essential to avoid legal issues and maintain brand reputation.research is needed to explore
emerging trends and their impact on the FMCG marketing paradigm beyond the scope of this review.

2.3 Importance of FMCG

Sales Promotion and Marketing of Fast-Moving Consumer Goods (FMCG): A Comprehensive Review of
Literature

Introduction:

Fast-Moving Consumer Goods (FMCG) represent a significant sector in the global economy, characterized
by products with a short shelf life and high consumer demand. Effective sales promotion and marketing
strategies are crucial for FMCG companies to gain a competitive edge in this highly competitive market.
This review of literature aims to provide an in-depth analysis of the various aspects of sales promotion and
marketing in the FMCG sector, drawing insights from studies and research conducted up to September 2021.

1. Overview of the FMCG Sector:

- FMCGs encompass a wide range of products, including food, beverages, personal care items, and
household products.

- The sector is characterized by high competition, low profit margins, and frequent product innovations.

- Consumer behavior in the FMCG sector is influenced by factors such as brand loyalty, price sensitivity,
and convenience.

2. Sales Promotion Techniques:

- Sales promotions are temporary marketing strategies aimed at stimulating immediate sales.
23
 - Common sales promotion techniques in the FMCG sector include discounts, coupons, free samples,
loyalty programs, and contests.

- Research suggests that sales promotions can lead to short-term sales spikes but may also erode brand
equity if overused.

3. Effectiveness of Sales Promotion in FMCG:

- Numerous studies have investigated the impact of sales promotions on FMCG sales.

- It is generally agreed that promotions can boost sales volume, but their long-term effects on brand loyalty
and profitability vary.

- Research by Blattberg and Neslin (1990) introduced the concept of the "promotional lift" to measure the
incremental sales generated by promotions.

4. Consumer Behavior in Response to Sales Promotions:

- Consumer psychology plays a crucial role in the effectiveness of sales promotions.

- Price sensitivity and deal-proneness are key factors influencing consumer response.

- Research by Inman et al. (1990) identified various consumer segments based on their response to
promotions, such as brand loyalists, deal enthusiasts, and price-sensitive shoppers.

5. Marketing Strategies in FMCG:

- Beyond sales promotions, FMCG companies employ various marketing strategies.

- Branding, packaging, advertising, and distribution are critical components.

- The concept of "brand equity" is pivotal, with consumers forming strong associations with brands that
influence their purchase decisions.

6. Digital Marketing in FMCG:

- The digital revolution has transformed FMCG marketing.

24
 - Social media, e-commerce, and data analytics play vital roles in targeting and engaging consumers.

- Personalization, influencer marketing, and online reviews have gained prominence in shaping consumer
choices.

7. Challenges and Trends in FMCG Marketing:

- FMCG companies face challenges related to sustainability, health consciousness, and changing consumer
preferences.

- Ethical and environmental concerns drive the need for responsible marketing and sustainable packaging.

- Direct-to-consumer (DTC) models, subscription services, and e-commerce continue to reshape the
industry.

8. Globalization and International Marketing:

- Many FMCG companies operate globally, necessitating adaptation to diverse markets.

- Cultural, regulatory, and economic differences influence marketing strategies.

- Standardization versus localization is a crucial consideration.

9. Measuring Marketing Effectiveness:

- Metrics such as return on investment (ROI), customer lifetime value (CLV), and market share are used to
evaluate marketing effectiveness.

- Advances in data analytics enable real-time monitoring and optimization of marketing campaigns.

10. Regulatory Framework:

- FMCG marketing is subject to various regulations related to labeling, advertising, and product safety.

- Compliance is essential to avoid legal issues and maintain brand reputation.

25
Title: Challenges and Strategies in Sales Promotion and Marketing for Fast-Moving Consumer Goods
(FMCG)

Here

2.4 Challenges in Sales Promotion and Marketing for FMCG

1. Intense Competition: The FMCG sector is saturated with numerous brands offering similar products,
leading to fierce competition. This competition makes it challenging for FMCG companies to stand out and
capture consumer attention.

2. Price Sensitivity: FMCG consumers are often highly price-sensitive, and this sensitivity can limit the
scope of pricing strategies. Companies must balance profitability with affordability to attract and retain
customers.

3. Consumer Loyalty: Building and sustaining brand loyalty can be challenging in a market where
consumers frequently switch brands based on discounts and promotions. Achieving long-term customer
loyalty requires consistent effort.

4. Short Product Life Cycles: Many FMCG products have short life cycles due to changing consumer
preferences and innovations. Companies must constantly adapt their marketing strategies to keep up with
these changes.

5. Complex Supply Chain: FMCG companies often have complex supply chains involving multiple
intermediaries. This complexity can hinder the timely execution of marketing and promotion strategies.

6. Regulatory Constraints: FMCG marketing and sales promotions are subject to various regulations related
to labeling, advertising, and product safety. Non-compliance can lead to legal issues and damage brand
reputation.

26
7. Environmental Concerns: As consumers become more environmentally conscious, FMCG companies face
pressure to adopt sustainable and eco-friendly practices in their marketing and packaging.

8. Digital Transformation: The digital revolution has reshaped consumer behavior and marketing channels.
Companies must adapt to the online landscape, including e-commerce, social media, and data analytics.

2.5 Strategies to Overcome Challenges

1. Effective Branding: Building a strong brand presence through consistent branding strategies helps FMCG
companies differentiate themselves and foster consumer loyalty.

2. Segmentation and Targeting: Segmenting the market and targeting specific consumer groups with tailored
marketing messages and promotions can increase the effectiveness of campaigns.

3. Innovation: Continuously innovating products and packaging keeps offerings fresh and appealing to
consumers, mitigating the impact of short product life cycles.

4. Pricing Strategies: Careful pricing strategies, such as dynamic pricing and value bundles, can help balance
profitability and affordability while addressing price sensitivity.

5. Data Analytics: Leveraging data analytics to understand consumer behavior and preferences enables
companies to make informed marketing decisions and personalize promotions.

6. Omni-channel Marketing: Embracing both online and offline marketing channels allows FMCG
companies to reach a wider audience and engage consumers where they are most active.

27
7. Sustainability Initiatives: Adopting sustainable and environmentally responsible practices in marketing,
packaging, and product development aligns with consumer values and regulatory expectations.

8. Compliance Management: FMCG companies should invest in compliance management systems to ensure
adherence to regulations and mitigate legal risks.

9. Customer Engagement: Building strong customer relationships through loyalty programs, feedback
mechanisms, and personalized communications can foster long-term loyalty.

