A Brief Study On Market Sructure and Demand Analysis of Hindustan Unilever Limited
A Brief Study On Market Sructure and Demand Analysis of Hindustan Unilever Limited
A Brief Study On Market Sructure and Demand Analysis of Hindustan Unilever Limited
TABLE OF CONTENT
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1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21 History Introduction About HUL Brands Vision Purpose & Principles Company Structure Product Portfolio Marketing Supply Chain Career Progression Human Resource Information Technology Production & Distribution Technology Marketing Strategy SWOT Analysis Product Portfolio Sales Methods Future Projects Future Opportunities
Content
Executive summary
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4-5 6-9 10-11 12 13 14 15-16 17-23 24 24-25 26 28 29-30 31-32 33 34-37 38-40 41-42 43 44 45-47
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Sales Growth Performance Analysis Data Analysis Hindustan Liver Network Objective & Methodology Product Line Competitors Analysis Conclusion Bibliography
EXECUTIVE SUMMARY
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. 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 ColgatePalmolive. 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 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 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 competitors analysis in which the market share of top FMCG companies are analayised & the market share of HULS different competitors. categories product are analayised with comparison to its
Then we have done SWOT analysis to know the threat & opportunities of HUL in present market.
Then performance analysis is made by taking 10 year financial data from 1998-2007. The profit & sales growth is analysed.
Then the future opportunities for FMCG products are taken into consideration by analyzing the increased percapita income & increased disposable income to forecast the future demand of HUL.
HISTORY
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 liberalisation 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. 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 Icecream 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
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of Frozen Desserts. By the end of the year, the company entered into a strategic alliance with the Kwality Icecream Group families and in 1995 the Milkfood 100% Icecream 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 2000s. 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, HUL made its foray into Ayurvedic health & beauty centre category with the Ayush product range and Ayush Therapy Centres. Hindustan Unilever Network, Direct to home business was launched in 2003 and this was followed by the launch of Pureit 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
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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.
INTRODUCTION
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Hindustan Unilever Limited (abbreviated to HUL), formerly Hindustan Lever Limited, is INDIAs largest consumer products company and was formed in 1933 as Lever Brothers India Limited. It is currently headquartered in Mumbai, India and its 41,000 employees are headed by Harish Manwani, the non-executive chairman of the board. HUL is the market leader in Indian products such as tea, soaps, detergents, as its products have become daily household name in India. The Anglo-Dutch company Unilever owns a majority stake in Hindustan Unilever Limited. The company was renamed in late June 2007 as "Hindustan Unilever Limited". Some of its brands include Kwality Wall's ice cream, Lifebuoy, Lux, Breeze, Liril, Rexona, Hamam, Moti soaps, Pureit Water Purifier, Lipton tea, Brooke Bond tea, Bru Coffee, Pepsodent and Close Up toothpaste and brushes, and Surf, Rin and Wheel laundry detergents, Kissan squashes and jams, Annapurna salt and atta, Pond's talcs and creams, Vaseline lotions, Fair & Lovely creams, Lakme beauty products, Clinic Plus, Clinic All Clear, Sunsilk and Dove shampoos, Vim dish wash, Ala bleach and Domex disinfectant,Rexona,Modern Bread and Axe deospray.HUL has produced many business leaders for corporate India. It is referred to as a CEO Factory' in the Indian press for the same reasons. Its leadership building potential was recognized when it was ranked 4th in the Hewiit Global Leadership Survey 2007 with only GE, P&G and Nokia ranking ahead of HUL in the ability to produce leaders with such regularity Today, HUL is one of Indias largest exporters of branded Fast Moving Consumer Goods. It has been recognized by the Government of India as a Golden SuperStarTradingHouse. Over time HUL has developed into a viable & competitive sourcing base for Unilever world wide in Home and Personal Care & Foods & Beverages category of products. HUL is also a global marketing arm for select licensed Unilever brands and also works on building categories with core country advantage such as brandedbasmatirice.
