chandan kumar fresh project[1]

8/3/2019 Chandan Kumar Fresh Project[1]

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To Study Customer Perception while purchasing FMCG Product

with special reference to Soap of Hindustan UnileverLtd.

SUBMITTED IN PARTIAL FULFILLMENT FOR THE

AWARD OF THE

DEGREE OF MASTER OF BUSINESS

ADMINISTRATION

UNDER THE GUIDANCE OF SUBMITTED BY:

Mrs. Geetu Tuteja Chandan Kumar

Project Co-ordinator Batch MBA III (Distance)

BHARATI VIDYAPEETH DEEMED UNIVERSITY SCHOOL OF

DISTANCE EDUCATION

Academic Study Center - BVIMR, New DelhiAn ISO 9001:2008 Certified Institute

NAAC Accredited Grade A University

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Student Undertaking

This is to certify that I Chandan Kumar had completed the Project titled To study the customer

Perception while purchasing FMCG product with special reference to soap of Hindustan Unilever Ltd. in

(HUL) under the guidance of Mr./Ms. Geetu Tuteja in the partial fulfillment of the requirement for the

award of degree of MBA from Bharati Vidyapeeth Deemed University, SDE, Academic Study Center

BVIMR, New Delhi. This is an original piece of work and I had neither copied nor submitted it earlier

elsewhere.

Chandan Kumar

( )

Dated :

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Acknowledgement

This report is an outcome of mutual support and guidance of many person towards whom I indebted. My

special thank to Mr. Yashwant Kumar to provide various facility and Mrs. Puja Jha for his guidelines in

the summer training by which I can make my project in the easy way. I express my profound reference

and the artful gratitude to Mrs. Geetu Tuteja to suggest me a proper guideline towards the project.

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ABSTRACT

Hindustan Unilever Limited is India's largest Fast Moving Consumer Goods company, touching

the lives of two out of three Indians. HUL's mission is to "add vitality to life" through its

presence in over 20 distinct categories in Home & Personal Care Products and Foods &

Beverages. The company meets everyday needs for nutrition, hygiene, and personal care, with

brands that help people feel good, look good and get more out of life.

The competition in the market is very fierce nowadays with many new entrants in this segment

and gaining momentum in capturing the market at a very faster rate. This can be seen with the

nearest competitor Godrej gaining a market share of 9.7% by bringing in various offers and

schemes. ITC has also entered into this segment with the Vivel range of soaps. It has been

advertising the soaps with celebrities like Deepika Padukone and Kareena Kapoor. By its

advertisements it has created a good repo in the market and has seen a large effect on the sales.

Also in the race are Wipro and Dabur which are doing a good job in their own segments as

Sandalwood and Ayurvedic.

However Hindustan Unilever (HUL) being the market leader for years has been capturing the

market by bringing in various strategies like innovation and pricing. HUL, has cut prices of key

soaps and detergents by 4-20%, the companys stockists and distributors said. The prices have

been cut through a combination of an increase in the weight of some packs and a reduction in the

maximum retail price. For instance, the company has increased the weight of its Lifebuoy toilet

soap from 115g to 120g, but kept the price unchanged at Rs15. This translates into an effective

price cut of 4.2%.

Lifebuoy accounts for around 30% of HULs annual revenue from soaps. According to market

research firm AC Nielsen, Lifebuoy had a market share of 18% in 2008.

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SIGNATORY PAGE

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TABLE OF CONTENTS

PAGE NO.

CHAPTER 1.INTRODUCTION 1-29

Company Overview

Company History

Product Line

SWOT analysis

CHAPTER 2.RESEARCH METHODOLOGY 30-36

Objective

Scope of the study

Managerial usefulness of study

Methodology

Limitations

CHAPTER 3. CONCEPTUAL DISCUSSIONS 37-56

CHAPTER 4.DATA ANALYSIS 57-67

CHAPTER 5.CONCLUSIONS & SUGGESTIONS 68-70

APPENDICES 71

BIBILOGRAPHY 72

QUESTIONIER 73-75

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Chapter 1

INTRODUCTION TO FMCG MARKET

INTRODUCTION TO INDUSTRY

Fast Moving Consumer Goods (FMCG), also known as Consumer Packaged Goods (CPG), are

products that have a quick turnover and relatively low cost. Consumers generally put less

thought into the purchase of FMCG than they do for other products. Though the absolute profit

made on FMCG products is relatively small, they generally sell in large numbers and so the

cumulative profit on such products can be large.

FMCG Products and Categories

Personal Care, Oral Care, Hair Care, Skin Care, Personal Wash (soaps);

Cosmetics and toiletries,deodorants, perfumes, feminine hygiene,paper products;

Household carefabric wash including laundry soaps and synthetic detergents; household

cleaners, such as dish/utensil cleaners, floor cleaners, toilet cleaners, air fresheners,

insecticides and mosquito repellents, metal polish and furniture polish.

Food and health beverages, branded flour, branded sugarcane, bakery products such as

bread, biscuits, etc., milk and dairy products,beverages such as tea, coffee, juices, bottled

water etc,snack food,chocolates, etc.

Frequently replaced electronic products, such as audio equipments, digital cameras,

Laptops, CTVs; other electronic items such as Refrigerator, washing machines, etc.

coming under the category of White Goods in FMCG;

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http://www.naukrihub.com/india/fmcg/overview/personal-care/http://www.naukrihub.com/india/fmcg/overview/oral-care/http://www.naukrihub.com/india/fmcg/overview/hair-care/http://www.naukrihub.com/india/fmcg/overview/skin-care/http://www.naukrihub.com/india/fmcg/overview/soaps/http://www.naukrihub.com/india/fmcg/overview/cosmetics-toiletries/http://www.naukrihub.com/india/fmcg/overview/deodorants-perfumes/http://www.naukrihub.com/india/fmcg/overview/feminine-hygene/http://www.naukrihub.com/india/fmcg/overview/paper-products/http://www.naukrihub.com/india/fmcg/overview/household-care/http://www.naukrihub.com/india/fmcg/overview/fabric-wash/http://www.naukrihub.com/india/fmcg/overview/household-cleaners/http://www.naukrihub.com/india/fmcg/overview/household-cleaners/http://www.naukrihub.com/india/fmcg/overview/air-fresheners/http://www.naukrihub.com/india/fmcg/overview/mosquito-repellents/http://www.naukrihub.com/india/fmcg/overview/furniture-polish/http://www.naukrihub.com/india/fmcg/overview/food-beverages/http://www.naukrihub.com/india/fmcg/overview/branded-flour/http://www.naukrihub.com/india/fmcg/overview/branded-sugar/http://www.naukrihub.com/india/fmcg/overview/bakery-products/http://www.naukrihub.com/india/fmcg/overview/bakery-products/http://www.naukrihub.com/india/fmcg/overview/milk-dairy/http://www.naukrihub.com/india/fmcg/overview/tea/http://www.naukrihub.com/india/fmcg/overview/coffee/http://www.naukrihub.com/india/fmcg/overview/fruit-juice/http://www.naukrihub.com/india/fmcg/overview/bottled-water/http://www.naukrihub.com/india/fmcg/overview/bottled-water/http://www.naukrihub.com/india/fmcg/overview/snacks/http://www.naukrihub.com/india/fmcg/overview/chocolate/http://www.naukrihub.com/india/fmcg/overview/consumer-electronics/http://www.naukrihub.com/india/fmcg/overview/audio-equipments/http://www.naukrihub.com/india/fmcg/overview/laptop/http://www.naukrihub.com/india/fmcg/overview/color-televisions/http://www.naukrihub.com/india/fmcg/overview/refrigerator/http://www.naukrihub.com/india/fmcg/overview/washing-machines/http://www.naukrihub.com/india/fmcg/overview/white-goods/http://www.naukrihub.com/india/fmcg/overview/personal-care/http://www.naukrihub.com/india/fmcg/overview/oral-care/http://www.naukrihub.com/india/fmcg/overview/hair-care/http://www.naukrihub.com/india/fmcg/overview/skin-care/http://www.naukrihub.com/india/fmcg/overview/soaps/http://www.naukrihub.com/india/fmcg/overview/cosmetics-toiletries/http://www.naukrihub.com/india/fmcg/overview/deodorants-perfumes/http://www.naukrihub.com/india/fmcg/overview/feminine-hygene/http://www.naukrihub.com/india/fmcg/overview/paper-products/http://www.naukrihub.com/india/fmcg/overview/household-care/http://www.naukrihub.com/india/fmcg/overview/fabric-wash/http://www.naukrihub.com/india/fmcg/overview/household-cleaners/http://www.naukrihub.com/india/fmcg/overview/household-cleaners/http://www.naukrihub.com/india/fmcg/overview/air-fresheners/http://www.naukrihub.com/india/fmcg/overview/mosquito-repellents/http://www.naukrihub.com/india/fmcg/overview/furniture-polish/http://www.naukrihub.com/india/fmcg/overview/food-beverages/http://www.naukrihub.com/india/fmcg/overview/branded-flour/http://www.naukrihub.com/india/fmcg/overview/branded-sugar/http://www.naukrihub.com/india/fmcg/overview/bakery-products/http://www.naukrihub.com/india/fmcg/overview/bakery-products/http://www.naukrihub.com/india/fmcg/overview/milk-dairy/http://www.naukrihub.com/india/fmcg/overview/tea/http://www.naukrihub.com/india/fmcg/overview/coffee/http://www.naukrihub.com/india/fmcg/overview/fruit-juice/http://www.naukrihub.com/india/fmcg/overview/bottled-water/http://www.naukrihub.com/india/fmcg/overview/bottled-water/http://www.naukrihub.com/india/fmcg/overview/snacks/http://www.naukrihub.com/india/fmcg/overview/chocolate/http://www.naukrihub.com/india/fmcg/overview/consumer-electronics/http://www.naukrihub.com/india/fmcg/overview/audio-equipments/http://www.naukrihub.com/india/fmcg/overview/laptop/http://www.naukrihub.com/india/fmcg/overview/color-televisions/http://www.naukrihub.com/india/fmcg/overview/refrigerator/http://www.naukrihub.com/india/fmcg/overview/washing-machines/http://www.naukrihub.com/india/fmcg/overview/white-goods/