10. Global Expansion: To expand globally, FMCG companies should conduct thorough market research,
adapt to local preferences, and establish effective distribution networks.

28
 Chapter-3

PROFILE OF AN ORGANIZATION

INTRODUCTION
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. The company’s Turnover is Rs. 20, 239 crores (for the 15 month period – January 1,
2008 to March 31, 2009).

Hindustan unilever limited is a subsidiary of Unilever, one of the world’s leading suppliers of fast moving
consumer goods with strong local roots in more than 100 countries across the globe with annual sales of
€40.5 billion in 2008. Unilever has about 52% shareholding in HUL. Hindustan Unilever was recently rated
among the top four companies globally in the list of “Global Top Companies for Leaders” by a study
sponsored by Hewitt Associates, in partnership with Fortune magazine and the RBL Group. The company
was ranked number one in the Asia-Pacific region and in India.

The mission that inspires HUL's more than 15,000 employees, including over 1,400 managers, is to “add
vitality to life". The company 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 HUL shares with its parent
company, Unilever, which holds about 52 % of the equity.

3.1 Heritage
HUL’s heritage dates back to 1888, when the first Unilever product, Sunlight, was introduced in India. Local
manufacturing began in the 1930s with the establishment of subsidiary companies. They merged in 1956 to
form Hindustan Lever Limited (The company was renamed Hindustan Unilever Limited on June 25, 2007).
The company created history when it offered equity to Indian shareholders, becoming the first foreign
subsidiary company to do so. Today, the company has more than three lakh resident shareholders.

HUL’s brands -- like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Sunsilk, Clinic, Close-up,
Pepsodent, Lakme, Brooke Bond, Kissan, Knorr, Annapurna, Kwality-Walls - 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 in over 35 factories, several of them in backward areas
of the country. The operations involve over 2,000 suppliers and associates. HUL's distribution network
covers 6.3 million retail outlets including direct reach to over 1 million.

HUL has traditionally been a company, which incorporates latest technology in all its operations. The
Hindustan Lever Research Centre (now Hindustan Unilever Research Centre) was set up in 1958

3.2 Doing well by doing good

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HUL believes that an organisation’s worth is also in the service it renders to the community. HUL focuses
on hygiene, nutrition, enhancement of livelihoods, reduction of greenhouse gases and water footprint.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 relief and rehabilitation of the
people affected by the Tsunami disaster, in India.

HUL’s Project Shakti is a rural initiative that targets small villages populated by less than 5000 individuals.
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 provides health and hygiene
education through the Shakti Vani programme.The program now covers 15 states in India and has over
45,000 women entrepreneurs in its fold, reaching out to 100,000 villages and directly reaching to over three
million rural consumers.

HUL also runs 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 120 million people in approximately 50, 676 villages across India.

If Hindustan Unilever straddles the Indian corporate world, it is because of being single-minded in
identifying itself with Indian aspirations and needs in every walk of life.

Type Public company BSE: 500696

Industry Fast Moving Consumer Goods FMCG)

Founded 1933

Headquarters Mumbai, India

Key people Harish Manwani (Chairman), Nitin Paranjpe (CEO

and Managing Director)

Products Home & Personal Care, Food & Beverages

Revenue 17,873.44 crore (US$3.97 billion) (2009-2010) [1]

Net income 2,202.03 crore (US$488.85 million)

Employees Over 65,000 direct & indirect employees

Parent Unilever Plc (52%)

Website www.hul.co.in

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 History of HUL

In the summer of 1888, visitors to the Kolkata harbour noticed crates full of Sunlight
soap bars, embossed with the words "Made in England by Lever Brothers". With it, began an era of
marketing branded Fast Moving Consumer Goods (FMCG).

Soon after followed Lifebuoy in 1895 and other famous brands like Pears, Lux and Vim. Vanaspati was
launched in 1918 and the famous Dalda brand 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; HUL offered 10% of its equity to the Indian public, being the first among
the foreign subsidiaries to do so. Unilever now holds 52.10% equity in the company. The rest of the
shareholding is distributed among about 360,675 individual shareholders and financial institutions.

The erstwhile Brooke Bond's presence in India dates back to 1900. By 1903, the company had launched Red
Label tea in the country. In 1912, Brooke Bond & Co. India Limited was formed. Brooke Bond joined the
Unilever fold in 1984 through an international acquisition. The erstwhile Lipton's links with India were
forged in 1898. Unilever acquired Lipton in 1972 and in 1977 Lipton Tea (India) Limited was incorporated.

Pond's (India) Limited had been present in India since 1947. It joined the Unilever fold through an
international acquisition of Chesebrough Pond's USA in 1986.

Since the very early years, HUL has vigorously responded to the stimulus of economic growth. The growth
process has been accompanied by judicious diversification, always in line with Indian opinions and
aspirations. The liberalization of the Indian economy, started in 1991, clearly marked an inflexion in HUL's
and the Group's growth curve. Removal of the regulatory framework allowed the company to explore every
single product and opportunity segment, without any constraints on production capacity.

Simultaneously, deregulation permitted alliances, acquisitions and mergers. In one of the most visible and
talked about events of India's corporate history, the erstwhile Tata Oil Mills Company (TOMCO) merged
with HUL, effective from April 1, 1993. In 1996, HUL and yet another Tata company, Lakme Limited,
formed a 50:50 joint venture, Lakme Unilever Limited, to market Lakme's market-leading cosmetics and
other appropriate products of both the companies. Subsequently in 1998, Lakme Limited sold its brands to
HUL and divested its 50% stake in the joint venture to the company.

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, Unilever Nepal Limited (UNL), and its factory represents the largest manufacturing investment in the
Himalayan kingdom. The UNL factory manufactures HUL's products like Soaps, Detergents and Personal
Products both for the domestic market and exports to India.

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The 1990s also witnessed a string of crucial mergers, acquisitions and alliances on the Foods and Beverages
front. In 1992, the erstwhile Brooke Bond acquired Kothari General Foods, with significant interests in
Instant Coffee. In 1993, it acquired the Kissan business from the UB Group and the Dollops Ice-cream
business from Cadbury India.

As a measure of backward integration, Tea Estates and Doom Dooma, two plantation companies of
Unilever, were merged with Brooke Bond. Then in 1994, Brooke Bond India and Lipton India merged to
form Brooke Bond Lipton India Limited (BBLIL), enabling greater focus and ensuring synergy in the
traditional Beverages business. 1994 witnessed BBLIL launching the Wall's range of Frozen Desserts. By
the end of the year, the company entered into a strategic alliance with the Kwality Ice-cream Group families
and in 1995 the Milk-food 100% Ice-cream marketing and distribution rights too were acquired.

