Hindustan Unilever Marketing Strategies and Policies

MARKETING STRATEGIES AND POLICIES OF HINDUSTAN UNILEVER LIMITED A major project report

Submitted in partial fulfillment of the requirements for BBA(GEN) semester VI programme of Guru Gobind Singh Indraprastha University,Delhi

By: Mitesh Kumar Verma Enrl.no.:0551221705 BBA(General)

Delhi College Of Advanced Studies B-7, Shankar Garden ,Vikaspuri New Delhi-110018

Declaration

I here declare that the major project, entitle “marketing strategies and policies of Hindustan Unilever Limited”, is based on my original study and has not been submitted earlier for any degree or diploma of an institution/university. The work of author(s), wherever used has been acknowledged at appropriate places. Place:

Candidate’s signature

Date:

Name: Enrol.no.:

Countersigned Name: Supervisor Delhi college Of Advanced Studies

PREFACE Hindustan Unilever Limited (formerly Hindustan Lever

Limited)

is

India’s

largest

Fast

Moving

Consumer Goods company with a sales turnover of more than Rs.10,000 crores. At least one of its products reaches two thirds of Indian households. It has 35 brands and employs more than 15,000 people.

Its

promoter

company

Unilever,

a

fortune

500

multinational, holds 51.42% equity. Unilever has presence in more than 100 countries worldwide in FMCG sector. Hindustan Unilever Limited (HUL), a subsidiary of Unilever, is a fast moving consumer goods (FMCG) company based in India. The company focuses on efficient delivery to consumers with an improved supply chain, brand building initiatives and innovation, which has helped the company to sustain its leadership position in the overall FMCG category in India. This project is a sincere effort to look for the market potential in FMCG industry. A descriptive research procedure had been applied to come to the conclusions of the project. A detailed questionnaire

had been prepared and the responses of the concerned people had been collected for the analysis.

ACKNOWLEDGEMENT I am grateful to many people who have contribution to this project. In particular I would like to thank my faculty, MS.MEENU ARORA, who have helped me through this project in their own special & affordable way. My project has been a successful task because of cheerful devotion of always lend the support, I needed of. I have been getting all the guidance, Dr.

NARENDRA MOHAN, the director of our

college and my faculty members who possibly could get through out the making of this project from them.They always been ready & also have to clarify all my queries from time to time. Last but not least I would also like to thank the library members and computer laboratory members who also have been supportive during the making of this project by providing adequate books as & when required for.

Finally I extend my sincere thanks to all those who have given me encouragement throughout, without whose generosity this project would have been difficult for me to complete.

INTRODUCTION The Hindustan Unilever Ltd’s(HUL) Inc has taken the opportunity to offer us a broader view of FMCG category. The Hindustan Unilever Ltd (HLL) is India’s no.1 FMCG is able to share with their market insights based upon unparalleled breath of consumer goods experience. Hindustan Unilever Ltd (HUL) has grown from strength to strength with new technologies being introduced to make the HLL consumer goods business, one of the most efficient in the world. The company’s history dates back to 1931 when Unilever set up its first Indian subsidiary, Hindustan Vanaspati Manufacturing Company, followed by Lever Brothers India Limited (1933) and United Traders Limited (1935). These three companies merged to form Hindustan Lever Limited in November 1956. Effective July 19, 2007 the company has changed the name to Hindustan Unilever Limited. Hindustan Unilever Limited (HUL), a subsidiary of Unilever, is a fast moving consumer goods (FMCG) company based in India. The company focuses on efficient delivery to consumers with an improved supply chain, brand building initiatives and innovation,

which has helped the company to sustain its leadership position in the overall FMCG category in India. Hindustan Unilever is Unilever's main operating business in India. It is the country's biggest consumer goods company, and far and away the leading advertiser. HUL inhabits virtually every sector of the consumer goods market, including several not occupied by Unilever in other markets such as preserves and bakery products, and is also one of the country’s top five exporters. In addition to FMCG products it is the country's biggest exporter of tea. It is generally acknowledged to be one of India's best-run businesses, although performance slowed dramatically between 2000 and 2004, prior to restructuring. Unilever, which sells soap to more than 500 million Indians, may see global revenue growth slow in 2010 as Procter & Gamble Co. and ITC Ltd. step up marketing in Asia's third-biggest economy. The world's second-largest consumer products maker has relied on accelerating shipments of Surf Excel detergent in India to make up for sluggish sales in Europe.Now Cincinnati- based Procter &