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Sector Outlook

FMCG is the fourth largest sector in the Indian Economy with a total market size of Rs. 60,000

crores. FMCG sector generates 5% of total factory employment in the country and is creating

employment for three million people, especially in small towns and rural India.

Analysis of FMCG Sector

Strengths:

1. Low operational costs

2. Presence of established distribution networks in both urban and rural areas

3. Presence of well-known brands in FMCG sector

Weaknesses:

1. Lower scope of investing in technology and achieving economies of scale,

especially in small sector

2. Low exports levels

3. Me-too products, which illegally mimic the labels of the established brands.

These products narrow the scope of FMCG products in rural and semi-urban market.

Opportunities:

1. Untapped rural market

2. Rising income levels i.e. increase in purchasing power of consumers

3. Large domestic market

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4. Export potential

5. High consumer goods spending

Threats:

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

2. Slowdown in rural demand

3. Tax and regulatory structure

FUTURE SCENARIO

The Indian FMCG sector with a market size of US$13.1 billion is the fourth largest sector in the

economy. A well-established distribution network, intense competition between the organized

and unorganized segments characterizes the sector. FMCG Sector is expected to grow by over

60% by 2010. That will translate into an annual growth of 10% over a 5-year period. It has been

estimated that FMCG sector will rise from around Rs 56,500 crores in 2005 to Rs 92,100 crores

in 2010. Hair care, household care, male grooming, female hygiene, and the chocolates and

confectionery categories are estimated to be the fastest growing segments.

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GROWTH PROSPECT

With the presence of 12.2% of the world population in the villages of India, the Indian rural

FMCG market is something no one can overlook. Increased focus on farm sector will boost rural

incomes, hence providing better growth prospects to the FMCG companies. Better infrastructure

facilities will improve their supply chain. FMCG sector is also likely to benefit from growing

demand in the market. Because of the low per capita consumption for almost all the products in

the country, FMCG companies have immense possibilities for growth. And if the companies are

able to change the mindset of the consumers, i.e. if they are able to take the consumers to

branded products and offer new generation products, they would be able to generate higher

growth in the near future. It is expected that the rural income will rise in 2007, boosting

purchasing power in the countryside. However, the demand in urban areas would be the key

growth driver over the long term. Also, increase in the urban population, along with increase in

income levels and the availability of new categories, would help the urban areas maintain their

position in terms of consumption. At present, urban India accounts for 66% of total FMCG

consumption, with rural India accounting for the remaining 34%. However, rural India accounts

for more than 40% consumption in major FMCG categories such as personal care, fabric care,

and hot beverages. In urban areas, home and personal care category, including skin care,

household care and feminine hygiene, will keep growing at relatively attractive rates. Within the

foods segment, it is estimated that processed foods, bakery, and dairy are long-term growth

categories in both rural and urban areas.

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THE TOP 10 COMPANIES IN FMCG SECTOR

1. Hindustan Unilever Ltd.

2. ITC (Indian Tobacco Company)

3. Nestle India

4. GCMMF (AMUL)

5. Dabur India

6. Asian Paints (India)

7. Cadbury India

8. Britannia Industries

9. Procter & Gamble Hygiene and Health Care

10. Marico Industries

BUDGET IMPLICATIONS ON FMCG SECTOR

The Budget gives more focus on the agricultural/farm sector that will boost the rural income thus

providing better growth prospects to the FMCG companies. With 12.2% of the world population

living in the villages of India, the Indian rural FMCG market is something no one can overlook.

Better infrastructure facilities will improve their supply chain. Also, with rising income and

growing consumerism, FMCG sectors are likely to benefit. Growth potential for all the FMCG

companies is huge as the per capita consumption of almost all products in the country is amongst

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the lowest in the world. Further, if these companies can change consumer's mindset and offer

new generation products, they would be able to generate higher growth in the future

Products which have a quick turnover, and relatively low cost are known as Fast Moving

Consumer Goods (FMCG). FMCG products are those that get replaced within a year. Examples

of FMCG generally include a wide range of frequently purchased consumer products such as

toiletries, soap, cosmetics, tooth cleaning products, shaving products and detergents, as well as

other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. FMCG

may also include pharmaceuticals, consumer electronics, packaged food products, soft drinks,

tissue paper, and chocolate bars.

The Indian FMCG sector is the fourth largest in the economy and has a market size of US$13.1

billion. The middle class and the rural segments of the Indian population are the most promising

market for FMCG, and give brand makers the opportunity to convert them to branded products.

Most of the product categories like jams, toothpaste, skin care, shampoos, etc, in India, have low

per capita consumption as well as low penetration level, but the potential for growth is huge.

Typical Characteristics of FMCG products

Individual products are of small value. But , all FMCG products put together account for

a significant part of the consumers budget .

The consumer keeps limited inventory of these products and prefers to purchase them

frequently, as and when required.

Many of these products are perishable.

The consumer spends little time on the purchase decision. Rarely does he / she look for

technical specifications (in contrast to industrial goods).

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Brand loyalties or recommendations of reliable retailer / dealer drive purchase decision.

Trial of a new product i.e. brand switching is often induced by heavy advertisement ,

recommendations of the retailer or neighbors / friends.

These products cater to necessities , comforts as well as luxuries.

They meet the demands of the entire cross section of population.

Price and income elasticity of demand varies across products and consumers.