HUL Exports offers high level of service with flexibility and responsiveness thorough out the supply chain. It has a dedicated organization structure to support this endeavor and this has helped in growth of these businesses in particular. Intrinsic cost competitiveness in the end to end Supply
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chain with appropriate technology and competitive capital investment operations while delivering best in class quality enables HUL to position itself as a key sourcing hub for Unilever and also become a preferred partner for Global customers in categories we operate. HULs key focus in the exports business is on two broad categories. It is a sourcing base for Unilever brands in Home & Personal Care (HPC) and Food and Beverages (F&B) for supplies to other Unilever companies. It also focuses on becoming a preferred supplier to both non-Unilever and Unilever clients in three categories in which India, as a country, has competitive advantage Branded Rice, Marine Products and Castor and its Derivatives. HUL enjoys international recognition within Unilever and outside for its quality, reliability and speed of customer service. HUL's Exports geography comprises, at present, countries in Europe, Asia, Middle East, Africa, Australia, and North America etc.
HULs products touches two out of three Indian everyday Reach 80% Households Direct Coverage of 1mln outlets 2000 Suppliers and Associates
71 Manufacturing locations
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Type -
Public company BSE: 500696 Fast Moving Consumer Goods FMCG) 1933 Mumbai, India
IndustryFounded-
HeadquartersKey peopleProductsRevenue-
Home & Personal Care, Food & Beverages 17,873.44 crore (US$3.97 billion) (2009-2010) 2,202.03 crore (US$488.85 million) Over 65,000 direct & indirect employees
Website-
BRANDS
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HUL is the market leader in Indian consumer products with presence in over 20 consumer categories such as soaps, tea, detergents and shampoos amongst others with over 700 million Indian consumers using its products. Sixteen of HULs brands featured in the ACNielsen Brand Equity list of 100 Most Trusted Brands Annual Survey (2008). According to Brand Equity, HUL has the largest number of brands in the Most Trusted Brands List. It has consistently had the largest number of brands in the Top 50, and in the Top 10 (with 4 brands). The company has a distribution channel of 6.3 million outlets and owns 35 major Indian brands. Its brands include Kwality Wall's ice cream, Knorr soups & meal makers, Lifebuoy, Lux, Pears, Breeze, Liril, Rexona, Hamam and Moti soaps, Pureit water purifier, Lipton tea, Brooke Bond (3 Roses, Taj Mahal, Taaza, Red Label) tea, Bru coffee, Pepsodent and Close Up toothpaste and brushes, and Surf, Rin and Wheel laundry detergents, Kissan squashes and jams, Annapurna salt and atta, Pond's talcs and creams, Vaseline lotions, Fair and Lovely creams, Lakm beauty products, Clear, Clinic Plus, Clinic All Clear, Sunsilk and Dove shampoos, Vim dishwash, Ala bleach, Domex disinfectant, Modern Bread, Axe deosprays and Comfort fabric softeners.
VISION
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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.
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 with the aim of doubling 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 peoples 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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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."
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.
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COMPANY STRUCTURE
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Hindustan Unilever Limited is India's largest Fast Moving Consumer Goods (FMCG) company. It is present in Home & Personal Care and Foods & Beverages categories. HUL has about 15,000 employees, including over 1400 managers The fundamental principle determining the organisation structure is to infuse speed and flexibility in decision-making and implementation, with empowered managers across the companys nationwide operations.
Board of Directors
The Board of Directors as repositories of the corporate powers act as a guardian to the Company as also the protectors of shareholders interest. This Apex body comprises of a Non- Executive Chairman, four whole time Directors and five Independent Non Executive Directors. The Board of the Company represents the optimum mix of professionalism, knowledge and experience.
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Management Committee
The day-to-day management of affairs of the Company is vested with the Management Committee which is subjected to the overall superintendence and control of the Board. The Management Committee is headed by Mr. Nitin Paranjpe and has functional heads as its members representing various functions of the Company
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PRODUCT PROMOTION
Buy-One-Get-One-Free (BOGOF) - which is an example of a self-liquidating promotion. Customer Relationship Management (CRM) incentives such as bonus points or money off coupons. New media - Company provides discount to the customer for the promotion of the sale. Free samples-Use free samples of product. Vouchers and coupons-Seen in newspapers and magazines, on packs. Competitions and prize draws-In newspapers, magazines, on the TV and radio, on The Internet, and on packs.
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MARKETING
Our global portfolio of brands is trusted by consumers the world over. And marketing is critical to understanding, creating and building demand.
Challenge brings reward The scope and variety of our marketing activity is huge. The scope and variety of our marketing activity is huge. Working on great categories and brands in a competitive environment that changes all the time, the pursuit of market share and volume growth is a challenging and rewarding role. Expert knowledge Marketing at Unilever offers many opportunities. Marketing at Unilever offers many opportunities. To engage closely with consumers understanding their preferences and needs. To operate at a global, regional and local level across a broad range of products. To experience world-class professional development and acquire leading edge skills. To lead assignments that build business and brand equity. The discipline is divided in two broad areas.