Gamble is stocking Indian stores with Olay skin- care products after nearly halving the local prices of Ariel and Tide detergents in 2004. Asia and Africa, which make up about a third of Unilever's worldwide sales, will see their share of the company's growth fall to 2 percent in 2010 from 3.3 percent in 2007, according to Brusselsbased brokerage Petercam SA. Revenue from the two continents rose 11.4 percent in the first nine months of last year, helping offset 1.9 percent growth in Europe and 4.2 percent in North and South America. Unilever's overall sales growth will slow to 4.9 percent in 2010 from an estimated 5.3 percent in 2007, according to the median of five analysts in a Bloomberg survey.

Hindustan Unilever – A 75 Year Commitment

 15,000 employees  1,200 managers  2,000 suppliers & associates  75 Manufacturing Locations  45 C&FAs, 4,000 Stockists  Total Coverage 6.3 Mln Outlets  Direct Coverage 1 Mln outlets

Population of INDIA: 1027 Mln  5,545 Towns  2.5 Mln outlets  6,38,000 Villages  5.0 Mln outlets

HISTORY OF HINDUSTAN UNILEVER LTD • It was in the summer of 1888 that Unilever of England first marketed Sunlight soap in India. This was followed by brands like Pears and Vim. Vanaspati was launched in 1918 and Dalda came to the market in 1937. • In 1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspati

Manufacturing

Company,

followed

by

Lever

Brothers India Limited (1933) and United Traders Limited (1935). These three companies merged to form HUL in November 1956. • A number of prominent companies came into the HUL fold as result of Unilever’s international acquisitions. These included Brooke Bond (1984), Lipton (1972) and Pond’s (1986).

• In 1993, Tata Oil Mills Company (TOMCO) merged with HUL. Two years later, HUL and yet another Tata company, Lakme Limited, formed a 50:50 joint venture, Lakme Lever Limited. • Subsequently in 1998, Lakme Limited sold its brands to HUL and divested its 50 per cent stake in the joint venture to the FMCG giant. • HUL formed a 50:50 joint venture with the US-based Kimberly Clark Corporation in 1994, Kimberly-Clark Lever Ltd, which markets Huggies diapers and Kotex sanitary pads. • HUL has also set up a subsidiary in Nepal, Nepal Lever Limited (NLL), and its factory represents the largest manufacturing investment in the Himalayan kingdom. In a historic step, HUL picked up 74 per cent of the equity of Modern Foods from the Indian government. • In 2002, HUL acquired the government s remaining stake in Modern Foods. • FMCG major Hindustan Unilever Limited (HUL), formerly known as Hindustan Lever Limited, employs 36,000 people,

including over 1,350 managers. It is one of the earliest MNCs to have entered India

ORGANIZATIONAL STRUCTURE

Managing Direc tor

General Mana ger

Vice President

Marketing

Manufacturin Sales g

Finance

Distribution

PRESENT STATUS Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods company, touching the lives of two out of three Indians with over 20 distinct categories in Home & Personal Care Products and Foods & Beverages. They endow the company with a scale of combined volumes of about 4 million tonnes and

sales

of Rs.10,000crore. HUL is also one of the country's largest exporters; it has been recognised as a Golden Super Star Trading House by the Government

of

India.

The mission that inspires HUL's over 15,000 employees, including over 1,300 managers, is to "add vitality to life." HUL meets everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life. It is a mission HUL shares with its parent company, Unilever,

which holds 51.55% of the equity. The rest of the shareholding is distributed among 380,000 individual shareholders and financial institutions.