The personal care category has the largest number of brands. The FMCG (Fast Moving

Consumer Goods) industry can be subdivided into Organized & Unorganized sector. The size of

organized sector is about Rs660bn. It accommodates product lines such as soaps, detergents, skin

care, hair care, oral care, cosmetics, disinfectants, other toiletries and processed packed food

products. Unorganized FMCG, which is around 40% of the volume of Organized Industry with

localized products and counterfeits, is valued at around Rs100bn. The herbal product market

within FMCG is valued at Rs50bn.Organized retail market size is around Rs.530bn which have

2% beauty care products include soap, shampoo and other product.

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SOAP MARKET

During the British rule in India, Lever Brothers England introduced modern soaps by importing

and marketing them in India. However, North West Soap Company created the first soap

manufacturing plant in India, which was situated in the city of Meerut, in the state of Uttar

Pradesh. In 1897, they started marketing cold process soaps. During World War I, the soap

industry floundered, but after the war, the industry flourished all over the country.

Mr. Jamshedji Tata set up India's first indigenous soap manufacturing unit when he purchased

OK Coconut Oil Mills at Cochin Kerala around 1918. OK Mills crushed and marketed coconut

oil for cooking and manufactured crude cold process laundry soaps that were sold locally. It was

renamed The Tata Oil Mills Company and its first branded soaps appeared on the market in the

early 1930s. Soap became a necessity for the moneyed class by around 1937.

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India is a vast country with a population of 1,030 million people. Household penetration of soaps

is 98%. People belonging to different income levels use different brands, which fall under

different segments, but all income levels use soaps, making it the second largest category in

India. Rural consumers in India constitute 70% of the population. Rural demand is growing, with

more and more soap brands being launched in the discount segment targeting the lower socio-

economic strata of consumers. Soaps form the largest pie of the FMCG Market with bathing &

toilet soaps accounting for around 30% of the soap market.

Currently, the soap industry is divided into three segments namely Premium, Popular and

Economy/ Sub popular. Indias soap market is Rs 41.75 billion. Soaps are available in five

million retail stores, out of which, 3.75 million retail stores are in the rural areas. Therefore,

availability of these products is not an issue. 70% of India's population resides in the rural areas;

hence around 50% of the soaps are sold in the rural markets. Soaps form the largest pie of the

FMCG Market with bathing & toilet soaps contributing around 30% of soap market.

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SOAP MARKET

Natural soap/Glycerin soap Herbal soap

Market Size

Rs.280crore Rs.227 crore

Outline for the herbal soap Herbal soap

Neem soap Tulsi soap Turmeric soap Sandal soap

The Crisis of Declining Markets

Through the nineties, the FMCG markets grew at almost 15% per annum in value. Suddenly, in

2000, FMCG market growth stalled and then declined for the next four years. It is important to

understand why this happened.

The rapid opening up of the economy resulted in many new avenues of expenditure for the

consumers growing income. A sharp drop in interest rates from 18% to 8% led to explosive

demand for consumer durables like white goods, two-wheelers and automobiles. After all, one

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could drive out of a car showroom in a Maruti 800 with a down payment of only Rs. 2000. The

home ownership market grew exponentially as the average age of a home loan borrower dropped

from 50 in 1999 to 30 in 2004. Mobile phone ownership and usage exploded due to its amazing

lifestyle and convenience benefits as well as lower prices. Entertainment, Leisure and Travel

sectors also boomed.

The lure of new avenues of expenditure in products and services led to consumers restricting

their expanse on FMCG. It is not that they bathed less often or brushed their teeth less often or

indeed washed their clothes less often. But they did downtrade to lower priced substitutes from

higher quality brands. For example, a consumer buying six tablets of Lux in a month went to

buying three of Lux and three cheaper brands. Or a consumer buying Surf Excel for her clothes

mixed it with a cheaper powder. As a result of this shift in spending patterns, the FMCG market

declined in value in the last four years creating a major challenge for growth.

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HINDUSTAN UNILEVER LTD

Hindustan Unilever Limited, erstwhile Hindustan Lever Limited (also called HLL),

headquartered in Mumbai, is India's largest consumer products company, formed in 1933 as

Lever Brothers India Limited. Its 41,000 employees are headed by Mr.Harish Manwani, the

non-executive chairman of the board. HLL 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 Lever Limited.

Recently in February 2007, the company has been renamed to "Hindustan Unilever Limited" to

provide the optimum balance between maintaining the heritage of the Company and the future

benefits and synergies of global alignment with the corporate name of "Unilever".

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.10,000 cores.

HUL is also one of the country's largest exporters; it has been recognized 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.

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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 stockists, covering 6.3 million retail

outlets reaching the entire urban population, and about 250 million rural consumers.

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 Centers in India have over 200

highly qualified scientists and technologists, many with post-doctoral experience acquired in the

US and Europe.

HUL believes that an organizations 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

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I Shakti 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

endeavors to induce adoption of hygienic practices among rural Indians and aims to bring down

the incidence of diarrhea. 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.

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CHRONOLOGY

1888 Sunlight soap introduced in India

1895 Lifebuoy soap launched; Lever Brothers appoints agents in Mumbai, Chennai, Kolkata,

and Karachi

1902 Pears soap introduced in India.

1905 Lux flakes introduced.

1925 Lever Brothers gets full control of North West Soap Company

1930 Unilever is formed on January 1 through merger of Lever Brothers and Margarine Unie.

1934 Soap manufacture begins at Sewri factory in October; North West Soap Company's

Garden Reach Factory, Kolkata rented and expanded to produce Lever brands.

1935 United Traders incorporated on May 11 to market Personal Products.

1941 Agencies in Mumbai, Chennai, Kolkata and Karachi taken over; company acquires own

sales force.

1942 Unilever takes firm decision to "train Indians to take over junior and senior management

positions instead of Europeans".

1955 65% of managers are Indians.

1956 Three companies merge to form Hindustan Lever Limited, with 10% Indian equity

participation

1957 Unilever Special Committee approves research activity by Hindustan Lever.

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1958 Research Unit starts functioning at Mumbai Factory.

1959 Surf launched.

1967 Hindustan Lever Research Centre, opens in Mumbai

1974 Pilot plant for industrial chemicals at Taloja; informal price control on soaps withdrawn;

Liril marketed.

1982 Government allows 51% Unilever shareholding.

1992 HLL recognised by Government of India as Star Trading House in Exports.

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MANAGEMENT STRUCTURE

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 and Group

companies have about 16,000 employees, including 1200 managers.

The fundamental principle determining the organization structure is to infuse speed and

flexibility in decision-making and implementation, with empowered managers across the

company's nationwide operations. For this, HUL is organized into two self-sufficient divisions -

Home & Personal Care & Foods - supported by certain central functions and resources to

leverage economies of scale wherever relevant

HINDUSTAN UNILEVER LOGO

Logo of Hindustan Unilever Is Contaning the legacy of their parent company unilever. Logo of Hindustan

Unilever has also been changed with company name. This logo coincides with the announcement of new

corporate identity. Name HUL was approved by shareholder at the year annual meeting on May 18 &

new identity was officially announced on 25 June following government approval.

New identity provides optimum balance between maintaining the heritage of the company & synergies of

global alignment with the corporate name of unilever. Most importantly it retains Hindustan as the first

word in its name to reflect the companys continued commitment to local economy, consumers, partners,

& employers

New logo symbolizes the company mission of Adding Vitality to life & play a very strongly in our

vision of Earning the love & respect of India by making a real difference to every Indian. It comprises

25 different icons representing organization, its brands & idea of vitality.

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COMPANY ANALYSIS

Ownership:

The company is a publicly held organization. The majority of the shares are held by the parent

company Unilever limited.