Finally, BBLIL merged with HUL, with effect from January 1, 1996. The internal restructuring culminated
in the merger of Pond's (India) Limited (PIL) with HUL in 1998. The two companies had significant
overlaps in Personal Products, Speciality Chemicals and Exports businesses, besides a common distribution
system since 1993 for Personal Products. The two also had a common management pool and a technology
base. The amalgamation was done to ensure for the Group, benefits from scale economies both in domestic
and export markets and enable it to fund investments required for aggressively building new categories.

In January 2000, in a historic step, the government decided to award 74 per cent equity in Modern Foods to
HUL, thereby beginning the divestment of government equity in public sector undertakings (PSU) to private
sector partners. HUL's entry into Bread is a strategic extension of the company's wheat business. In 2002,
HUL acquired the government's remaining stake in Modern Foods.

In 2003, HUL acquired the Cooked Shrimp and Pasteurised Crabmeat business of the Amalgam Group of
Companies, a leader in value added Marine Products exports.

HUL launched a slew of new business initiatives in the early part of 2000’s. Project Shakti was started in
2001. It is a rural initiative that targets small villages populated by less than 5000 individuals. It is a unique
win-win initiative that catalyses rural affluence even as it benefits business. Currently, there are over 45,000
Shakti entrepreneurs covering over 100,000 villages across 15 states and reaching to over 3 million homes.

In 2002 In 2002, HUL made its foray into Ayurvedic health & beauty centre category with the Ayush
product range and Ayush Therapy Centr es. Hindustan Unilever Network, Direct to home business was
launched in 2003 and this was followed by the launch of ‘Pure-it’ water purifier in 2004.

In 2007, the Company name was formally changed to Hindustan Unilever Limited after receiving the
approval of share holders during the 74th AGM on 18 May 2007. Brooke Bond and Surf Excel breached the
the Rs 1,000 crore sales mark the same year followed by Wheel which crossed the Rs.2,000 crore sales
milestone in 2008.

On 17th October 2008, HUL completed 75 years of corporate existence in India

REVIEW OF LITERATURE
Hindustan Unilever Limited is the Indian arm of the Anglo-Dutch company –Unilever. Both Unilever and
HUL have established themselves well in the Fast Moving Consumer Goods (FMCG) category. In India, the
company offers many households brands like, Dove, Lifebuoy, Lipton, Lux, Pepsodent, Ponds, Rexona,
Sunsilk, Surf, Vaseline etc. Some of its efforts were also rewarded when four of HUL brands found place in
the ‘Top 10 brands’ list for the year 2008 published in The Economic Times.

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Unilever was a result of the merger between the Dutch margarine company, Margarine Unie, and the British
soap-maker, Lever Brothers, way back in 1930. For 70 years, Unilever was the undisputed market leader but
now faces tough competition from Proctor & Gamble and Colgate-Palmolive.

HUL is also known for its strong distribution network in India. In order to further strengthen its distribution
in the rural areas and to empower the local women, HUL launched a Project Shakti in 2000 in a district in
Andhra Pradesh. The idea behind this project was to create women entrepreneurs and provide them with
micro-credit and training in enterprise management, which would enable them to create self- help groups
and become direct-to-home distributors of HUL products. Today Project Shakti is present across 80,000
villages in 15 states and is helping many underprivileged women earn their livelihood.

As the per-capita income of India is increasing along with the Indian population. So, the future for the
FMCG Companies is bright. To analysis the past performance & the future demand of HUL, FMCG
products we have considered following points:

 We have a listed the different FMCG product lines of HUL.

 We have done competitor’s analysis in which the market share of top FMCG companies are
analysed & the market share of HUL’S different categories product are analysed with comparison to
its competitors.
 Then performance analysis is made by taking 10 year financial data from 1998-2007. The profit &
sales growth is analysed We have done SWOT analysis to know the threat & opportunities of HUL
in present market.

 The future opportunities for FMCG products are taken into consideration by analyzing the increased
per capita income & increased disposable income to forecast the future demand of HUL.

OBJECTIVE OF STUDY
 The main objective of this project is to find, what are the steps Hindustan Unilever Ltd. is adapting to be
market leader and to differentiate itself from its competitors.

 What is the steps company is utilizing to find current trend in the market.

 To study various brands of HUL

 To study the competitive brands in the market of ,home care products,.food brands,personal care
products

 To find the market share of the HUL brands and its competitive brands.

 To determine the key areas of strength and weakness for HUL brands To develop a promotion plan for
brand communication of the HUL

 To study various marketing strategies of HUL

RESEARCH METHODLOGY

There is large no. of FMCG companies in the market, to find the defining strategies used, the methodology
used is interview and survey method.
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Data Collection Method:

For this research study, primary data as well as secondary data was collected

Primary Data has been collected through personal contact. For this purpose both questionnaireand one-on-
one interview was considered with the consumers, shop owners and distributors & suppliers of the company.

Secondary data has collected from magazines, newspaper, company literature and websites.

Data analysis:

Analyzing codes to each question were awarded. thereafter which aws written and than analysed

MAJOR FINDINGS

Major competitors

1. Dabur

2. Jhandu

3. Johnson &Johnson

4. Cavin Care

5.Procter & Gamble 6. Britannia

7. ITC

8. Gillette

METHODOLOGY FOR RESEARCH PROBLEM

Following steps where taken in to consideration, to identify the research problem-

1. Informal investigation

• Visit to the shop owners, talked to the distributors and to the consumers in the locality and surrounding
areas.

2.External and Internal Analysis

• Understanding customer problem

• Understanding the market structure

3. Situational Analysis

• Tastes & preferences

• Needs & income

• Major Competitors

ITC
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 Dabur

Procter & Gamble

Cavin Care

Amul

Johnson & Johnson, etc

A Compressive study of Secondary and Primary data (Informal Interviews) was collected through specific
questionnaires for people and shop-owners & distributors.

3.4 SAMPLING TECHNIQUE

For my survey I used Cluster Sampling technique. I selected a sample of 100 people around the area and
interviewed them according to the questionnaire. In the survey I tried to find out their preferences & tastes,
their purchasing habit, are they brand loyal or they consider their friends advice or some reference group
duringpurchasing. I also tried to find out that are they satisfied with the quality or present stature of product,
did they want any change in the existing product.

I also interviewed some of the shop owner and distributors and try to find out what the company is doing to
sustain their customer and what new changes they are bringing in their product to gain competitive
advantage from other competitors

3.5 RESEARCH INSTRUMENT

Research instruments, for the purpose of primary data collection were Questionnaires. The Questionnaires
were designed in two sets, one is for customers and another is for shop-owners and distributors.