HUL's brands - like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's, Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, Knorr-Annapurna, Kwality Wall's – are household names across the country and span many categories - soaps, detergents, personal products, tea, coffee, branded staples, ice cream and culinary products. They are manufactured over 40 factories across India. The operations involve over 2,000 suppliers and associates. HUL's distribution network, comprising about 4,000 redistribution stockiest, covering 6.3 million retail outlets reaching the entire urban population ,and about 250 million rural consumer. HUL has traditionally been a company, which incorporates latest technology in all its operations. The Hindustan Unilever Research Centre (HLRC) was set up in 1958, and now has facilities in Mumbai and Bangalore. HLRC and the Global Technology Centres in India have over 200 highly qualified scientists and technologists, many with post-doctoral experience acquired in the US and Europe.

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 AngloDutch consumer goods company Unilever Plc, is now working on a new growth strategy for its laundry business. “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 Ahmedabadbased 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.

“Consumers today are buying more clothes,” says Vats. “Trends suggest that the usage of detergents has gone up as a result. Also,

with premium quality of clothes, people want to use better and branded products.” Still, analysts remain cautious. “Some of HUL’s recent moves, such as promotional campaigns and advertising, seem right,” says Macquarie’s Sharma. “Still, it is too early to say what result their new strategies will yield.”

PRODUCT PROFILE HUL’s business activities are divided into four broad areas:  Home and personal care

personal wash, fabric wash, home care, oral care, skin care, hair care, deodorants and talcs, colour cosmetic  Foods

tea, coffee, branded staples, culinary products, ice creams, Modern Foods ranges

 New Ventures

Hindustan Lever Network, Ayush ayurvedic products and services, Sangam, Pureit water purifiers.  Exports HPC, beverages, marine products, rice

BRANDS

HUL s brands are household names across the country. They include: Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond s, Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, KnorrAnnapurna and Kwality Walls.

SWOT ANALYSIS Strength

1. 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.. 2.

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." 3. 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. 4. Low cost of production due to economic of scale. That means higher profits and / or more competitioners. Better market penetration. 5. 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 1.

Continuous threat from other competitors.

Opportunities 1. Increasing per capita national income resulting in higher disposable income. 2. Growing middle class and growing urban population. 3. Increasing gifts cultures. 4. Increasing departmental stores concept – impulse @ at cash counters. 5.

Globalization.

Threats 1. HLL's tea business has declined marginally, reason is that, cost pressure is likely due to rising crude and freight costs.

PEST ANALYSIS P: since the budget range is decontrolled, no political effects are envisaged. E:

1) increasing per capita income resulting in higher Disposable income 2) Growing middle class/urban population – increase in Demand 3) Low cost of production – better penetration

S:

1) Per capita consumption expected to increase – fashion 2) Increasing gifts culture – increase in demand

T:

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

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 Wall’s .

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 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. Ad since any discussion today would be incomplete without mention ‘e’ word, the management plans to tap this new channel of

marketing.

Beside

the

company

website

(i.e.

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… repositioning 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: 1) 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 2) 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.

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

COMPETITIVE 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.

Facing Competition From P&G And Others The reason for this new found egalitarianism is that the $3 billion Hindustan Unilever is facing serious competition. The company, which is practically synonymous with India, makes everything from detergents, soaps, and shampoos to soups, sauces and tea, and dominates most of those categories. Yet early this year, Finnish

handset maker Nokia (NOK) dislodged it as the multinational with the highest revenues in India, after ringing up India-based sales of $3.5 billion. Now Hindustan Unilever is under siege from aggressive Indian and foreign competitors such as Procter & Gamble (PG), Nivea, and L’Oréal. In the last year, ACNielsen data shows, Hindustan Unilever’s lead in hand soaps, including the popular Lux, is down from 55.2% to 54%. Favorite detergent brands like Surf Excel and Rin are barely hanging onto their 37% share. Hindustan Lever tea brands like Brooke Bond and Lipton have dipped from a combined market share of 29.2% to 24.3%. All this has taken a toll on Hindustan Unilever’s operating margins, down from 21% a few years ago to just 11.84% now. That’s why the company is wooing consumers in big retail stores. These newly affluent shoppers present the best hope for the company’s future in India. According to retail consultant KSA Technopak, organized retail, currently just 3.5% of India’s total $336 billion retail market, will grow to 28% by 2017. Hindustan Unilever’s managers hope their revenues from big retail will increase from 5% today to over 25% in 2012. “It is a big game