Shareholding Pattern(as on 31.05.2007):

The majority of shares of the company are held by 9 foreign corporate bodies. They hold 54.2%

of the total shares. The names of the companies and their share %age are

Unilever PLC 33.7%

Brooke Bond Group Limited 4.84%

Unilever UK & CN Holdings Limited 2.72%

Brooke Bond South India Estates Ltd 2.39%

Unilver PLC 2.31%

Unilever Overseas Holdings AG 1.81%

Brooke Bond Assam Estates Ltd 1.49%

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Unilver Overseas Holdings AG 1.3%

Unilver Overseas Holdings BV 0.85%

The public shareholding of the company is varied and comprises of Mutal funds/UTI(3.74%),

Banks(.3%), Insurance Companies(12.41), FII(12.28), Thus the total institutional public

shareholding is 28.73%

In non institutions, corporate bodies hold 1.83%, while 17.56% shares are held by individuals. In

addition to that.46% of the shares are held by other individuals and bodies such as the director &

relatives, trusts, NRIs and clearing bodies. Hence the total public shareholding comes out to be

48.52%

(Source: HLL official website)

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HUL IN THE BUSINESS:

FMCG still offers enormous potential

As the largest FMCG player it was up to them to reverse the downtrading to realize its true

growth potential. They could achieve this by raising the bar and becoming world class in what

their brands offered and how they worked. Nothing less would do.

Penetration levels in several of the categories and consumption levels in all of the categories is

low by any comparison. Across the world, they are seeing a strong correlation between income

levels and the size of FMCG markets. Over the next 10 years, per capita income in India is likely

to touch Chinas current levels. At those levels, the FMCG market will be over Rs.100,000

crores from a current value of Rs.40,000 crores. This is an opportunity that they have to seize.

Per capita Income in India has doubled in 4 years 04-07. As their incomes and standards of living

improve, Indian customers for FMCGs are shifting towards higher lifestyle categories like skin

care, hair care, deodorants, convenience foods, health foods etc.

Rural India, where penetration levels are low as compared to urban areas, has a large consuming

class with 41 per cent of India's middle-class and 58% of the total disposable income. Factors

like loan waiver of farmers, hike in minimum support price for crops and flood inflation has

helped farmers with rise in income. The purchasing power in rural areas has increased and

spending behavior is also changing which shows a high growth potential for FMCG companies

here.

Better Value

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The first step was to ensure that they offer world class quality and real differentiation backed by

technology to give them the advantage over low priced competition. They have invested over

Rs.400 crores, or 5% of sales, in the last three years to upgrade the brands.

In several cases they reduced prices to make the brands more affordable. Better quality and more

affordable prices have increased the value to the consumer.They have also launched several low

unit size and price packs for single use to make the brands more accessible to all income groups.

For example, they are the first to introduce a branded toothpaste in a tube at Rs.5 and a branded

quality shampoo in a bottle at Rs.5.

Bigger Role in Consumers Lives

Perhaps the most significant change has been to move the brands beyond merely making

functional claims to playing a bigger and deeper role in the lives of consumers. They had to

move from selling a soap or a detergent to something far more important and central to the

consumers life. How often have we heard someone say, A soap is a soap! Or indeed, All

detergents clean clothes as well.

In the case of Lifebuoy, it was only when they associated it with the promise of health and

protection against disease that it claimed a larger space in the consumers mind. It moved from

being a mere soap to a health essential. Today Lifebuoy, their oldest brand, has grown at over

15% for the last three years.

Similarly, in the laundry market, Surf Excel went well beyond the benefit of great clean by

saving two buckets of water with every wash. Imagine the importance of that benefit to

consumers in cities, who often get running water for only a couple of hours a day. Surf Excel is

one of their fastest growing brands today.

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Both Lifebuoy and Surf Excel have succeeded because they are relevant to two key concerns of

the Indian housewife: family health and the scarcity of water.

In addition to the growing consciousness of health, consumers today are looking for ways to look

good and feel good so that they can get much more out of life. In short, consumers are seeking

Vitality in their lives. Their portfolio of 35 power brands is uniquely positioned to offer nutrition,

hygiene and personal care benefits and thereby deliver Vitality.

Technology, the Key Differentiator

Their brands and sound understanding of the local consumer are supported by a world class

Research and Development capability. They have over 200 of the brightest scientists and

technologists based in India.

Their recent reorganization leverages the talent pool from across 16 global technology centres, of

which four are in India. In all, they have over 4,000 high quality minds across Unilever working

relentlessly to provide new benefits that make a real difference to the consumers.

Winning with Customers

Hindustan Lever has historically had a strong bond with its customers. They have strengthened

this and reinvented the way they manage their distribution channels and their customers. The

sales structure has been transformed to leverage scale and build expertise in servicing Modern

Trade and Rural Markets. They have also de-layered their sales force to improve the response

times and service levels.

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Their customers are serviced on continuous replenishment. This is possible because of IT

connectivity across the extended supply chain of about 2,000 suppliers, 80 factories and 7,000

stockists. They have also combined backend processes into a common Shared Service

infrastructure, which supports the units across the country. All these initiatives together have

enhanced operational efficiencies, improved the service to the customers and have brought us

closer to the marketplace.

In the case of Lifebuoy, it was only when they associated it with the promise of health and

protection against disease that it claimed a larger space in the consumers mind. It moved from

being a mere soap to a health essential. Today Lifebuoy, their oldest brand, has grown at over

15% for the last three years.

Similarly, in the laundry market, Surf Excel went well beyond the benefit of great clean by

saving two buckets of water with every wash. Imagine the importance of that benefit to

consumers in cities, who often get running water for only a couple of hours a day. Surf Excel is

one of their fastest growing brands today.

Both Lifebuoy and Surf Excel have succeeded because they are relevant to two key concerns of

the Indian housewife: family health and the scarcity of water.

In addition to the growing consciousness of health, consumers today are looking for ways to look

good and feel good so that they can get much more out of life. In short, consumers are seeking

Vitality in their lives. Their portfolio of 35 power brands is uniquely positioned to offer nutrition,

hygiene and personal care benefits and thereby deliver Vitality.

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The People & Organisation

They have restructured the company, integrating eight Profit Centres into two Divisions Home

and Personal Care (HPC) and Foods. The result is a simpler and leaner organisation, less

hierarchical with fewer levels and greater empowerment. This has eliminated complexity and

speeded up decision making. Today the company is far more youthful in attitude and spirit.

There is greater openness and transparency.

The Transformation: Investment in the Future

To ensure that Hindustan Lever remains competitive in the long-term, they have made significant

investments in product quality, pricing and marketing. As mentioned earlier, the investment in

product quality alone has been in excess of Rs. 400 crores, or 5% of our sales.

In addition there has been the cost of defending their market position. Recently an international

competitor attacked their laundry business led by a price reduction of as much as 50%. They

acted with speed and determination leveraging all their past experience in India and

internationally. They have been able to fully protect their market leadership and share, albeit

sacrificing short-term profit. They made this necessary trade-off as market share is the best

means of sustaining future profit. Over time, their stronger market positions will surely lead to

greater long-term profit.

Despite these significant investments to strengthen the long-term competitiveness and the costs

of defending the strong market position, they still remain one of the most profitable companies in

the country.

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MARKET SHARE OF HUL:

HUL has a dominant market share across different segments in FMCG sector. HUL has been

able to sustain highest sales revenues in the sector through its products across all the price points

(entry level, mid and top end of market), better brand positioning, aggressive brand management

and restructuring of product portfolios. But over the long term (Dec'02 - Sep'08), company has

lost considerable share in some categories.The loss can be attributed to the fact that HUL has its

products across all segments of FMCG sector but its competitors are focussing on niche

products.

In Q3CY08,HUL has seen a market share loss in most of the categories barring detergents, tea

and coffee. Part of the market share loss is attributable to changing market structure i.e. top end

growing at a faster pace, where HUL does not have a market share similar to what it has at the

mass segment.