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Brand development This is about creating exciting and compelling visions for our brands and developing plans across the full marketing mix. This is about creating exciting and compelling visions for our brands and developing plans across the full marketing mix. It includes brand communications, innovation and renovation as well as channel-specific propositions. Brand building Here we translate those visions into a local market context, plan practical activity and make sure those plans are executed flawlessly. Here we translate those visions into a local market context, plan practical activity and make sure those plans are executed flawlessly. Through leading the country operations, this teams job is to deliver market share and revenue. The destination Unilever is a destination for outstanding marketers and we attract the very best. Unilever is a destination for outstanding marketers and we attract the very best. In an organisation that values creativity, plays to individual's strengths and allows people to be themselves, our aim is to maintain highly-skilled teams with a wealth of experience
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SUPPLY CHAIN
From sourcing raw materials to delivering the end product, our technologically advanced supply chain underpins our growth, providing service excellence at competitive costs. Customer Service Front end Understanding customer needs. The main purpose of this area is to understand customer needs and work together to solve joint logistical challenges such as on shelf availability. Roles include order management, working at the interface between warehousing and transportation, and ensuring the right products arrive in the right place at the right time. Customer Service Plan Unique individuals. O ur Planners are unique individuals who use great analytical and interpersonal skills to help bring innovations to market. Working with all business functions, they are key to our sales and operations planning process. Demand planning uses models as well as market knowledge to determine potential sales. Using this data, supply planning ensures factories are able to meet these sales on time in the most cost effective way. Supply management Intelligent sourcing. This is about optimising the cost and quality of what we buy and how we buy it. Intelligent sourcing of raw materials, packaging and non-production items helps reduce costs and make our
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business more effective. The team explores new ways of working with suppliers and plays an important role in technology innovation. Manufacturing Output and costs. Our manufacturing record is one of the most envied in the world, with many of our facilities considered the best in their country. Youll help factories improve efficiencies and adapt to the changing needs of customers and consumers. As a manager, you might be responsible for a teams quality, output and costs. In engineering, you could be designing and building high-speed production lines.
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CAREER PROGERSSION
As one of the world's largest consumer goods companies, the scale and importance of our supply chain operation offers many fascinating career paths.
Access all areas
As your career progresses, youll have opportunities to work within the full spectrum of disciplines, roles and areas. You'll gain exposure at global, regional and local levels across a broad range of categories, markets and technologies. You'll take on different responsibilities that allow you to directly impact business performance. And through world-class professional learning programmes, youll develop the expertise necessary to become highly effective in your specialisation.
Qualities & skills
You're exceptionally organised with a hands-on approach and excellent IT skills. You're good at managing people, projects, information and change. You have an entrepreneurial mind when it comes to innovation and cost saving. You also have the ability to create strong links with individuals from a variety of different cultures and backgrounds.
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HUMAN RESOURCE
HR supports and develops Unilevers most important asset our people by enabling them to deliver outstanding business performance. An eye on the future Our environment is about empowering people. Both to contribute to our business objectives and to achieve their own personal and career goals. We also keep an eye on the future, with our 'leadership behaviours' initiative aiming to identify the next generation of leaders. In HR, youre not just a part of the Unilever culture you help create it. What we do impacts everyone within the organisation, which in turn impacts the consumer and the bottom line Diverse roles HR's job is to make sure we have highly-skilled, exceptional people in all areas of the organisation. Within that, there are numerous possibilities split into three broad areas HR Business Partners identify the needs of the business in order to develop, manage and implement appropriate strategies. They ensure that the right structure, culture, people and capabilities are in place to foster positive working relationships.
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HR Expertise Teams work on policies, processes, systems and tools that allow each business area to attract, select and develop talented individuals. They also provide a connection with world-class external experts and keep us up-to-date with industry best practice. HR Services deliver and continuously improve services such as payroll, recruitment, pensions and benefits. They also track, monitor and aggressively manage service performance to ensure that its delivered to the required quality and at the optimum cost.