for us,” says D. Sundaram, Hindustan Unilever’s finance director. Hindustan Unilever’s strategy is to market its premium products through the hundreds of megastores springing up across India. That

dovetails

with

parent

company

Unilever’s

new

global

realignment of products.Parent Unilever will develop the brands and streamline product offerings across the world, while its subsidiaries will

sell the products.

This means that all of Unilever’s brands will be available across global markets, fitting in quite nicely with India’s turn towards more international products being sold in supermarkets. Yet this is still a dramatic change for Hindustan Unilever which, not long ago, was the most successful and profitable company in the Unilever group, the crown jewel whose managers had free rein to develop and build brands suitable for the local market. The takeover of Hindustan Lever by Unilever became evident in March, 2006, when Baillie, a Zimbabwe-born British national, became the first foreigner in four decades to head the Indiancompany.

From Local Player To Multinational Overnight the change sent shock waves through India. For many decades most Indians thought Hindustan Lever was a local company,

not

management

a

multinational,

graduates

and

made their

the

cream

careers

there.

of

India’s Then

in

February, 2007, the company, then known as Hindustan Lever, was rechristened Hindustan Unilever to reflect its parentage.

Baillie first had to sort out some past problems. For instance, in 2002 the company adopted Unilever’s global strategy of focusing on just 30 power brands instead of the total basket of 110 more local brands. While the strategy aimed to conserve management energy, it also left the field wide open for competitors to attack Hindustan Unilever in the niche soap and detergent markets where its smaller brands held sway. And there was some stiff competition from rival Procter & Gamble; a 2004 price war with P&G in the detergent business forced Hindustan Unilever to slash prices on its premium brand Surf Excel. The effect: The company’s sales and operating profits stagnated at $2.5 billion for five years while operating profit plunged 37%, to $274 million in 2004. Last year operating profits reached $357 million, thanks to price increases. But the rich margins of the past have

not

returned.

Tougher To Hold On To Market Share Baillie says he intends to get the company back “into the competitive growth zone and do this in a manner that we can consistently deliver.” He also wants to expand the foods business in conjunction with the parent, where foods bring in half the revenues globally. In India, the company’s home and personal care businesses account for 80% of revenues and 85% of profits at

Hindustan Unilever, while the company’s track record in foods has been dismal. Indeed, it has phased out more food products—wheat flour, confectionery, frozen bread—than it has launched. Hindustan Unilever executives are realistic about the new era in which it now operates. Nitin Paranjpe, executive director in charge of the home and personal care business, admits that it’s now “tougher to hold on to market share. If India is a great story, we aren’t the only ones seeing it.” Rivals like P&G and Nivea have also copied Hindustan Unilever’s best innovation: the small shampoo sachets it pioneered in the 1980s, which sold for less than 2 cents each and which expanded the market for Hindustan Unilever products among India’s rural masses. Currently, 80% of Indian shampoo sales come from sachets. But today even L’Oreal has sachets of its Fructis shampoo. In June, the Tata Group’s beverage company Tata Tea overtook Hindustan Unilever as India’s largest selling tea brand. According to ACNielsen, Tata Tea’s market share increased from 16.7% in March, 2006, to 19.9% in July, 2007, while Hindustan Unilever slipped from 26.1% to 19.5%. Tata Tea is exultant. Managing

Director Percy Siganporia says the gain is “a dream comes true for us.”