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Hindustan Unilever Ltd has been in market leader in the soaps segment for many years.It has a

market share of 54.3%.To be the market leader HUL has to perform many acts and has to please

the customers by passing on the benefits to them.

During the times of high inflationary pressures, Hindustan Unilever has surprised the Industry

dropping prices of three of its soap brands Lux ,Hamam and rexona. The industry was

expecting HUL to hike prices so that they could follow suit. Holding on to the price line by

sacrificing margins is becoming difficult for most FMCG companies reeling under rising input

costs. The price reduction by HUL is being termed as a post-budget measure to please

consumers. The excise duty on soaps was reduced by a margin of 2-14% in the union budget for

2008-09. The industry had, however, ruled out price cut and had termed the excise relief as

miniscule. But, HUL, being themarket leaderin toilet soaps, has decided to pass on the excise

benefits to consumers by reducing prices of Lux, Hamam and Rexona.

The price of Lux (100gm) has come down from Rs 17 to Rs 16 and that of Luxs 45gm SKU

(stock keeping unit) is down from Rs 6 to Rs 5. In the case of Hamam and Rexona, price change

has taken place in the 100gm SKU. "The price changes were made effective from early March

2008. This is consequent to the excise duty reduction announced in the union budget for home &

personal care products from 16% to 14%, along with changes in abatements. Since the benefit is

small at a unit level for eachSKU in the Health and personal care portfolio, the overall benefit is

being passed through price reductions on select popular SKUs in the skin cleansing category as

mentioned above

(Source: Times of India)

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http://timesofindia.indiatimes.com/Business/India_Business/HUL_slashes_prices_of_three_soap_brands/articleshow/2935876.cmshttp://timesofindia.indiatimes.com/Business/India_Business/HUL_slashes_prices_of_three_soap_brands/articleshow/2935876.cmshttp://timesofindia.indiatimes.com/Business/India_Business/HUL_slashes_prices_of_three_soap_brands/articleshow/2935876.cmshttp://timesofindia.indiatimes.com/Business/India_Business/HUL_slashes_prices_of_three_soap_brands/articleshow/2935876.cmshttp://timesofindia.indiatimes.com/Business/India_Business/HUL_slashes_prices_of_three_soap_brands/articleshow/2935876.cmshttp://timesofindia.indiatimes.com/Business/India_Business/HUL_slashes_prices_of_three_soap_brands/articleshow/2935876.cmshttp://timesofindia.indiatimes.com/Business/India_Business/HUL_slashes_prices_of_three_soap_brands/articleshow/2935876.cmshttp://timesofindia.indiatimes.com/Business/India_Business/HUL_slashes_prices_of_three_soap_brands/articleshow/2935876.cms


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HUL IN THE SOAP SEGMENT:

In 2000, 75% of their sales came from FMCG businesses. The rest came from several non-

FMCG businesses which were not profitable, and did not offer prospects for long-term

leadership. Besides, they were a drain on the core FMCG business, both in terms of resource and

focus. They decided to disengage from all non-FMCG or commodity businesses. In all, we have

divested and discontinued 15 businesses including Animal Feeds, Speciality Chemicals, Nickel

Catalyst, Adhesives, Thermometers, Seeds, Mushrooms etc. with sales of Rs.1,750 crores as in

1999. Today they are a focused on FMCG company with our branded business accounting for

over 90% of sales, consisting of 35 brands across 20 categories. These will be their main engines

of growth, with higher levels of resource concentration, be it technology, people talent or media

spend.

( Source :Wikinvest.com)

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Soaps and Detergents business contributes highest (46%) towards revenues followed by Personal

care products (26%). Despite being highest revenue generator soaps and detergents business is

not the most profitable segment. Personal care contributes highest (46.2%) towards the EBIT

which is due to high margins and low penetration of the market.

Portfolio of Strong Brands

Their main challenge was to reverse the downtrading in the categories and re-establish the

relevance of their brands in the mind of the consumer. In 2000, they had 110 brands, many

undifferentiated and lacking scale. They chose to focus on 35 power brands covering all

consumer appeal and price segments. They are already seeing the benefits. Six brands Brooke

Bond, Lifebuoy, Lux, Fair & Lovely, Rin and Wheel have emerged as mega brands in the last

five years, each with sales of more than Rs.500 crores.

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CHAPTER 2

RESEARCH METHODOLOGY

OBJECTIVES OF THE STUDY

To check the taste & preference of customer while purchasing soaps with special

reference to HUL

To study the important factors which customers consider most important while

purchasing soaps.

To do a comparative analysis of various brands of HUL.

SCOPE OF THE STUDY

The study is limited to National capital region of Delhi. It focuses mainly on HUL Soaps. Only

one parameter of marketing-product has been covered in study. HUL will be in a position to

know how to overcome the hurdles of acquiring the whole market share of India.

RESEARCH METHODOLOGY

Marketing research is the process collecting and analyzing marketing information and ultimately

arrived at certain conclusion Management in any organization need information about potential

marketing plans and to change in the market place. Marketing research includes all the activities

that enable an organization to obtain the information. This research is very important in strategy

formation and feed back of any organizational plan.

There are many type of research some are conceptual, empirical, descriptive, explorative etc.

each research type is being used for various purpose. In this research

I have used descriptive research, I try to describe what are the factors, which affect the business

plan of AMULS Chocolate.

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Research design is the plan, structure and strategy of investigation conceived so as to obtained to

research problem and control variances. It is the specification of methods and procedures for

acquiring the information needed. It is overall operational pattern or framework of the project

that stipulated what information is to be collected and from which source and by what procedure.

TYPE OF RESEARCH DESIGN: - Different types of research design have emerged on

account of the different perspectives from which a research study can be viewed. There are three

fundamental categories that we used frequently are given below.

1. EXPLORATORY RESEACH: - In the case of exploratory research, the focus is on the

discovery of ideas. An exploratory study is generally based on the secondary data that are

readily available. It does not have formal and rigid as the researcher may have to change

his focus or direction, depending on new idea and relationships among variables. An

exploratory research is in nature of a preliminary investigation.

2. DESCRIPTIVE RESEARCH: - The objective of such a study is to answer the who,

what, when, where and how. Of the subject under investigation, descriptive studies are

well structured and tend to be rigid and its approach can not be changed every now and

then. It is therefore, necessary that the researcher

give sufficient thought to farming research question and deciding the types of data to be

collected and procedure to be used for this purpose.

3. CASUAL RESEARCH: - A causal research investigates is cause and effect relationship

between two or more variables. The causal research design is based on reason along well-

tested line. We use inductive logic for confirming hypothesis with the help of future

evidence.

TYPE OF RESEARCH CARRIED OUT: -

In my project work I used exploratory research.

SAMPLE SIZE

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I have used a sample size of 75 people which comprises of 30 housewives, 25 working

ladies and 20 college girls.

DATA COLLECTION METHODOLOGY

DATA COLLECTION:-

To achieve the objectives, the primary as well as secondary source of data are used..

Primary source includes the retailers and companys officials through questionnaires.

Secondary source of data includes the past records of company.

The data were collected through the following methodical techniques in the present project

work.

1. Through questionnaires

2. Through interview

3. Through observation

QUESTIONNAIRES:-

Questionnaires consist of question printed or type in definite order on a

form or set of form. It was questionnaire format firms tested on small sample then was modified

and developed according to the environmental situation and other affecting factors. Each

questionnaire is framed with systematic and modern technique to make useful in achieving the

objectives up to a maximum possible limit.

There are two types of questionnaires, the first one is standard questionnaire and the second is

un-standard questionnaire. The authority or expert sets the standard questionnaire. In the other

hand un-structured questionnaire is set according to objective of the study by researcher.