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INFORMATION TECHNOLOGY
Working on the application of IT in one of the worlds leading consumer goods companies will give you access to interesting work and excellent professional development. Strategy Develops strategy to support business goals. Defines and manages the process of deploying and integrating IT capabilities. Business partnering Provides advice, assistance and leadership across all areas of IT. To ensure we gain maximum benefit from the products and services available. Information management Designs information structures, setting policies for sourcing, maintenance and analysis. Includes compliance and data protection. Vendor partnering Sources and manages external suppliers and negotiates contracts. The aim is to continuously improve service delivery. Business analysis Evaluates functions and processes. Identifies how to improve them and qualifies the potential business benefits.
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Architecture and technical planning Specifies systems architectures. Identifying emerging technologies and techniques and assessing their value. IT analysis and development Manages resources in order to plan and carry out projects. Also integrates and tests components/interfaces to create operational systems. Portfolio, programme and project management Coordinates projects and personnel during the design. Management and implementation of business change initiatives. Service management Covers everything from risk management to network infrastructures. Application support to database administration.
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Production capacity for salt was well above demand in India. To avoid adding further capacity, and also because HUL felt its strongest competencies were in R&D and marketing, HUL immediately sought manufacturing partners. The primary screening criteria were the quality of the manufacturing processes and the integrity of the business managers. Once partnerships were in place, HUL took a very active role in managing production, transferring their technology, and upgrading quality and cleanliness standards at each plant. Over time, they were able to improve utilization rates for their manufacturers, and that reduced costs. HUL also wanted to minimize financial risk. By partnering for manufacturing capacity and sharing distribution assets with other HUL products, the investment in fixed assets for the new product was near zero. Despite the approach to production and distribution, cost competitiveness remained an issue for HUL because the competition in each market was local. HUL faced high transportation costs, especially in the northern and eastern regions of the country, which were furthest from the most cost efficient locations for salt production. Local, unbranded producers faced much lower transportation costs, and no refining or packaging costs. Because of this, Kissan Annapurna salts were priced at 6 Rupees (about US$0.03) per kilo, twice the cost of a typical unbranded salt. While initial response in urban markets showed that it was possible to upgrade consumers to branded salts, cost reduction remained a priority. HUL found ways to reduce costs by taking a different approach to distribution management than was practiced for other HUL products. Because shelf life, price to weight ratio, and tax status were all different for salt than for other HUL products, it made less sense than was expected to simply ride the distribution system for other HUL products. Ultimately, salt distribution relied more heavily on rail transport than other HUL products, had fewer middlemen involved, and sometimes ended with wholesalers rather than retailers.
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MARKETING STRATEGY
Fragmentation in Indian media offered HUL the opportunity to test the product incrementally. In the first few cities in which they launched the product, HUL was gratified to discover that they were successfully upgrading consumers from unbranded to branded salts. However, as the rollout continued, they became concerned that they really hadnt sufficiently differentiated themselves from other branded salts with the purity positioning, and therefore were worried that they wouldnt necessarily retain the new customers they were acquiring. As a result, HUL began exploring ways to position their product more strongly. They shifted their emphasis from purity, a product attribute, to health, a consumer benefit. Essentially, they positioned their product as healthy because there was nothing bad (no impurities) in it. Later, HUL investigated the possibility of including messages about iodine in their communications. Although all branded salts were iodized, nobody in India had really tried to take advantage of iodization from a marketing perspective. Iodine is a critical chemical element for regulating bodily functions, particularly in the thyroid. Deficiencies in iodine result in goiter, an unsightly growth on the neck. More significantly, iodine deficiencies can result in abnormal mental development and inadequate physical growth in children. Governments had taken different approaches to this public health issue. In some countries, most all salt was iodized. In others that were less susceptible to iodine deficiency and more averse to chemical food additives, it was not. Iodine deficiency disorders had been prevalent in several developing countries, including India, and a few non-profit, non-governmental organizations had become involved in persuading governments to take a more active role in ensuring the population received sufficient iodine. Salt was viewed as an ideal delivery mechanism for iodine because everyone used it. Water was less ideal because it came from too many isolated sources. After researching the health issues associated with iodine, HUL began a campaign to