• The first set is to find out about the needs and preferences of the customers and what they want from in the
product and also the level of knowledge about different products in the market.

• Second set is all about what are the steps company are taking to get about the information about he
changing preferences in the taste and needs of the customers and what company is doing to sustain their
market position as well as to tap new market.

3.5 DATA ANALYSIS

For the analysis of data collected through survey work, a series of steps were followed which are given in a
chronological order

•Each question of the questionnaire was assigned codes (coding)

•Each questionnaire was punched into ms-excel sheet thus forming a data base (punching)

•Further the data was analyzed by using diagrams, graphs, charts etc.

•The graphic rating scale and ranking method was used to measure the response and attitude of the
customer.

Finally, an effort was made to extract meaningful information from analyzed data, which acted as a base for
the recommendations

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 LIMITATIONS OF THE STUDY

In attempt to make this project authentic and reliable, every possible aspect of the topic was kept in mind.
Nevertheless, despite of fact constraints were at play during the formulation of this project.

The main limitations are as follows:

 Due to limitation of time only few people were selected for the study. So the sample of consumers
was not enough to generalize the findings of the study.

 The main source of data for the study was primary data with the help of self- administered
questionnaires. Hence, the chances of unbiased information are less.

 People were hesitant to disclose the true facts.

 The chance of biased response can’t be eliminated though all necessary steps were taken to avoid
the same.

Vision of Hindustan Unilever limited

Unilever products touch the lives of over 2 billion people every day – whether that's through feeling great
because they've got shiny hair and a brilliant smile, keeping their homes fresh and clean, or by enjoying a
great cup of tea, satisfying meal or healthy snack.

3.6 A clear direction

The four pillars of our vision set out the long term direction for the company – where we want to go and
how we are going to get there:

• We work to create a better future every day

• We help people feel good, look good and get more out of life with brands and services that are good for
them and good for others.

• We will inspire people to take small everyday actions that can add up to a big difference for the world.

• We will develop new ways of doing business that will allow us to double the size of our company while
reducing our environmental impact. We've always believed in the power of our brands to improve the
quality of people’s lives and in doing the right thing. As our business grows, so do our responsibilities. We
recognise that global challenges such as climate change concern us all. Considering the wider impact of our
actions is embedded in our values and is a fundamental part of who we are.

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 Purpose & principles of hul

Our corporate purpose states that to succeed requires "the highest standards of corporate behaviour towards
everyone we work with, the communities we touch, and the environment on which we have an impact."
Always working with integrity
Conducting our operations with integrity and with respect for the many people, organisations and
environments our business touches has always been at the heart of our corporate responsibility.

Positive impact
We aim to make a positive impact in many ways: through our brands, our commercial operations and
relationships, through voluntary contributions, and through the various other ways in which we engage with
society.

Continuous commitment
We're also committed to continuously improving the way we manage our environmental impacts and are
working towards our longer-term goal of developing a sustainable business.

Setting out our aspirations

Our corporate purpose sets out our aspirations in running our business. It's underpinned by our code of
business Principles which describes the operational standards that everyone at Unilever follows, wherever
they are in the world. The code also supports our approach to governance and corporate responsibility.

Working with others

We want to work with suppliers who have values similar to our own and work to the same standards we do.
Our Business partner code, aligned to our own Code of business principles, comprises ten principles
covering business integrity and responsibilities relating to employees, consumers and the environment.

MARKETING STRATEGYOF HINDUSTAN UNILEVER LIMITED

1)HUL’S NEW GROWTH STRATEGY:

After having fought a bitter price battle for market share with its rivals, Hindustan Unilever Ltd (HUL),
Indian subsidiary of the Anglo- Dutch consumer goods company Unilever Plc, is now working on a new
growth strategy for its laundry business.

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“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.

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
2006—is also on the right track.”

HUL’s 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 HUL’s 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 doesn’t report its laundry revenues separately but puts them under the soaps and detergent
category.

In 2006, HUL’s soaps and detergents segment contributed around Rs5,596 crore to the company’s 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.

2)SUSTAINABILITY STRATEGY
We have a long-standing set of values and principles that guides our behaviour. These values underpin our
approach to sustainability.
We have always been a business driven by a strong set of values. Today those values are as important as
ever. We now know that the well-being of society and the environment is critical to our ability to grow.

Our Sustainability strategy

Unilever’s vision is to double the size of its business while reducing the overall impact on environment. This
new vision recognises that the world is changing, populations are growing and the rise in incomes is fuelling
a growth in the demand for consumer products. Products like ours rely on an increasingly constrained set of
natural resources, whether it is fuel, water, or other raw materials.
In Hindustan Unilever Limited (HUL), the principle of Corporate Responsibility (CR) is an integral part of
our commitment to all our stakeholders – consumers, customers, employees, the environment and the
society that we operate in.

Today, India is battling multiple issues like water scarcity, poverty, and problems arising out of low
awareness of health, hygiene, and nutrition. If these issues are not addressed soon, they will create
insurmountable barriers to business growth. We believe that helping society prosper and ensuring a

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sustainable future for the planet goes hand in hand with our goal of ensuring growth that is competitive,
profitable, and sustainable for our organisation.

Our contributions have to be substantial and sustainable, which is why we are not just banking on our
philanthropic programmes, but are transforming our core business practices as well. Even the seemingly
small innovations in our brands and business processes can lead to a big difference in society as we touch
the lives of two out of every three Indians.*

For example, if one household uses Surf Excel detergent, it can conserve two buckets of water per wash. A
million Indian households using Surf Excel can save enough water for meeting the basic hygiene needs of
many Indians. Thus, small individual actions multiplied with our large consumer base will make a big
difference in combating the issues society faces.

We will further demonstrate that successful business strategies are driven by responsible business practices.
The key to this approach is developing a CR framework which integrates the social, economic, and
environmental agenda with our business priorities – growing markets, maintaining the competitive edge,
enjoying goodwill in the communities we operate in, and building trust and an exceptional reputation.
Hence, in the future, the three cornerstones for CR integration with business at HUL will be:

Growing markets responsibly:

We will address issues related to hygiene and nutrition through product innovations and awareness.
Gathering information about the concerns expressed by consumers, communities, and stakeholders can help
us identify opportunities for innovation at the category, brand, and marketing plan level. We have a very
strong and trusted position in India and we can leverage this to our competitive advantage.
Ensuring sustainable practices in our operations:

To secure a thriving future, we need to establish sustainable sources for raw materials. Being a company
that is heavily dependent on water, agriculture, fuels and petrochemicals, we must plan now for a future in
which water could be scarce, agriculture could be under pressure, and fuels will be expensive. Our
consumers add up to two-thirds of the Indian population, hence addressing sustainability issues is a high
priority.