In this research work I used un-structured questionnaire with my best ability and under the

guidance of my institutes faculties and the project guide of the organization.

After floor acing the questionnaire, the respondents (retailers and customers) were personally

contacted. Each respondent was requested to answers the question with appropriate answer

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genuinely. All the questions were made very clear to them. The questionnaires were duly filled

with the responses of all the respondents in the current project work.

INTERVIEW METHOD: -

There is a fact to face interaction with most of the samples they were directly questioned and

according personal and professional problem were collected from them for question are asked to

the responded to flourish the questionnaire effectively and efficiently. In this project work I have

made interview with almost respondent to know some extra data or fact, which was used in this

project work. After using this method I tried to find the competitors policy and there strength

after this method I was able to conclude all facts with competitors point of view.

OBSERVATION METHOD:-

During the project work, I contact the retailers and consumers particularly and find their opinion

about the Amul Chocolate.

In the observation method the research himself collects necessary information by observing the

phenomena under this method. Observation may be conducted on in the natural field or in the

form of experiment.

After observation the data carefully noted in the questionnaire format. I used uncontrolled

observation in this observation takes place in the natural setting. Retailer and customer are free to

express their felling about the product and the company. The observation method give me an

idea about the satisfaction level of customer and retailer in the other hand there precious

knowledge about the market situation make me understand the business difficulties which help

me a lot to carry out my project in a significant and effective manner.

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SAMPLE DESIGN :- The sampling designs are mainly of two types non-probability sample

designs and probability sample design.

RANDOM SAMPLING :- a random sample gives every unit of population a known

and non probability of being selected. Since random sampling implies equal

probability to every unit in the population; it is necessary that the selection of the

sample must be free from human judgment.

SYSTEMATIC SAMPLING: - In this method first a sampling fraction is calculated

as N/n where N is total no. of units in the population and n is the size of sample..

STRATIFIED RANDOM SAMPLING :- A stratified random sampling is divided

into mutually exclusive and mutually exhaustive strata or sub group and then a simple

random sample is selected with in each of the strata or sub group.

CLUSTER SAMPLING :- cluster sampling implies that instead of selecting

individual units from the population entire groups or clusters are selected random.

QUOTA SAMPLING :- quota sampling involves the fixation of certain quotas, which

are to be fulfilled by the interviewers, since quota sampling is not based on random

selection it is not possible

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TYPES OF DATA

Two types of data:-

PRIMARY DATA

SECONDARY DATA

PRIMARY DATA:-

Primary data is that kind of data which is collected by the investigator himself for the purpose of

the specific study. The data such collected is original in character. The advantage of third method

of collection is the authenticity. A set of question s were put together in the form of questionnairewith . Question. The method of sampling was the random method as it is unbiased.

SECONDARY DATA:-

When an investigator uses the data that has been already collected by others is called secondary

data. The secondary data could be collected from Journals, Reports and Various Publications.

The advantages of secondary data can be economical, both in the term of money and time spent.The researcher of the reporter also did the same and collected secondary from various internet

sites like Google.com.altavista.com and many more. The researchers of the reporter also visited

various libraries for collection of the introduction part.

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LIMITATIONS OF RESEARCH

Although all efforts were taken to make the result of survey as accurate as possible the survey

had the following constraints:

Retailers are not willing to give answers of the questions due to their busy schedules.

Retailers hide the facts especially in the sales figure.

A few retailers were not cooperating during the project survey. It was quite difficult to

collect necessary data.

Due to the time constraint and other imperative workload during the training period it

could not be made possible to explore more areas of concern pertaining to project study.

The employee of HUL were very hesitant and reluctant to give all information which was

vital for my project work because some information were confidential in nature.

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Chapter 3

Conceptual Discussion

4Ps of HUL

PRODUCT

THE BRANDS OF HUL :

LUX :

Since 1929, Lux in step with the changing trends and evolving beauty needs of

the consumers, offers an exciting range of soaps and Body Washes with unique elements to make

bathing time more pleasurable. One can choose from a range of skincare benefits like firming,

fairness and moisturizing.

Lux stands for the promise of beauty and glamour as one of India's most trusted personal care

brands. Lux Believes in passion for beauty .It continues to be a favourite with generations of

users for the experience of a sensuous and luxurious bath. Lux believes that femininity shouldnt

be denied.

DOVE :

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Dove soap, which was launched by Unilever in 1957, has been available in

India since 1995. It provides a refreshingly real alternative for women who recognise that beauty

is not simply about how you look, it is about how you feel. Globally, Dove has been extended to

many other countries. Since the 1980s, for example, Unilever has launched a moisturising body-

wash, deodorants, body lotions, facial cleansers and shampoos and conditioners, providing a

comprehensive range of solutions to bring out true inner beauty.

LIRIL :

For 28 years, freshness has been clearly identified with one name Liril. Liril

expressions have always set trends whether it is a bathing beauty in a waterfall or "Oof Yu Maa!"

The energy and excitement levels associated with the brand have to be experienced to be

believed with changing times. Liril has donned many avatars; Presently, Liril Soft Aloe Vera &

Lime, Liril Icy Cool and Liril Orange splash are making waves.

LIFEBUOY :

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Lifebuoys vision is, Making a billion Indians feel safe and secure by

meeting all their health and hygiene needs. True to its vision, the world's largest selling soap,

offers a compelling health benefit to the entire family. Launched in 1895, Lifebuoy, for over 100

years, has been synonymous with health and value. The honest & hard working soap, with its

distinctive perfume and popular jingle, has carried the Lifebuoy message of health across the

length and breadth of the country.

The relaunch of the soap in 2002, 2004 & again in 2006 have been turning points in its history.

The new mix includes a new formulation and a repositioning to make it more relevant to both

new and existing consumers. Apart from Lifebuoy total, it has also strongly built its other core

variants like Lifebuoy deofresh targeted at freshness, Lifebuoy nature containing all the

goodness of nature and Lifebuoy care for sensitive skin. Lifebuoy also offers specific health

benefits through specialised productformats like Lifebuoy HandWash & Lifebuoy Clearskin,

which provides treatment and protection against acne

PEARS :

Introduced in India in 1902, Pears soap has equal. It is gentle enough,

even for baby's skin.Pears is manufactured like any other soap, but unlike in conventional soaps,

39
http://images.google.co.in/imgres?imgurl=http://img.alibaba.com/photo/101678354/Lifebuoy_Soap.jpg&imgrefurl=http://www.alibaba.com/product/id101670702-101678354-100595525/Lifebuoy_Soap.html&usg=__exyn9vXhUZbmt4LEEWJNEEgsuYg=&h=343&w=600&sz=156&hl=en&start=3&tbnid=QeJacqOeN2aOaM:&tbnh=77&tbnw=135&prev=/images?q=lifebuoysoap&gbv=2&hl=enhttp://images.google.co.in/imgres?imgurl=http://upload.wikimedia.org/wikipedia/commons/8/8c/Pears-Soap-barbox.jpg&imgrefurl=http://commons.wikimedia.org/wiki/File:Pears-Soap-barbox.jpg&usg=__RM612ZuXA92-XPg4WFDgkSPAQpU=&h=504&w=1051&sz=276&hl=en&start=2&tbnid=1SmTN6iKWcS2UM:&tbnh=72&tbnw=150&prev=/images?q=pears+soap&gbv=2&hl=enhttp://images.google.co.in/imgres?imgurl=http://img.alibaba.com/photo/101678354/Lifebuoy_Soap.jpg&imgrefurl=http://www.alibaba.com/product/id101670702-101678354-100595525/Lifebuoy_Soap.html&usg=__exyn9vXhUZbmt4LEEWJNEEgsuYg=&h=343&w=600&sz=156&hl=en&start=3&tbnid=QeJacqOeN2aOaM:&tbnh=77&tbnw=135&prev=/images?q=lifebuoysoap&gbv=2&hl=en


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the glycerine is retained within the soap. That is the cause if its unique transparency. Today Pears

is available in three variants - the traditional amber variant, a green variant for oil control and a

blue variant for germ protection.