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educate the public on the importance of consuming sufficient iodine. Because HUL concluded that marketing messages that related to goiter, particularly visual messages, would be unattractive, they decided to focus on mental development. Anil Dua, who had been the senior brand manager since the launch of Kissan Annapurna, recalled the excitement of discovering such a powerful but untapped marketing angle: Every mother wants her child to be intelligentbrighter than the next door child. Therefore it is in her interest to give iodized salt to her child. That was the big idea. With that idea, we hit a very emotional chord within our target customer. It was a big opportunity because research showed that almost every single district in India is at risk for iodine deficiency disorders. We saw that especially in India there was a huge opportunity and need. Their approach was initially met with skepticism by parents. In focus groups, a typical response was: You must think were really dumb if you think were going to believe something so gimmicky as my childs mental development is dependent on consuming the right salt. To make their case, HUL sought endorsements from trusted government agencies. Ultimately they had to pay the government for an endorsement. The government, in turn, used the funds to support research programs. As a direct result of the endorsement, focus group responses to HULs messages dramatically improved. HLL then aggressively implemented their communications plan, heavily emphasizing the health-related aspects of iodine. A typical advertisement might show a child asking a parent an intelligent questionone that the parent didnt know the answer to. The child would then provide the answer, and the parent would be very proud. HLL also offered Annapurna scholarships, and held contests which encouraged children to submit interesting questions with answers. Following the techniques that HUL had pioneered with soaps and detergents, demonstration vans traveled through rural India putting on shows. For many rural residents, these shows might include a first opportunity in a lifetime to view a moving picture, so excitement in a town would build prior to arrival. School assemblies were
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addressed, and salt samples and coupons were left with students. Health charts were posted on school walls. This was expensive but generated tremendous word-ofmouth. As a result of HULs success with the health positioning, they initiated a similar strategy with wheat flour, focusing on iron supplements in their marketing. Their strategy was also copied externally. By 1998, all of their competitors were repeating messages about iodine and mental development. In search of a new source of competitive advantage, HUL researchers discovered a problem. Indians tended to add most salt to their food before it was cooked, as opposed to sprinkling it on top of food. And, Indian spices and cooking techniques created conditions that broke down salt and released iodine as a gas. Much of the iodine within salt was simply boiling away. As a result, HUL began a multi-year research effort to develop a technique to prevent this from happening. By 2002, HUL had introduced a new and improved salt which included what they called stable iodine, and had patented in eighty countries. They had discovered that by encapsulating the iodine in aluminum and magnesium hydride (both of which were found in salt anyway), iodine was retained even in Indian cooking conditions. Critically, HUL was able to prove through nuclear imaging that the encapsulation materials broke down during the digestive processotherwise the iodine would simply pass through. Mr. V.K. Mahindru, who headed the research into the encapsulation technique, reflected on the managerial mindset through the project: In certain products, we know we have to do fundamental research. If it is interesting enough from a marketing point of view, from a customer point of view, we are prepared to invest resources. For twoanda-half years we did. Progress was reviewed every three to four weeks. What are we doing? Are we moving forward? Are any problems developing? Is it worth continuing to invest? How will we know when we are successful? As with many fundamental research projects, it was difficult to project with any precision how the research would progress. Armed with the new breakthrough, HUL felt confident they could build on their
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success in the salt category. By 2002, HUL led with a 17.7% market share, having dislodged the former market share leader, Tata.