FUTURE COMPETITIVE STRATEGY 2010 Expectations P&G, the world's largest consumer-goods maker, will continue to gain share in the next five years in India, according to Ali Dibadj, an analyst at Sanford C. Bernstein in New York, who rates the stock ``outperform.'' Hindustan Unilever Ltd., 52 percent owned by the London- and Rotterdam-based parent, lost ground in shampoo,

bath soap, toothpaste and tea in the quarter ended Sept. 30, compared with the year earlier, according to the company. Its share of the shampoo market declined by more than a percentage point to 47.7 percent, the company said. ITC, the largest Indian cigarette maker and partly owned by British American Tobacco Plc, is also making inroads. It started selling more brands including Fiama Di Wills shampoo and Superia soap last year as the government raised tobacco taxes. `Profitable' Cigarettes The tobacco maker ``has a very profitable cigarettes business which will help it to invest and expand its personal- care portfolio,'' said Anand Shah, an analyst at Angel Broking in Mumbai, who has a ``neutral'' rating on the stock. ``It has the ability to take losses in this segment as long as it grows its sales. This strategy will still satisfy investors.'' Rising prices of raw materials have made it more difficult for consumer-goods makers to pass on higher costs. The price of palm oil, used to make soaps and foods, has surged 70 percent in the past year.

``Given the competition, profitability will continue to be under pressure,'' said Macquarie Securities Ltd. analyst Unmesh Sharma, who has an ``underperform'' rating on Hindustan Unilever. He expects the stock to drop to 180 rupees ($4.57) in the next year from 190.9 rupees. The company has a market value of about $11.8 billion. India is Unilever's biggest market in Asia, generating about 6 percent of annual sales. It has sold soap in the country since 1888 and controls about half of the sales of products such as skin creams, bathing soaps and shampoo.

HUL-UNIQUELY CREATE VALUE  Our strategy

 Competitive strengths

POSITIONED

TO

 Innovation

and

R&D

capabilities

to

straddle

the

pyramid

 Versatile distribution network

 Strong corporate responsibility and governance

 Strong local and talent base

Strategy  Grow ahead of the market by leading market development activities.  Leverage positive impact of growing Indian economy on consumer spending.  Grow a profitable foods and top end business.  Grow the bottom line ahead of the top line.

 Strong commitment

to sustainable development.

Competitive Strengths

Corporate Social Responsibility-Aiding In The Development Of The Country

Shakti Three shakti initiatives •

Shakti entrepreneur; currently~44000 women cover 1,25000 villages.

• Shakti vani: one-to-many communication for category growth • ishakti:

customized

interaction

with

remote

consumers.

Impact of community • business and social impact can go together. • partnerships with diverse stakeholders.

HINDUSTAN UNILEVER LIMITED COMPARATIVE BUSINESS ANALYSIS Hindustan Unilever Limited Formerly known as Hindustan Lever Limited. The Group's principal activities are to manufacture and market consumer products. The Group operates through seven segments: Soaps and Detergents, Personal Products, Exports, Beverages, Foods, Ice Creams and Other. The products include home and personal care products, foods and beverages, industrial

and agricultural products. Home and personal care products consists of personal and fabric wash, household, oral care, skin and hair care, deodorants, perfumery, colour cosmetics and baby care. Foods and beverages includes tea, coffee, cooking fats and oils, bakery fats, ice creams, tomato products, fruit and vegetable products,

rice,

salt,

atta

and

rawa,

marine

products

and

mushrooms. Industrial and agricultural products includes specialty chemicals, bulk chemicals, fertilisers, animal feeds, seeds, plant growth nutrients, processed-tri-glycerides and agri commodities, yeast,

leather,

footwear

and

carpets,

thermometers

and

plantations. This analysis compares Hindustan Unilever Limited with three other companies in closely related industry sectors. The company focuses on efficient delivery to consumers with an improved supply chain, brand building initiatives and innovation, which has helped the company to sustain its leadership position in the overall FMCG category in India. Its brands are spread across 20 consumer product categories. Hindustan Unilever markets consumer goods throughout India. The

company faces competition from international, local and regional players.