HAMAM :

Launched in 1934, Hamam has always been a reliable option for consumers

over years. The brand has withstood the test of time and has given the consumers the confidence

and assurance of being a soap that is safe on skin.

REXONA:

Rexona is one of India's pioneer brands in family soaps. Launched in 1947, it

was positioned as a natural skin care soap to give silky, glowing skin. The brand has been

constantly improved to keep up with expectation of the consumers. In 2005, the brand was

relaunched with a new modern look and packaging and contains coconut and cucumber.

BREEZE :

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Breeze Scent Magic is the soap which fulfills the aspirations of women of rural India. Breeze has

offered them 'beauty at an affordable price', making them look and feel beautiful.Breeze comes

in 4 exotic fragrances Rose, Sandal, Lime and Rajnigandha. All this at a very affordable price

for the masses.

PRICE

HUL caters to different income groups by focusing on the prices. They have priced the products

in a way that it becomes accessible by people of all categories and classes. Recently. Hindustan

Unilever has cut the prices of its Lifebuoy brand by increasing the grammage of the soap.

Also they have come up with small packs of lux at a price of Rs 10.This has increased the sales

to a large extent as it has a good circulation among the students, lower class and the lower

middle class groups. They have their different soaps for different purposes and the pricings also

vary accordingly .They have small packs for most of the variants which have worked quite

well.These pricing strategy has helped the company to be the leader in the market and reap the

benefits of growth and penetration.

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PLACE

HUL DISTRIBUTION MODEL :

To meet the ever-changing needs of the consumer, HUL has set up a distribution network that

ensures availability of all their products, in all outlets, at all items. This includes, maintaining

favorable trade relations, providing, innovative incentives to retailers and organizing demand

generation activities among host of other things.

HUL has followed a strategy of building its distribution channels in a transitional manner; and in

different successive phases of the evolution of its distribution system, has penetrated well into

the rural market.

Phase I

The first phase of the HUL distribution network had wholesalers placing bulk orders directly

with the company. Large retailers also place direct orders, which comprised almost 30 percent of

the total orders collected.

The company salesman grouped all these orders and placed an indent with the Head Office.

Goods were sent to these markets, with the company salesman as the consignee. The salesman

then collected and distributed the products to the respective wholesalers, against cash payment,

and the money was remitted to the company.

Phase II

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The focus of the second phase, which spanned the decades of the 40s, was to provide desired

products and quality service to the companys customers. In order to achieve this, one wholesaler

in each market was appointed as a Registered Wholesaler, a stock point for the companys

products in that market. The company salesman still covered the market, canvassing for orders

from the rest of the trade. He would then distribute stocks from the Registered Wholesaler

through distribution units maintained by the company. The Registered Wholesaler was given a

margin of 1 per cent to cover the cost of warehousing and financing the stocks held by him. The

Registered Wholesaler system, therefore, increased the distribution reach of the company to a

larger number of customers.

Phase III

The highlight of the third phase was the concept of Redistribution Stockiest (RS) who replaced

the REGISTERED WHOLESALERSs. The REDISTRIBUTION STOCKIST was required to

provide the distribution units to the company salesman. The REDISTRIBUTION STOCKIST

financed his stocks and provided warehousing facilities to store them. The REDISTRIBUTION

STOCKIST also undertook demand stimulation activities on behalf of the company.

The second characteristic of this period was the changes brought in as the company realised that

the REDISTRIBUTION STOCKIST would be able to provide customer service only if he was

serviced well. This knowledge led to the establishment of the Company Depots system. This

system helped in transshipment, bulk breaking, and acted as a stock point to minimise stock-outs

at the REDISTRIBUTION STOCKIST level.

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In the recent past, .significant change has been the replacement of the Company Depot by a

system of third party; the Carrying and Forwarding Agents (C&FAs). The C&FAs act as buffer

stock-points to ensure that stock-outs did not take place. The C&FA system has also resulted in

cost savings in terms of direct transportation and reduced time lag in delivery. The most

important benefit has been improved customer service to the REDISTRIBUTION STOCKIST.

Operation Bharat HULs Rural Distribution Effort

HLL implemented a major direct consumer programme called Project Bharat, which covered 2.2

crore homes. Each home was given a box, at a special price of Rs.15, comprising a low unit-

price pack of hair-care (Clinic shampoo), dental (Pepsodent toothpaste), skin-care (Fair &

Lovely) and body-care (Ponds Dream flower talc) products along with educational leaflets ,

audio-visual demonstrations, film songs and mythological serials interspersed with ads of Lever

product. Close to 160 vans and over thousand promoters (sales staff of the distributors or some

other private operators) were pressed into Operation. The cost came upto roughly Rs.13 crore.

Each van, equipped with a TV arid VCR, had six promoters. The project helped eliminate

barriers to trial, and strengthened salience of both particular categories and brands.

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Operation Streamline

In 1998, HUL launched Operation Streamline to extend their distribution. Operation Streamline

is one of the major initiatives undertaken by HUL in recent times to penetrate the rural markets.

In the case of Operation Streamline, the goods are distributed from the C &F Agents to the Re-

distributors, who in turn pass it onto the Star Sellers. Being a cross-functional initiative, the Star

Seller sells everything from detergents to personal products, etc. Operation Streamline opened up

a new distribution channel beyond the territories that were covered by HULs 7,500 odd

distributors. In less than two years, it has doubled the companys reach in rural India. Levers

distribution network now covers 60 per cent of the villages with population greater than 2,000,

and having motor able roads. Example:- Penetration levels for its Fair & Lovely cream shot up

nearly three times in just three months of launch of project. Interestingly, there appears to be a

convergence around the prescription that HUL has created to crack opens the rural markets. For

the additional 30,000 villages that HUL wanted to reach, it created a super stockiest; sub-

stockiest structure. The super-stockiest in the bigger towns service these sub-stockiest, who are

paid 1-2 per cent more margins that the retailers. This is to cover the sub-stockests costs in

servicing retailers in his area. Since the distributor cannot cover these retailers regularly, these

sub-stockiest are essentially stock points. Then, once dealers do the necessary demand creation

exercises and as such off takes increases.

Operation Harvest

The reach of conventional media and, therefore, awareness of different products in rural markets

in weak. It was also not always feasible for the distribution Stockiest to cover all these markets

due to high costs involved. Yet, these markets are important since growth opportunities are high.

The company decided to initiate mobile van operations in a focused manner to create both

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awareness and point of purchase access. Operation harvest endeavored to supplement the role of

conventional media in rural India and, in the process, forge relationships and loyalty with rural

consumers. Operation Harvest also involved conducting product awareness programmes on vans.

There are 1.2 million urban retail outlets, and another 3.6 million shops in rural areas. Depending

on their business objectives, marketers use varying definitions for what is rural. Whatever be the

case, to extend their reach, marketers begin by seeding the new territory, mostly through a

brand awareness exercise. As HUL demonstrated with Operation Harvest, this exercise is best

done through van operations. During this exercise, vans from HUL and its distributors did the

rounds of 30,000 villages giving promotional packs, showing products ads and identifying key

retail and distribution points.

Cinema Van Operations

The Redistribution Stockiest typically funds these. Cinema Van Operations have films and audio

cassettes with song and dance sequences from popular films, also comprising advertisements of

HUL products. But over a period of time, van operations (usually run by the distributor or a third

party) have also been used to regularly service retailers in these smaller markets rather than only

making contract with the end consumer. These successive Operations have enabled the

company far deeper penetration levels than other companies. HUL recognised early in its rural

distribution initiative that market share would be created only when demand is built up through

awareness, trial and consistent availability. The company literally had to build up the market

village by village in its rural initiative. Cost-effective distribution solutions were as first

attempted by HUL, and many other companies are veering around to that option today. It has

been working well for HUL, so others are beginning to experiment with it.