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STRENGTHS
1] DEEP ROOTS IN LOCAL CULTURE & MARKETS & GREAT UNDERSTANDING OF CONSUMER NEEDS. 2] WEALTH OF LOCAL KNOWLEDGE & INTERNATIONAL EXPERTISE HELPS IT TO BE GLOBALLY COMPETITIVE. 3] EXCEPTIONAL HIGH QUALITY STANDARD PRODUCTS. 4] NEW INNOVATIVE IDEAS & PRODUCTS. 5] HIGHILY PROFESSIONAL MANAGEMENT. 6] EXCELLENT DISTRIBUTION NETWORK & GOOD RELATIONSHIP WITH THE WHOLESALERS & RETAILERS. 7]CONTINOUS EFFORTS TO REDUCE COST & PASS ON BENEFIT TO CONSUMERS. 8] GOOD REPUTATION & GOODWILL IN THE MARKET FOR ITS PRODUCTS. 9] GOOD ADVERTISEMENTS SO AS TO MAKE THE CONSUMERS AWARE OF ITS PRODUCTS,USES & PRICE & ALSO HAVE A LASTING IMPRESSION BY CATCHY ADS. 10] EXCELLENT BRAND MAKING CAPABILITY. IT HAS 110 BRANDS OUT OF WHICH 30 ARE POWER BRANDS (IE, LEADER IN MARKET SHARE WITH HIGH GROWTH POTENTIAL) 11] ABILITY TO PROVIDE GOOD QUALITY GOODS TO MIDDLE CLASS AT REASONABLE RATES & ALSO CATER TO THE PREMUIM SEGMENT FOR THE UPPER CLASS. 12] VERY HIGH MARKET PRICE PER SHARE COMPARED TO THE FACE VALUE. 13]GOOD RETURNS BY WAY OF DIVIDEND PER SHARE EVERY YEAR.LAST YEAR 5/- RS DIVIDEND PER SHARE. 14]STEADY INCREASE IN THE RETURN ON CAPITAL EMPLOYED. 15] CONTINOUS INCREASE IN EARNING PER SHARE (EPS)
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16]GOOD CASH RESERVES. 17]EXCELLENT PAST PERFORMANCES FOR A NUMBER OF YEARS. 18]ABILITY TO MANAGE DIVERSE BUSINESS 19]HAVING UNILEVER AS PARENT COMPANY GIVES IT A GLOBAL PRESENCE. 20]EXCELLENT RESEARCH & DEVELOPMENT. 21]USE OF RS-NET A WEB ENABLED CUSTOMER MANAGEMENT SYSTEM TO ESTABLISH TWO WAY CONNECTIVITY WITH STOCKIST. 22] USING INFORMATION TECHNOLOGY TO CONNECT SUPPLY CHAIN 23] EXCELLENT FINACIAL SUPPORT FROM BANKS & FINANCIAL INSTITITUIONS. 24]GOOD FINACIAL LIQUIDITY & ALSO ABILITY TO COMPLETE PROJECTS ON TIME. 25] GOOD EXPORT EARNINGS
WEAKNESS
1]DIVERSIFICATION INTO VARIOUS LINES IN WHICH IT DOES NOT HAVE MUCH KNOWLEDGE WOULD BE VERY RISKY PROPOSITION. 2] HIGH COMPETITION FROM ESTABLISHED BRANDS WHICH HAS RESULTED IN REDUCTION IN PROFIT MARGINS. 3] NON FMCG PRODUCTS ARE LOSING GROUND & THEIR MARKET SHARE & SALES HAVE BEEN DECLINING. 4]WORKING CAPITAL TURNOVER IS NEGATIVE. 5]UNALE TO MAKE A BIG IMPACT IN RURAL AREAS. 6] COMPETITION FROM ITS OWN BRANDS ( LUX, LIRIL, LIFEBUOY )
OPPORTUNITIES
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1]BIG UNTAPPED MARKET AVAILABLE., ESPECIALLY THE RURAL AREAS. 2]GROWTH POTENTIAL IS HIGH FOR THE POWER BRANDS. 3]GOOD SOURCE OF REVENUE & FOREIGN EXCHANGE AVAILABLE BY WAY OF EXPORTS OF ITS PRODUCTS. 4]ITS COMPETITORS DONT HAVE THE FIANACIAL BANKING LIKE IT SO IT CAN TAKE ADVANTAGE OF THIS. 5]DUE TO GOOD REPUTATION IT MAY EXPERIMENT & INTRODUCE NEW INNOVATIVE PRODUCTS IN THE MARKET. 6] THE FOOD,CULINARY & ICECREAM CATEGORY HAVE A LOT OF GROWTH POTENTIAL AVAILABLE
THREATS
1] HIGH COMPETITION FROM ESTABLISHED BRANDS.(NIRMA,COLGATE, P&G) 2] COMPETITION FROM UNBRANDED PRODUCTS. 3] COMPETITION FROM ITS OWN BRANDS.( LUX,BREEZE,LIRIL) (PEPSODENT & CLOSE UP) 4]POOR MONSOON LEADS TO POOR GROWTH DUE TO LACK OF PURCHASING POWER BY THE RURAL AREAS. 5]NEGATIVE WORKING CAPITAL TURNOVER MAY LEAD TO SHORT TERM INSTABILITY. 6] ITS FOOD,CULINARY, ICECREAM SEGMENT & BEVERAGE SEGMENT ARE FACING REDUCTION IN SALES & HENCE INNOVATION REQUIRED TO MEET THREATS OF COMPETITIORS.