Building a good reputation through responsible leadership:

CR is one of the key components of reputation and trust. A good reputation can be a major competitive
advantage and can build employer brand and consumer loyalty.

3)ENGAGING WITH OUR STAKEHOLDERS

Listening to others and learning from our stakeholders informs our decision-making, strengthens our
relationships and helps us succeed as a business.

STAKEHOLDER ENGAGEMENT FOR IDENTIFYING ISSUES THAT ARE MATERIAL TO US:

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We appointed SustainAbility International to conduct stakeholder engagement on our behalf. They analysed
and assimilated the expectations of stakeholders regarding issues that matter to them. These expectations
were similar to the areas identified by us, where HUL's contribution could create a significant impact.

SCOPING THE AREAS FOR INTERVENTION

While the issues are many, it is necessary to address them in a systematic manner to make a real difference.
Instead of spreading thin across all issues, we have chosen to work on five areas to ensure a deep impact.

These areas have been arrived at using the output from our stakeholder engagement process and areas which
we are poised to address through our business.

KEY MESSAGES FROM STAKEHOLDERS

‘TARGET. ALLOCATE RESOURCES. ACHIEVE THOSE TARGETS. THIS IS MORE CRITICAL
THAN JUST BEING VISIBLE & TALKING ABOUT IT.’
- ‘We feel that some Indian companies can be leaders in their respective sectors. HUL has the potential to be
such a leader.’

- ‘Invest for your markets – don't do social work, it isn't your ballgame.’

- ‘Please make money out of it. When you make money out of it, things are going to change.’

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 4)GOVERNANCE
We aim to have strong governance structures in place to manage our social and environmental
responsibilities carefully and thoughtfully.

Corporate Responsibility at HUL is led by the CEO and the Management Committee (MC) of the company.
The MC governs the sustainability strategy with a view of key strategic approaches and seeks reports on
impacts and efforts against clear targets.

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 Each of the nine cells (in the daigram shown in Sustainability strategy section) is owned by an MC member.
For the execution of the strategy there is a team of 12 Sustainability Governing Council (SGC) members
based on their respective functions.

SUSTAINABILITY GOVERNING COUNCIL

The Sustainability Governing Council is responsible for:

 Recommending sustainability priorities for approval by the MC and monitoring its progress

 Recommending HUL's positions on critical issues for approval by MC

 Receiving stakeholder feedback

The role of the SGC is formalised, with a clear mandate and terms of reference outlining its mission,
purpose, membership, meeting schedule, and reporting systems.

EXTERNAL COMMENTARY
We shared our sustainability strategy with leading external experts from diverse backgrounds. Below you
can read their comments on our sustainability strategy.

VIEW OF LEADING EXTERNAL EXPERTS ON HUL’S SUSTAINABILITY STRATEGY

‘The long-term strategy and roadmap provides a comprehensive approach towards meeting future
sustainability challenges, especially with respect to resources such as water and energy.’

- Shirish Sinha, Head Climate Change & Energy Programme, WWF

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 ‘We are happy with the focus on linking the business processes with corporate responsibility. Social impact
has to be central to business processes, which is brought about by HUL's strategy. Corporate responsibility
via business strategies is the way forward.’

- Ibrahim H. Rehman, Director, Social Transformation Division, TERI

‘The tying up of your strategic threads is excellent. Ensure that you carry it through action!’

5)COMPETATIVE STRATEGY

As Competition Heats Up, India’s 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 doesn’t attract much notice from
other shoppers in Mumbai’s Hypercity, the India hypermarket chain. That’s how Douglas Baillie likes it.
Baillie, the managing director of Hindustan Unilever, India’s premier consumer-products company, wants to
see how his products are stocked, what consumers are buying, and how shoppers are reacting to competitive
brands. It’s primary market research at its most elemental, and it’s best done incognito.

Hindustan Unilever has traditionally relied on small traders and mom-and-pop corner stores to retail its
products. But India’s recent retail boom has created large stores and malls, so the company wants to make
sure it’s in with the new marketing crowd. Hence Baillie’s 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 can’t 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, India’s largest retailer and a former manager at Hindustan Unilever.

6)OTHER STRATEGY

 Grow ahead of market by leading market development activites.

 leverage positive impact of growing Indian economy on consumer spending.
 Grow a profitable foods and top end business.
 Grow the bottom-line ahead of top line.
 Strong commitment to sustainable development.

SWOT ANALYSIS

STRENGTHS

 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..

 Due to its long presence in India – has deep penetration – 20 consumer product category, over
15,000 employees, including over 1,300 managers, is to "add vitality to life."

 The company derives 44.3% of its revenues from soaps and detergents, 26.6% from personal care
products, 10.5% from beverages, and the rest from foods, ice creams, exports, and other products.

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  Low cost of production due to economic of scale. That means higher profits and / or more
competitioners. Better market penetration.

 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.

Weakness

 Strong competitors and availability of substitute products

 Low export levels

 High price of some products

 High advertising cost

Opportunities

 Increasing per capita national income resulting in higher disposable income.

 Growing middle class and growing urban population.

 Increasing gifts cultures.

 Increasing departmental stores concept – impulse @ at cash counters.

 Globalization.

Threats

 HUL's tea business has declined marginally, reason is that, cost pressure is likely due to rising crude
and freight costs.

 Tax and regulatory structure.

 Mimic of brands.

 Removal of import restrictions resulting in replacing of domestic brands.

 Temporary slowdown in economy can have an impact on FMCG in Industry.

PEST ANALYSIS

P:
 since the budget range is decontrolled, no political effects are envisaged.

44
E:
 increasing per capita income resulting in higher Disposable income

 Growing middle class/urban population – increase in Demand

 Low cost of production – better penetration

S:
 Per capita consumption expected to increase – fashion

 Increasing gifts culture – increase in demand

T:
 Will have to reinforce technology to international levels Once India is a “fully free” economy

MAJOR FINDINGS

 The Crisis of Declining Markets

Through the nineties, the FMCG markets grew at almost 15% per annum in value. Suddenly, in 2000,
FMCG market growth stalled and then declined for the next four years. It is important to understand why
this happened.

The rapid opening up of the economy resulted in many new avenues of expenditure for the consumer’s
growing income.A sharp drop in interest rates from 18% to 8% led to explosive demand for consumer
durables like white goods, two-wheelers and automobiles. After all, one could drive out of a car showroom
in a Maruti 800 with a down payment of only Rs. 2000. The home ownership market grew exponentially as
the average age of a home loan borrower dropped from 50 in 1999 to 30 in 2004. Mobile phone ownership
and usage exploded due to its amazing lifestyle and convenience benefits as well as lower prices.
Entertainment, Leisure and Travel sectors also boomed.