RURAL- THE BIG INDIAN ROMANCE  Rural population larger than europe(800 million) 

Low growth in agriculture;however rural income are growing faster with 70% population here,income growth is crucial.

 Structural changes in the economy which are affecting this are:  Disintermediation in the agricultural market price discovery mechanism has benefited farmers.

 Government

grants

and

subsidies.employment

grants-Rs 40000cr

Did Hindustan Unilever Get Its Rural Pitch Right? A new book from Wharton School Publishing is critical of Hindustan Unilever’s advertising strategy in India. “HUL missed an opportunity for increased marketing productivity when they repositioned, retargeted, and relaunched Lifebuoy,” write

Leonard

M.

Lodish,

Howard

L.

Morgan

and

Shellye

Archambeau, the authors of Marketing that Works. Though the company was ‘extremely innovative’ the way it handled the rural communications plan was very traditional, they add.

The company basically worked with “one agency, Ogilvy and Mather (O&M), and screened some options to roll out one option that everyone was happy with,” reads an observation in a chapter titled ‘entrepreneurial advertising that works’. A better strategy, according to the authors, would have been to develop “a number of different communications executions using different creative sources and then testing them as part of the early rollout.” Advertising strategy came for mention when the company reported the second quarter results, a few days ago. Mr D. Sundaram, Director (Finance & IT), HUL, said: “We have been phasing our advertising spends depending on the launches and relaunches of brands.” The advertising spends have not been linear for the company, he added. The company’s advertising and promotional spends during the quarter fell to Rs 336 crore, from the earlier Rs 345 crore. Lifebuoy is ‘one of Unilever’s oldest brands’ with more than a hundred-year history. “Lifebuoy has become more than just a red

bar of soap – today the brand provides hygiene and health solutions for families,” says the site, in a paragraph on innovation. “Differentiating soap products on the platform of health takes advantage of an opening in the competitive landscape for soap,” reads a quote in the book from C.K. Prahalad’s The Fortune at the Bottom of the Pyramid . HUL, through its innovative communication campaigns, has been able to link the use of soap to a promise of health as a means of creating behavioural change, and thus has increased sales of its low-cost, mass-market soap, Prahalad notes. The O&M strategy, as explained by Mr Lodish et al, targeted “10,000 villages in nine states where HUL stood to gain the most market share… They spent a lot of effort in designing low cost ways of communicating with their rural target.” The authors are of the view that government workers who have been interacting with villagers might have come up with some excellent ideas; “or the villagers themselves might also be able to generate very effective communications vehicles.”

So, why didn’t HUL try alternative campaigns when rolling out its initiative? “Probably the biggest reason is that they always did their communications the same way – even for innovative programs,” wonder the authors. “As a big company, many times it is difficult to change the procedures without creating significant political problems.” The HUL example, which is one of the many discussed in the book, concludes by stating that globally very progressive and innovative firms can also benefit from being “more entrepreneurial and less traditional

in

how

they

manage

their

advertising

and

communication.”

JOINT VENTURE Hindustan Unilever Sets Up Joint Venture With Smollan Holdings Hindustan Unilever Limited (HUL) has decided to set up a Joint Venture (JV) with Smollan Holdings of South Africa and the JV will be operational from January 1, 2008. The strategic tie-up aims to build long term capabilities and bring ‘in-store’ execution focus in servicing the Company’s Modern Trade customers.

The new company has been named as Hindustan Unilever Field Services Private Limited (HUFS) and will work exclusively on behalf of HUL in Modern Trade channel only. The operations will begin with the existing Modern Trade in-store execution team of HUL moving into HUFS. Smollan Holdings is one of the leading ‘in-store execution and field services’ companies internationally. It has leading edge capabilities in servicing Modern Trade focused on shelf filling, logistics for merchandising materials and in store execution. “Modern Trade in India is growing and evolving very rapidly and our strategy for winning in this growing retail market is to win at point-of-purchase with our shoppers & by delivering best-in-class service to our Modern Trade customers. This JV will bring in world class execution excellence in the market and build the right capabilities to deliver the company’s marketing strategy in Modern Trade”.