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HULs project Shakti

A woman from a SHG selected as a Shakti entrepreneur receives stocks at her doorstep from the

HUL rural distributor and sells direct to consumers as well as to retailers in the village. Each

Shakti entrepreneur services 6-10 villages in the population strata of 1,000-2,000 people.

A Shakti entrepreneur sets off with 4-5 chief brands from the HUL portfolio - Lifebuoy, Wheel,

Pepsodent, Annapurna salt and Clinic Plus. These are the core brands that they layer it with

whatever else is in demand like talcum powder or Vaseline during winters.

The Shakti model trains women from SHGs to distribute HUL products of daily consumption

such as detergents, toilet soaps and shampoos - the latter's penetration being only 30 per cent in

rural areas. The women avail of micro-credit through banks. The established Shakti dealers are

now selling Rs 10,000-Rs15,000 worth of products a month and making a gross profit of Rs 700-

Rs1,000 a month.

Each Shakti dealer covers 6-10 villages which have a population of less 2,000. The company is

creating demand for its products by having its Shakti dealers educating consumers on aspects

like health and hygiene. The Shakti brand endorsers are under-privileged rural women trained to

manage businesses. Shakti is a win-win initiative that creates livelihoods and a social initiative

that improves the standard of life and catalyses affluence in rural India. What makes Shakti

uniquely scalable and sustainable is that it contributes not only to HUL but also to the larger

interests of the community.

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I-Shakti

I-Shakti kiosks have been set up in 8 villages in Andhra Pradesh, and have been functional since

August 2003. The kiosks have received an overwhelming response from the local populace.

During the launch of these kiosks, important village members like the sarpanch, schoolteacher

and doctor are invited to help reinforce relationships with the villagers. The kiosks remain open

from 9 a.m. to 7 p.m., six days of the week. To enable access to the services, users have to

register themselves first and obtain the unique registration number. An id card with the

registration number is provided for use every time they visit the kiosk.

The kiosks offer information chiefly in the form of audio-visuals in the following areas health

and hygiene, E-Governance, education, agriculture, employment, legal services and veterinary

services.

The information provided in the above areas is called from the best available resources, taking

additional care to ensure that information, especially in areas like agriculture, is locally relevant

and includes inputs from home-grown experts. These experts are also available on request, to

help provide solutions to problems raised by users through a query mailing system. A farmer

from the village can obtain a quick solution to a pest problem with his crops. People can also

send queries on health and hygiene to a local doctor for a speedy response. Villagers can avail of

discount coupons from the kiosk for medical treatment from doctors operating in local areas. 'I-

shakti has also tied up with Azim Premji Foundation to deliver innovative educational modules

to students of classes VIII-XII through the kiosk. Local school teachers have also been involved

in the process. A similar partnership is in place with Tata Adult Literacy for adult education.

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GO TO MARKET (GTM) :

HUL,the countrys largest household and personal care products maker by sales is increasing its

so-called go to market (GTM) initiative, introduced in Mumbai last year, in an attempt to

refurbish its national distribution network and streamline its supply chain.

Reportedly, the project has been a success in Mumbai, where it was began in June, and will be

brought forth in 42 cities and towns across India by the end of 2009.

HULs GTM initiative in Mumbai was aimed at rationalizing its distribution network, make it

more proficient, deliver stocks to retailers faster and reduce inventory on their product shelves. It

farmed out the task of stock deliveries to logistics provider Mahindra Logistics as part of the

Mumbai project.

The GTM initiative has been internally labeled by parent firm Unilever Plc. as one of its 10 most

important initiatives said the senior HUL executive, as well as an executive with a firm that does

business with HUL. Both of them declined to be named as they were not authorized to comment

on the companys operations.

A top management team from Unilever, including outgoing chief executive officer Patrick

Cescau, his successor Paul Polman, and HUL chief executive officer Nitin Paranjpe, are believed

to have assessed the success of the pilot plan last month and given in-principle approval to take

the project to key cities in Tamil Nadu, Karnataka, Gujarat and Madhya Pradesh.

Unilever has said it is looking at global savings of 1.5 billion (Rs9,855 crore) yearly by 2010

through the restructuring operations.

The HUL executive and the HUL business associate added that the company is restructuring

other aspects of its operations as part of the GTM project and that it would cut back on losses

and in-transit theft.

The consolidation is focussed at giving the distributors, who typically operate on a 4% profit

margin, a bigger share of the pie at a time when they are being wooed by other sectors.

HUL had revenues of Rs13,913.40 crore in 2007, like its parent company, HUL follows a

calendar year for declaring results and sells some of the countrys most recognized brands such

as Surf Excel detergent powder, Lux soaps, Ponds and Dove skin care products. As part of its

effort to streamline distribution, HUL has also started outsourcing most of the sales team to

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professional staffing firms. Traditionally, bookings from retailers were the responsibility of the

distributors sales team.

Presently, about 2,400 distributors across the country employ 9,000 salesmen to take weekly

orders from a million retail outlets. Enlisting Mahindra Logistics led to a system being put inplace that has cut seven-day inventory to one day.

Orders are logged in the evening by distributors staff and delivered by the company the next

evening to the distributor. Mahindra Logistics delivers stocks to retailers the next morning.

Essentially this frees distributors resources that are otherwise tied up in stocking excess

inventory and preventing losses due to in-transit damage. Consumers get fresher stock from

retailers. Reportedly, the system also ensures that products that suffer on a retailers shelves are

not supplied, eliminating losses from expired stock. The shift from dependence on the

unorganized sector to an external logistics supplier will also decrease loss due to pilferage.

The GTM pilot in Mumbai, meanwhile, could make HUL distributors more visible to retailers

because sales people are required to now visit retailers regularly instead of waiting for orders to

come in.

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PROMOTIONS

The personal care products are most advertised product range in print and television media. In

India the top advertiser of this category is HUL. These advertisements usually feature women.

The reason for this is the fact that in most households women is the main decision maker when it

comes to shopping. So the target segment is the women for these advertisements. Some of the

most advertised soaps belong to the stable of HUL.. The main mediums are entertainment

channels and the movie channels.

Hindustan Unilever is very aggressive in its promotions. For its Lux brand which is one of the

largest selling in the segment, HUL has always promoted with celebrities since its early days

which has created an image of beauty and beautiful skin among the general people. However the

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ad once used Shahrukh Khan in one of its commercials which created a wrong impact on the

brand and sales went down. This happened because people could not associate a male with a

Lux. However the advertisement was changed and the sales picked up again.

Liril through its freshness advertisements have also created a feeling of freshness in the minds of

the people .Similarly lifebuoy as a brand for cleaning and safety. Through the fierce spending on

advertisements, HUL has captured the minds of the common man so much so that when one

thinks of a soap ,one thinks a Lux or a Liril etc.

MAJOR COMPETITORS IN THE SOAP SEGMENT :

1) Godej Consumer Products Ltd : It is the nearest competitor of HUL in the soap

segment with a market share of 9.7%. Started in 1897 as a locks manufacturing company, the

Godrej Group is today one of the most accomplished and diversified business houses in India.

Godrej's success has been driven by the company's commitment to delivering innovation and

excellence. Through the consistent application of this commitment and a century of ethical

business conduct, Godrej has earned an unparalleled reputation for trust and reliability.

In 1930, Godrej became the first company in the world to develop the technology to manufacture

soap with vegetable oils; that spirit of innovation has continued throughout the organization's

history. Today Godrej is delivering consumers exciting innovations across a spectrum of

businesses.

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chandan kumar fresh project[1]

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