The lure of new avenues of expenditure in products and services led to consumers restricting their expanse
on FMCG. It is not that they bathed less often or brushed their teeth less often or indeed washed their clothes
less often. But they did downtrade to lower priced substitutes from higher quality brands. For example, a
consumer buying six tablets of Lux in a month went to buying three of Lux and three cheaper brands. Or a
consumer buying Surf Excel for her clothes mixed it with a cheaper powder. As a result of this shift in
spending patterns, the FMCG market declined in value in the last four years creating a major challenge for
growth.

 The new Hindustan Lever:

Focused on FMCG In 2000, 75% of our sales came from FMCG businesses. The rest came from several
non-FMCG businesses which were not profitable, and did not offer prospects for long-term leadership.
Besides, they were a drain on the core FMCG business, both in terms of resource and focus.

They decided to disengage from all non-FMCG or commodity businesses. In all, we have divested and
discontinued 15 businesses including Animal Feeds, Speciality Chemicals, Nickel Catalyst, Adhesives,
Thermometers, Seeds, Mushrooms etc. with sales of Rs.1,750 crores as in 1999.

Today they are a focused on FMCG company with our branded business accounting for over 90% of sales,
consisting of 35 brands across 20 categories. These will be their main engines of growth, with higher levels
of resource concentration, be it technology, people talent or media spend.
45
  Building blocks of a strong Foods business

In Foods, there is enormous growth potential in leading the evolution of consumers to branded and
processed foods. Over the last few years they have focused on putting in place the building blocks of a
strong Foods business. Historically their Foods business was fragmented and lacked scale. It was often
commoditized with low margins. They recognized that changing food habits would require considerable
investment, which the current business simply could not afford. Therefore they divested the non-value added
parts like Vanaspati. They have consolidated theuir portfolio and improved the gross margins by over 13%
through product mix and cost reduction. They have also cleared the supply chain of all old stock and geared
up for fresh availability on shelf.Today, their Foods business has a healthy gross margin and a supply chain
driven by freshness. The Foods business will now invest for growth through relevant innovation.

 FMCG still offers enormous potential

As the largest FMCG player it was up to them to reverse the downtrading to realize its true growth
potential. They could achieve this by raising the bar and becoming world class in what their brands offered
and how they worked. Nothing less would do.

Penetration levels in several of the categories and consumption levels in all of the categories is low by any
comparison.Across the world, they are seeing a strong correlation between income levels and the size of
FMCG markets.Over the next 10 years, per capita income in India is likely to touch China’s current levels.
At those levels, the FMCG market will be over Rs.100,000 crores from a current value of Rs.40,000 crores.
This is an opportunity that they have to seize.

 Portfolio of Strong Brands

Their main challenge was to reverse the downtrading in the categories and re-establish the relevance of their
brands in the mind of the consumer. In 2000, they had 110 brands, many undifferentiated and lacking scale.
They chose to focus on 35 power brands covering all consumer appeal and price segments. They are already
seeing the benefits. Six brands – Brooke Bond, Lifebuoy, Lux, Fair & Lovely, Rin and Wheel – have
emerged as mega brands in the last five years, each with sales of more than Rs.500 crores.

 Better Value

The first step was to ensure that they offer world class quality and real differentiation backed by technology
to give them the advantage over low priced competition. They have invested over Rs.400 crores, or 5% of
sales, in the last three years to upgrade the brands. In several cases they reduced prices to make the brands
more affordable. Better quality and more affordable prices have increased the value to the consumer. They
have also launched several low unit size and price packs for single use to make the brands more accessible
to all income groups. For example, they are the first to introduce a branded toothpaste in a tube at Rs.5 and a
branded quality shampoo in a bottle at Rs.5.

 Bigger Role in Consumers’ Lives

Perhaps the most significant change has been to move the brands beyond merely making functional claims
to playing a bigger and deeper role in the lives of consumers. They had to move from selling a soap or a
detergent to something far more important and central to the consumer’s life. How often have we heard
someone say, “A soap is a soap is a soap!” Or indeed, “All detergents clean clothes as well”.

In the case ofLifebuoy, it was only when they associated it with the promise of health and protection against
disease that it claimed a larger space in the consumer’s mind. It moved from being a mere soap to a health
essential. Today Lifebuoy, their oldest brand, has grown at over 15% for the last three years.

46
Similarly, in the laundry market, Surf Excel went well beyond the benefit of ‘great clean’ by saving two
buckets of water with every wash. Imagine the importance of that benefit to consumers in cities, who often
get running water for only a couple of hours a day. Surf Excel is one of their fastest growing brands today.

Both Lifebuoy and Surf Excel have succeeded because they are relevant to two key concerns of the Indian
housewife: family health and the scarcity of water.

In addition to the growing consciousness of health, consumers today are looking for ways to look good and
feel good so that they can get much more out of life. In short, consumers are seeking Vitality in their lives.
Their portfolio of 35 power brands is uniquely positioned to offer nutrition, hygiene and personal care
benefits and thereby deliver Vitality.

 Technology, the Key Differentiator

Their brands and sound understanding of the local consumer are supported by a world class Research and
Development capability. They have over 200 of the brightest scientists and technologists based in India.

Their recent reorganization leverages the talent pool from across 16 global technology centres, of which
four are in India.In all, they have over 4,000 high quality minds across Unilever working relentlessly to
provide new benefits that make a real difference to the consumers.

 Winning with Customers

Hindustan Lever has historically had a strong bond with its customers. They have strengthened this and
reinvented the way they manage their distribution channels and their customers. The sales structure has been
transformed to leverage scale and build expertise in servicing Modern Trade and Rural Markets. They have
also de-layered their sales force to improve the response times and service levels.

Their customers are serviced on continuous replenishment. This is possible because of IT connectivity
across the extended supply chain of about 2,000 suppliers, 80 factories and 7,000 stockists. They have also
combined backend processes into a common Shared Service infrastructure, which supports the units across
the country. All these initiatives together have enhanced operational efficiencies, improved the service to the
customers and have brought us closer to the marketplace.

 Our Acorns: Investing in our Future

In the pursuit of growth, they have also begun to nurture some acorns for the future. These are both new
businesses and new ways of engaging with consumers.