Other Acquisition Hindustan Unilever has acquired several Indian FMCG companies so far. This includes:

•

Tata Oil Mills Company

•

Brooke Bond

•

Lipton India

•

Modern Foods

It acquired Kissan brand from UB group; Dollops ice cream brand from Cadbury India; Lakme cosmetics brands from Tata. It has also launched Pureit, a home water purifier which supplies drinking water without boiling/need of electricity. Hindustan Unilever Network is the direct selling channel of the company. It has about 350,000 consultants, all independent entrepreneurs, trained and guided by HLN's expert managers and trainers.

NEW INITIATIVE Bringing High-End Dove To India Baillie is fighting back. Over the past six months, Hindustan Unilever launched a high-end range of Pond’s skin care and Dove hair care products from Unilever’s international portfolio. These premium brands retail not in neighborhood small stores but in supermarkets and hypermarkets, where Indian customers love to touch and feel products.

Hindustan Unilever is also milking one of its top brands—Fair & Lovely, a hot-selling “fairness” cream, which promises a lighter skin, tone for many of India’s complexion-conscious consumers. The advertising campaign, which suggests that regular use of the cream helps women gain confidence and makes them eligible for marriage, has made the brand a winner. That has spawned a host of competitive fairness creams, soaps, and sunblock lotions. But Hindustan Unilever’s brand is still tops. Baillie is also getting aggressive on foods, focusing on the Knorr brand of soups and curry mixes—ideal for the Indian market. Analysts believe the company’s current strategy of concentrating on premium products and marketing them in the large retail stores is a winning one. Sumeet Budhraja, consumer analyst at Mumbai brokerage First Global Securities, says that Hindustan Unilever “could have addressed a lot more categories, but they are more focused and regaining their aggressiveness.” He points to the demand for safe drinking water in India, which Hindustan Unilever exploited with the launch of water purifier Pureit in 2005, at onethird the price of established Indian brands such as Aqua guard.

These efforts have delivered some promising results, and Baillie is pleased with the modest turnaround. In the quarter ended June, 2007, the company’s sales grew 13%, with net profit up 29.6%. Reason enough to keep patrolling those store aisles.

SERVICE TO SOCIETY HUL believes that an organisation's worth is also in the service it renders to the community. HUL is focusing on health & hygiene education, women empowerment, and water management. It is also involved in education and rehabilitation of special or underprivileged children, care for the destitute and HIV-positive, and rural development. HUL has also responded in case of national calamities / adversities and contributes through various welfare measures, most recent being the village built by HUL in earthquake

affected Gujarat, and relief & rehabilitation after the Tsunami caused devastation in South India. In 2001, the company embarked on an ambitious programme, Shakti.

Through

Shakti,

HUL

is

creating

micro-enterprise

opportunities for rural women, thereby improving their livelihood and the standard of living in rural communities. Shakti also includes health and hygiene education through the Shakti Vani Programme, and creating access to relevant information through the iShakti community portal. The program now covers 15 states in India and has over 31,000 women entrepreneurs in its fold, reaching out to 100,000 villages and directly reaching to 150 million rural consumers. By the end of 2010, Shakti aims to have 100,000 Shakti entrepreneurs covering 500,000 villages, touching the lives of

over 600 million

people.

HUL is also running a rural health programme – Lifebuoy Swasthya Chetana. The programme endeavours to induce adoption of hygienic practices among rural Indians and aims to bring down the incidence of diarrhoea. It has already touched 70 million people in approximately 15000 villages of 8 states. The vision is to make a billion Indians feel safe and

secure.