PRODUCT PORTFOLIO
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HULs pioneering efforts to develop techniques to bring branded products to Indias rural poor gradually had an impact on their entire portfolio of brands. Still, HUL also looked to exploit other growth opportunities. In the early 1990s, their foods category was a minor portion of their overall product portfolio, consisting of only cooking fats and oils. Based on the advice of Unilever, which had experience in a variety of global foods markets, HUL believed they could expand their presence in foods dramatically. The logic was threefold: The market was tremendousfood accounts for 50% of all economic
consumption in India. HULs existing system for selling and distributing throughout rural India could
be used to improve the economics for most food products. HUL had proven it possible to create nationwide, mass-market brands despite
Indias overwhelming ethnic and cultural diversity. In 1993, through an acquisition, they expanded into processed fruit and vegetable products, such as ketchups, jams, and cold beverages. In addition, in 1994, a research team of four was assigned to investigate a wide variety of additional growth options in the foods category. The team learned that 80% of the food purchased off the shelf in India is raw and unprocessedbasic food grains and other staples were the largest food category, and most of it was produced and sold locally. Because this was such a large market, the team investigated markets for several staple foods, including wheat, rice, beans, salt, spices, and others. Each had a different set of supply chain, production, and consumer decision-making process issues associated with it. Because salt was a raw material input for many of HULs other products,
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there was a great deal of in-house knowledge about the salt market. As a result, research was quick, and salt was chosen almost immediately as one area for expansion. After about one years additional effort, the team also identified wheat flour as a second attractive market. Of many criteria, one of the most important was the extent to which consumers would value a brand promise of quality and consistency. Rice was eliminated as an option, for example, because consumers felt confident that they could judge the quality of rice based simply on a physical and visual inspection. By contrast, a brand promise was viewed as critical for wheat, because consumers would spend a great deal of labor preparing bread, knowing that they would not be able to judge the quality of wheat until the cooking was complete. Branding was also viewed as valuable for salt, since consumers could not add iodine, an important health additive, on their own.
SALES METHODS
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Most of the product of HUL comes in the category of convenience products. They are frequently used and bought by the customers. There is large no. of players in the market, who are supplying similar product to the customers. Now, customers have become smart, they have great knowledge of market, product and suppliers. So, they are looking for the product which is providing something extra. HUL has a wide range of product in FMCG sector, covering almost every needs and wants of the customers. It has products for child, young & adult, male & female, etc. so, it has to differentiate its products taking into account the needs and demands of all the sectors of the society. Not, only product but it has to look upon the services and feed back from customers also. It should do something to give after sales service and collect feed back from the customers. 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, KnorrAnnapurna, 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 stockists, covering 6.3 million retail outlets reaching the entire urban population, and about 250 million rural consumers.
FUTURE PROJECTS
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As competition is increasing day by day, its difficult to maintain the leader position & to further strengthen the distribution network HUL made a project called project SHAKTI which will serve the following purpose: A) To Reach: Small, scattered settlements and poor infrastructure make distribution difficult. Over 500,000 villages not reached directly by HUL.
B) To Communicate: Low literacy hampers effectiveness of print media. Poor media-reach: 500 million Indians lack TV & radio.
FUTURE OPPORTUNITIES
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India is a fast developing country with a huge population whose per capita income is growing rapidly and there is huge opportunity for FMCG companies.
The opportunities are as follows: Increasing per capita income is driving FMCG growth in India Indias consuming class is growing rapidly Changing consumption pattern: Per capita income of Indian customer is increasing and FMCG products are relatively elastic in nature hence the expected sale should increase.
By the following three graphs(data collected from a research made by govt. of INDIA) we can expect increase future demand of FMCG products, the graphs showing the increasing percapita income, percapita disposable income and population of India respectively are as follows:
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As shown in the above graph the percapita income of an INDIAN increased throughout years, and if this trend will continue in future the people can purchase more FMCG products.
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2007)
(Above graph shows the past population and expected future population rise, data are collected from the research made by govt. of INDIA)Here by the above graphs we can see that there is huge scope for FMCG products and since HUL is the market leader in India hence it can gain the most out of it.