Their entry into Water Purifiers, through Pureit, shows great promise. Pureit delivers 100% protection
against all water-borne diseases. It provides water which is as safe as boiled water, without needing
electricity or continuous tap water supply. At 17 paise per litre, it is extremely affordable for the common
man. They have launched it in Tamil Nadu and are fine-tuning all aspects of the business system before a
phased national launch.

In urban India, Hindustan Lever Network (HLN) is their direct selling initiative selling a special range of
products. It already reaches 1,400 towns with over 3 lakh consultants. Besides reach, HLN enables direct
interaction with consumers and customises solutions for them to give them a complete brand experience.

 Our People & Organisation

They have restructured the company, integrating eight Profit Centres into two Divisions – Home and
Personal Care (HPC) and Foods. The result is a simpler and leaner organisation, less hierarchical with fewer
47
levels and greater empowerment. This has eliminated complexity and speeded up decision making. Today
the company is far more youthful in attitude and spirit. There is greater openness and transparency.

 The Transformation: Investment in the Future

To ensure that Hindustan Lever remains competitive in the long-term, they have made significant
investments in product quality, pricing and marketing. As mentioned earlier, the investment in product
quality alone has been in excess of Rs. 400 crores, or 5% of our sales.

In addition there has been the cost of defending their market position. Recently an international competitor
attacked their laundry business led by a price reduction of as much as 50%. They acted with speed and
determination leveraging all their past experience in India and internationally. They have been able to fully
protect their market leadership and share, albeit sacrificing short-term profit. They made this necessary
trade-off as market share is the best means of sustaining future profit. Over time, their stronger market
positions will surely lead to greater long-term profit.

Despite these significant investments to strengthen the long-term competitiveness and the costs of
defending the strong market position, they still remain one of the most profitable companies in the country.

FIVE P’S 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 company’s popular product’s include:

• Bathing soaps : Lux, Lifebuoy, Liril, Hamam, Breeze, Dove, Pears and Rexona

• Laundry items : Surf Excel, Rin and Wheel

• Skin care: Fair & Lovely, Pond’s 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

• Coffee : Bru

• Foods: Kissan, Annapurna and Knorr

• Ice cream:kwality walls

48
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.

Physical Distribution –

“Place” BRAND ISN’T THE ONLY ANY MORE.Marketers and finance manager need a new term to
evaluate their business:

Distribution Equity. It takes much more time and effort to build, but once built, distribution equity is much
together to erode.

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, swamp
prime television with best Ads, but the end of it all, you would be know of selling your products. The
cardinal task before the Indian market is managing is to shoe-horn its product on retail shelves. Buyers are
paying for distribution equity not brand equity and market shares.

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. 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 isn’t 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

49
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.

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.Naturally, that produced just the value vacuum that Hindustan Unilever Ltd(HUL)was looking to fill.

Thereafter it was the job of the advertising to 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.

And 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. 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….

It’s a combination of spiffing up its key brand, researching and improving the newer products that haven’t
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. Today’s consumer
demanding “more for less”, 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. 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
50
Positioning is a must when customer attitude have changed and product have strayed away from the
consumer’s 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:

 Lifebuoy is ‘one of Unilever’s 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

 Fair & Lovely, a hot-selling “fairness” cream, which promises a lighter skin tone for many of India’s
complexion-conscious consumers

HINDUSTAN UNILEVER’S MARKET SEGMENTATION

 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.

‘
51
 Chapter-4
DATA ANALYSIS AND INTERPRETATION
MARKET SHARE OF FMCG COMPANIES IN INDIA

19%
34%

4%

hul
itc
6%
nestle
britania
dabur
others
8%
29%

In the above pie charts we see the position of various FMCG companies doing business in india . we can see
that HUL is enjoying the position of market leader and is following by ITC as close second in the market
share of FMCG products.

52
MARKET LEADER-HINDUSTAN UNILEVER LIMITED

80
69.7 67.5
70

60 57.3
54.3 54.5
50 47.8
44
39.1
40 37.5

30 hul
23.7 22.7
20.8 competition market share
20 14.5
13.6
9.7 8.7
10 7.4
3.4
0
h h sh n o r ea e s
as as i
po de t ffe m
cw lw wa sk
ow et o ja
ri a ish am p ck c
b n d sh pa
fa er
so um
p lc
ta

As mentioned in the above graph ,hul is enjoying the leader position in the market and is having highest
market share which are followed by the market challengers like dabur india ltd , nestle,itc etc. in different
categories of fmcg products like shampoos deos, coffee, dish wash etc.

53
HINDUSTAN UNILEVER LIMITED-COMPETITORS

60

50 48.8

40

29.5 30.3
30 28.1 hul
competition market share

20

10

0
toothpaste ketchups

In some category market challengers are giving high level competition in different product lines such as
ketchup and tooth paste.

So we can see that in overall FMCG business HUL is distantiy ahead of rest of the companies as far as
market share of different product are concerned

54
CATEGORY WISE SALE GROWTH OF FMCG SECTOR OF HUL IN IN INDIA

CATEGORY PERCENTAGE

SOAPS AND DETERGENTS 19.3%

PERSONAL PRODUCTS 22.4%

ICE CREAM 15.7%

PROCESSED FOODS 13.7%

BEVERAGES 13.6%

OTHERS 19.4%

19.40% 19.30%

SOAPS AND DETERGENTS

13.60% PERSONAL PRODUCTS
ICE CREAM
22.40% PROCESSED FOODS
BEVERAGES
13.70% 15.70% OTHERS

PORTFOLIO STRADDLING THE PYRAMID ACROSS CATEGORIES

Particular Laundr Soaps Shampo Skin Toothpast tea Coffe

55
s y o e e
Market 2247 1658 542 698 691 1113 177
size-$ mln
Hul share 37.5% 54.3 47.8% 54.5 29.5% 22.7 44.0%
% % %
Nearest 13.6 9.7 23.7 7.4% 48.8% 20.8 39.1%
competito %
r

AFFLUENT

ASPIRING

STRIVING

56
 CATEGORY LEADERSHIP: LAUNDRY

38
37.5
37 37
36.5
36

35.2
35
LAUNDRY MARKET SHARE
34.5 34.5
34.3
34 34.1

33

32
2002 2003 2004 2005 2006 2007 2008 2009

57
BUILDING CATEGORY:PROCESSED FOODS

LARGE SNACKING MOMENTS low ketchup penetration

SNACKING INCIDENCE NORTH 21%

SNACKS %HHLDS SOUTH 7%

POTATO 37 EAST 25%

CHIPS WEST 16%
MIXTURE 43
METROS 31%
BHAJIYA 27

MURI(EAST) 27

28.5

28 28.1

27.5

27 26.9
26.5
Series 1
26 26

25.5 25.5

25

24.5

24
jan-mar apr-jun jul-sep oct-dec

As mentioned in the above graph ,hul is enjoying the leader position in the market and is having high market
share in home care products.

