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PRODUCT AND BRAND MANAGEMENT

PROJECT

ON

Company study of

Hindustan Unilever Limited (HUL)

Submitted to- Prof. Pitamber Dwivedi Submitted by-

Anish Bhattacharyya [FT-09-720]

Anurag Kumar Mishra [FT-09-729]

Durgesh Tiwari [FT -09-748]

Jagat Singh Nagar [FT -09-754]

Shwetank Kumar [FT-09-856]

Sourav Mukherjee [FT- 09-862]

Ravi Kumar Sinha [ FT- 09-813]


ACKNOWLEDGEMENT

We take this opportunity to convey our sincere thanks and gratitude to all those

who have directly or indirectly helped and contributed towards the completion

of this project.

First and foremost, we would like to thank Prof. Pitamber Dwivedi

We would also like to thank our batch mates for the discussions that we had

with them. All these have resulted in the enrichment of our knowledge and their

inputs have helped us to incorporate relevant issues into our project.

for her constant guidance and support throughout this project. During the

project, we realized that the degree of relevance of the learning being imparted

in the class is very high. The learning enabled us to get a better understanding

of the nitty-gritty of the subject which we studied.

Last but not the least we would like to thank God and our parents for their

cooperation and help.


TABLE OF CONTENTS

TOPICS PAGE

1. Introduction to FMCG/HUL 4

2. FMCG industry analysis 5

3. Key players of FMCG industry and their brief

introduction

7

4. HUL

Organization Structure

Distribution Channel

Market segment wise penetration

Products of HUL

Category wise Sales growth

BCG analysis

9

5. Corporate Social Responsibility

Project Shakti

14

6. Competition In the FMCG market

HUL and ITC

HUL and P&G

16

7. Strategic growth and Strategic market entry

(Kissan Annapurna Iodized Salt)

25

8. Strategic Shifts 26

9. Financial Analysis

27

10. Brand Management 29

11. Conclusion and Recommendation 31

12. Bibliography 32


INTRODUCTION OF FMCG INDUSTRY AND HUL IN INDIA FMCG is the 4th largest sector in Indian

economy with a market size of more than

$13.1 bn. And expected to become $33.4bn in

2015.200 million people are expected to shift

towards processed food. India needs Rs 28bn

investment in food sector. In the recession/

slowdown period FMCG industry recorded a

growth of 14.5%. Growth of FMCG sector and

Growth of HUL in India is as follows…

FMCG came into in existence in

1888 when Sun Light soap was

firstly seen at KOLKATA harbor.

It was made by Lever brothers in

England.

After that in 1895 Lifebuoy and

after that Lux, Pears and Vim bar.

In 1918 Vanaspati was launched.

Dalda was launched in 1937.

In 1931 Lever brothers made 1st

subsidiary in India

In 1933 they joint with Hindustan

Vanaspati manufacturing company

In 1935 they joint with united

traders limited

All these 3 players mixed together

and form HUL in 1957.

HUL offers 10% of its equity to

Indian public

Unilever holds 52.10% shares and

rest is distributed amongst about

360675 individual shareholders and

financial institutions

Brooke bond is present in India

back to 1900 and its Red Label

band was launched in 1903. In

1912 it joined with lever brothers.

Unilever acquired LIPTON in 1972

Ponds India ltd is working in India

since 1947 and it is acquired by

HUL in 1986 by an international

acquisition.

Tata oil Mills Company merged

with HUL in 1993.

In 1996 Tata made 50-50% joint

venture for LAKME with HUL and

in 1998 it was completely sold to

HUL.

HUL made 50-50% joint venture

with Kimberley Clark corp. in

1994 as Kimberley clark lever ltd

which makes haggis diapers and

kotex sanitary pads.

Unilever established its subsidiary

in Nepal as NEPAL UNILEVER

LTD.

In 2002 HUL launched AYUSH

ayurvedic soap.

In 2004 it came into the water

purifier segment and launched

PURE-it

In 2007 it formally formed as HUL

from HUL that is HINDUSTAN

UNILEVER LIMITED.


FMCG industry analysis

.