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

PERFORMANCE REVIEW Leadership Across

Diverse Fmcg Category

Record Performance

Financial Overview -2007

*FIGURES BASED ON FY 2007 AUDITED RESULTS

OBJECTIVE OF THE STUDY

 To identify the marketing strategies and policies of Hindustan Unilever Limited  To analyse the influence of rival company’s strategies on the performance of Hindustan Unilever Limited  To analyse the various strategies adopted by the company to gain competitive advantage

RESEARCH METHODOLOGY Achieving accuracy in any research requires in depth study regarding the subject. As the prime objective of the project is to compare

Hindustan

Unilever

Ltd’s(HUL)

with

the

existing

competitors in the market and the impact of Procter & Gamble (PG), Nivea, and L’Oréal on HLL, the research methodology adopted is basically based on primary data via which the most recent and accurate piece of first hand information could be collected. Primary data was collected by the Questionnaire & Personal Interview Method Sources of secondary data : Used to obtain information on, HUL and its competitor history, current issues, policies, procedures etc, wherever required. # Internet-www.unilever.com, www.Google.com # Magazines-Business Today # Newspapers-The Economic Times

Procedure of research methodology # Target geographic area was Delhi. # To these geographical area questionnaire was given, the questionnaire was a combination of both open ended and closed ended questions. # The date during which questionnaires were filled was between three week. # Some dealers were also interviewed to know their prospective. Interviews with the honour of retailer of HUL were also conducted. # Finally the collected data and information was analysed and compiled to arrive at the conclusion and recommendations given.

LIMITATIONS While undertaking my study I was encountered with some limitations:  Limited time was provided to complete the study.  Cost involved in collecting the data was high. 

Target geographic area was limited to Delhi.



To fix an appointment with the dealers was also very difficult task and even after that many time people was not turn up for the appointment.

ANALYSIS

AND

INTERPRETATION 

3rd

consecutive

yearof

accelerated

growth

in

FMCG

portfilio.Growth broad based and across all categories.  FMCG market expected to maintain current growth levels.  Successfully implement the food strategy.  Build momentum to the water business.  Build on competitive capabilities across the business system.  Manage cost inflation effectively to improve margin through pricing,cost saving and better mix.  Strong commitment to governance and CSR.

CONCLUSION This company project has demonstrated “HINDUSTAN UNILEVER’S MARKETING STRATEGIES AND POLICIES” that has proved to be extensive through, and of great benefit to the company in furthering its competitive advantage. In this project it possible to see the success of Hindustan Unilever’s in it’s indorse its strong potential to continue to do well.

BIBLIOGRAPHY •

A L Ries (1996), “Focus” Harper Collins Publishers Ltd.

•

David A. Aaker (1991), “Managing Brand Equity”, The Free Press.

•

David A. Aaker (1996) “Building Strong Brands”, The Free Press.

•

Philip

Kotler

(Eighth

Edition)

“Marketing

Prentice Hall of India Ltd.

•

The Economic Times – “Brand Equity”

•

Market survey and questionnaires

•

www.unilever.com

Management”,

QUESTIONNAIRE 1. Do you use FMCG products?  Yes

 No

2. Which brand of FMCG products do you use?  Hindustan Unilever  P&G  Nivea  Others

3. Where do you buy FMCG products from?  Super stores  Retail Stores  Others 4. Are you aware of any campaign of the above brands?

 Yes

 No

5. Which Hindustan Unilever’s product do you usually prefer or use?

 Bathing soaps

 Skin care

 Foods

 Deodorants

 others

6. Do you think Hindustan Unilever’s product is easily available in market ?  Yes

 No

7. Describe Hindustan Unilever in one word?

8. Your comments on Hindustan Unilever’s product? _______________________________________________

CONTENTS S NO. PARTICULARS

PAGE NO.

1

Introduction

2

History

of

Hindustan

Unilever

Limited 3

Oganisational Structure

4

Present status

5

HUL’s new growth strategy

6

Product profile

7

SWOT analysis

8

PEST analysis

9

Future competitive strategy

10

HUL-comparitive business analysis

11

Joint Ventures

12

New initiatives

13

Research Methodology

14

Analysis

15

Conclusion

16

Bibliography

17

Questionnaire