58
STRONG GLOBAL BRAND : DOVE

70%

60%

50%

40%

Series 1
30%

20%

10%

0%
MAY JUNE JUL AUG SEP OCT NOV DEC

As mentioned in the above graph ,hul is enjoying the leader position in the market and is having high market
share in personal care products. Dove is a global brand and used by million of customers,due to various
innovations made it is becoming famous among teenagers and the sales is constantly increasing.

59
MARKET SHARE OF HINDUSTAN UNILEVER – SKIN CARE PRODUCTS

Sales

5%
5%
HUL
NIVEA
20% GARNIER
45% AYUR
EMAMI

25%

As mentioned in the above graph ,hul is enjoying the leader position in the market and is having high market
share in personal care products.nivea and garnier are strong competitors of hul in skin care products to stay
ahead it has to do advertisements and give various promotional offers.

60
FINANCIAL OVERVIEW
2009 2008 2007

REPORTED 13.3% 9.4% 11.4%

GROWTH
CONTINUING 13.5% 10.0% 11.5%
SALES GROWTH
EBIT/SALES% 14.4% 14.1% 13.3%
EBIT GROWTH 15.4% 16.2% 1.1%

OPERATING CASH $365MN $489MN

FLOW

HUL FMCG SALES GROWTH%

14

12

10

6 SALES GROWTH%

0
2002 2003 2004 2005 2006 2007 2008 2009

EBIT MARGIN

61
 25.00%

20.00% 20.10%
19.30%

15.00% 15.50%
14.70%
14.10% 14.40%
13.20% 13.30%
Series 1
10.00%

5.00%

0.00%
2002 2003 2004 2005 2006 2007 2008 2009

HUL EARNING PER SHARE

25.00%

21.40%
20.60%
20.00% 19.70% 19.90%
18.30%

15.70%
15.00% 14.60%
13.30%
Series 1
10.00%

5.00%

0.00%
2002 2003 2004 2005 2006 2007 2008 2009

RETURN ON CAPITAL EMPLOYED

62
70
62.3 61.1
60
53.8 52.8 53
51.8
50

40.8
40

Series 1
30

20

10

0
2002 2003 2004 2005 2006 2007 2008

RETURN ON NET WORTH

90
82.8
80

70 68.1
61.1
60 57.2
52.7 53.9
50 48.4

Series 1
40

30

20

10

0
2002 2003 2004 2005 2006 2007 2008

63
 Chapter 5
CONCLUSIONS & RECOMMENDATION

(Conclusion)
sales promotion and marketing strategies play a pivotal role in the fast-moving consumer goods (FMCG)
industry. FMCG companies rely heavily on these strategies to achieve their business objectives, which typically
include increasing market share, driving product awareness, and fostering brand loyalty. Sales promotions, such
as discounts, coupons, and loyalty programs, can effectively attract and retain customers, especially in a market
characterized by intense competition and price sensitivity.

Moreover, successful marketing strategies involve a multi-faceted approach that encompasses advertising,
digital marketing, and consumer engagement. Building a strong online presence and using data-driven insights
to understand consumer behavior have become increasingly important in the digital age. Furthermore, a focus
on product innovation, packaging, and sustainability can set FMCG companies apart in a crowded marketplace.

Overall, the FMCG industry demands a dynamic and adaptable approach to sales promotion and marketing
strategies. To thrive, companies must continually analyze market trends, consumer preferences, and
competition, and be prepared to adjust their strategies accordingly. With the right combination of sales
promotion and marketing efforts, FMCG companies can forge lasting relationships with their customers, drive
sales growth, and stay ahead in this fast-paced industry.

Suggestion
For fast-moving consumer goods (FMCG) companies, effective sales promotion and marketing strategies
are essential to stand out in a highly competitive market. One potent approach is to adopt a multi-faceted
strategy that combines digital and traditional methods to reach a wider audience.

In the digital realm, leveraging social media platforms is crucial. Create engaging content, such as product
demonstrations, user-generated content, and customer testimonials, to foster brand engagement. Collaborate
with influencers in the FMCG niche to promote your products and gain credibility within your target
demographic. Additionally, invest in paid advertising on platforms like Facebook, Instagram, and Google
Ads to target specific consumer segments.

Traditional marketing strategies should not be overlooked. In-store promotions, like buy-one-get-one
(BOGO) offers and point-of-purchase displays, can encourage impulse purchases. Moreover, sampling and
product demonstrations at supermarkets and events can provide a hands-on experience for potential
customers. Invest in eye-catching packaging and label design to enhance shelf appeal and attract consumers.

Data analytics is another critical element. Collect and analyze consumer data to gain insights into purchasing
behavior and preferences. Use this information to tailor your marketing campaigns and offers to individual
consumers or specific market segments.

64
Finally, a loyalty program can be a powerful tool for customer retention. Offer discounts, exclusive access,
or rewards for repeat purchases. This not only retains existing customers but also incentivizes them to refer
your products to others.

By integrating these digital and traditional strategies, and continually monitoring and adapting your
approach based on data insights, FMCG companies can build a robust sales promotion and marketing
strategy to drive sales and build brand

(Recommendation)

For Fast Moving Consumer Goods (FMCG) companies, effective sales promotion and marketing strategies
are crucial for increasing brand visibility, driving sales, and fostering customer loyalty. To achieve these
objectives, a multifaceted approach is necessary. Firstly, offering time-limited discounts or buy-one-get-one
(BOGO) deals can stimulate immediate sales. These promotions should be strategically timed, perhaps
coinciding with holidays or peak shopping seasons.

Secondly, leveraging digital marketing is vital in today's landscape. Utilize social media platforms, email
marketing, and influencer collaborations to engage with a wider audience and build an online community.
Creating valuable content that educates and entertains consumers about your products can help build brand
trust.

Additionally, tapping into the power of data analytics to understand customer preferences and behaviors is
essential. Personalize marketing campaigns and offers to cater to individual consumer needs. Invest in
loyalty programs to reward repeat customers and encourage brand advocacy.

Lastly, ensure a strong in-store presence with eye-catching displays and product placement. Collaborate with
retailers for prominent shelf space, and run in-store promotions, like product bundling or sampling, to entice
shoppers. Continuous monitoring and adaptation of these strategies based on consumer feedback and market
trends will keep your FMCG brand competitive and thriving in a rapidly changing landscape.

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 Reference
I have collected information from several Websites:

 https://www.scribd.com

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