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CATEGORY Soaps & Detergents Personal Products Ice Cream Processed Food Beverages Others
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(Above graph shows the data of MAR08 Quarter %growth of different products of HUL)
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THE COMPARATIVE DATA OF % MARKET SHARE OF HUL AND ITS COMPETITOR IN QUARTER ENDED JUN08
(Above graph showing %age Market share of HUL and its competitor in different categories of FMCG products) As mentioned in the above graph, HUL is enjoying the leader position in the market and is having highest market shares which are followed by the market challengers like Dabur India Ltd, Nestle India Ltd, and ITC LTD, ETC..In different categories of FMCG products like shampoo, skincare , deo, jams, coffee, etc
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In some category these market challengers are giving high level competition in different product lines such as ketchup and toothpaste (As shown in the graph below).
(Above graph showing the two category of products in which HUL percentage market share is less than its competitor in Quarter ended JUN08)
So we can see that in overall FMCG business HUL is distantly ahead of rest of the companies as far as market share of different products are concerned.
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In the above pie chart 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 followed by ITC as close second in the market share of FMCG products.
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PERFORMANCE ANALYSIS
Hindustan Unilever Ltd is one of the leading FMCG company in India which having the following past financial records we have taken for the analysis as follows: Table showing past 10 years financial data
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DATA ANALYSIS
We have the sales and profit figures of HUL from the year 1998 to 2007 in the 10year past data from Yr1998-2007, after plotting two graph one of sales & other of profit as shown in here we can see that both profit and sales of the company rose from the year 1998 till 2001, but in the year 2002 we see that the sales fell but there was actually rise in the profit of the company . In the year 2004 we see that there was a steep fall in the profit of the company and from the year 2005 onwards there was a slow but steady rise in the profit of the company, but a rapid rise in the sales of the company in the given years.
Reason for the steep fall in the profit of the company in the year 2004:
The FMCG market in Urban India was attaining the saturation level and so companies had to expand its market in rural India. This resulted in the downfall in the profit of HUL. There was very aggressive advertising campaign by ITC in that year to set itself in the market this affected HUL who was enjoying the position of market leader and resulted in the fall in the profit of the company.
In the following graph we can see the percentage growth in FMCG sales of HUL from March quarter 07 to March quarter 08.
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OBJECTIVE
Primary objective To find the past sale growth and demand analysis Secondary Objective Market structure analysis SWOT analysis Competitor analysis Performance evaluation
Methodology
In this project we have followed descriptive method of study. Research instrument Here project analysis is made by collecting secondary data from different websites, journals, etc.
Secondary datas are pre published and research datas collected from different websites, journals, newspapers, company research papers.
These documents and datas are very useful for the theoretical, conceptual and organizational background analysis.
Detailed analysis of datas is made by plotting different graphs and tables which can be easily understandable.
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Then by observing these graphs we have made our conclusions and recommendations.
PRODUCT LINE
A) HOME AND PERSONAL CARE:
1) Personal wash Lux Lifebuoy Liril Hamam Breeze Dove Pears Rexona
Lakme
8) Ayurvedic Personal and health care: Ayush B) FOODS 1) Tea Brooke Bond Lipton C) WATER PURIFIER Pureit 2) Coffee Brooke Bond Bru 3) Foods Kissan Knor Annapurna 4) Ice cream Kwality walls
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COMPETITORS ANALYSIS
According to the market survey done by BUSINESS TODAY the top 10 companies of FMCG sector are given below. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Hindustan Unilever Ltd. ITC (Indian Tobacco Company) Nestl India GCMMF (AMUL) Dabur India Asian Paints (India) Cadbury India Britannia Industries Procter & Gamble Hygiene and Health Care Marico Industries
CONCLUSION
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Hindustan Unilever ltd. Is a leading FMCG company in India and from last three consecutive years has shown accelerated growth in FMCG portfolio. Customers in India are also spending more in FMCG as their standard of living is growing. HUL has placed itself successfully in the position of market leader in FMCG products. Though there was some downfall in sales and profit of the company in the beginning of this decade but after that HUL has shown considerable rise in both sales and profit. The future of the company is also looking bright as FMCG market in India is still expanding and so we can safely conclude that HUL will be able to secure its number one position in FMCG product.
HUL has also started project SHAKTI that has provided it direct reach to rural market. This may be considered a revolutionary step since the urban market is reaching its saturation level and there is a huge scope exploring rural market. This will also be helpful not only increasing its market share but also fight competition.
BIBLIOGRAPHY
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In order to make this project we have taken the help of the following websites & books:
AUTHORS NAME
Ashish Benerjee H.L. Ahuja C.K.Kothari
BOOKS
Principle of economics Modern Microeconomics Theory and Application Research Methodology
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