SUPPLIER POWER • Supplier concentration • Importance of volume to supplier • Differentiation of inputs • Impact of inputs on cost or differentiation • Switching costs of firms in the industry • Presence of substitute inputs • Threat of forward integration • Cost relative to total purchases in industry

Low

DEGREE OF RIVALRY -Exit barriers -Industry concentration -Fixed costs/Value added -Industry growth -Intermittent overcapacity -Product differences -Switching costs -Brand identity -Diversity of rivals -Corporate stakes

OTHER STAKEHOLDERS

Relative power of unions, govt

Low

High Low to medium

BARRIERS TO ENTRY • Absolute cost

advantages • Proprietary learning

curve • Access to inputs • Government policy • Economies of scale • Capital requirements • Brand identity • Switching costs • Access to distribution • Expected retaliation • Proprietary products

High

THREAT OF SUBSTITUTES -Switching costs -Buyer inclination to Substitute -Price-performance Trade-off of substitutes

BUYER POWER Bargaining leverage Buyer volume Buyer information Brand identity Price sensitivity Threat of backward integration Product differentiation Buyer concentration vs. industry Substitutes available Buyers' incentives

High


Rivalry among Competing Firms:

In the FMCG Industry, rivalry among

competitors is very fierce. There are scarce

customers because the industry is highly

saturated and the competitors try to snatch

their share of market. Market Players use

all sorts of tactics and activities from

intensive advertisement campaigns to

promotional stuff and price wars etc.

Hence the intensity of rivalry is very high.

Potential Entry of New Competitors:

FMCG Industry does not have any

measures which can control the entry of

new firms. The resistance is very low and

the structure of the industry is so complex

that new firms can easily enter and also

offer tough competition due to cost

effectiveness. Hence potential entry of new

firms is highly viable.

Potential Development of Substitute

Products:

There are complex and never ending

consumer needs and no firm can satisfy all

sorts of needs alone. There are plenty of

substitute goods available in the market

that can be re-placed if consumers are not

satisfied with one. The wide range of

choices and needs give a sufficient room

for new product development that can

replace existing goods. This leads to

higher consumer’s expectation.

Bargaining Power of Suppliers:

The bargaining power of suppliers of raw

materials and intermediate goods is not

very high. There is ample number of

substitute suppliers available and the raw

materials are also readily available and

most of the raw materials are

homogeneous. There is no monopoly

situation in the supplier side because the

suppliers are also competing among

themselves.

Bargaining Power of Consumers:

Bargaining power of consumers is also

very high. This is because in FMCG

industry the switching costs of most of the

goods is very low and there is no threat of

buying one product over other. Customers

are never reluctant to buy or try new things

off the shelf.


Key players of

FMCG industry

According to the market survey done by

BUSINESS TODAY the top 10 companies of

FMCG sector are given below.

1. Hindustan Unilever Ltd.

2. ITC

3. Nestlé India

4. GCMMF (AMUL)

5. Dabur India

6. Asian Paints (India)

7. Cadbury India

8. Britannia Industries

9. Procter & Gamble

10. Marico Industries

A brief introduction about

major FMCG companies in

India

Dabur India Limited (Dabur)

• Dabur has entered into the malted food

drink market with the launch of a new

health drink “Dabur Chyawan Junior”.

According to the company, they expect to

capture a market share of 10 per cent of

the Rs. 1,900 Crores malted food drink

market over the next two years.

• Dabur has acquired 72.15 per cent of

Fem Care Pharma Ltd (FCPL), a leading

player in the women’s skin care products

market, for Rs 203.7 Crores in an all-cash

deal. The Company is expected to create

synergy by this deal.

• Dabur got approval from Government of

Himachal Pradesh to set up another

medicine manufacturing unit. The project

has an expected investment of Rs. 130

Crores.

Colgate-Palmolive (India)

Limited

Colgate Palmolive (India) Ltd, which is

currently holding 75 per cent of the share

capital of SS Oral Hygiene Products

Private Ltd, Hyderabad, has acquired the

remaining 25 per cent share capital from

the local shareholders at an aggregate price

of Rs 77.70 lakh. Consequently, SS

Oral Hygiene Products has become a

wholly owned subsidiary of the company.

Nestle India Limited

• Nestle is planning to invest Rs 6 billion

in India in 2009 for expansion of its

business in the country.The company

which has allotted an investment of Rs 3

billion in the Indian market in 2008, would


be doubling the investment in 2009 as part

of its business strategy. Nestle

International is reinvesting and expanding

in India and Nestle India will have all the

financial resources to expand and grow

from the parent company.

• Nestle India reported a good increase in

its standalone net profit for the second

quarter.During the quarter, the profit of the

company rose 26.54% to Rs 1,210.90

million from Rs 956.90 million in the

same quarter, last year. The company

posted earnings of Rs 12.56 a share during

the quarter, registering 26.61% growth

over prior year period. Net sales for the

quarter rose 23.45% to Rs 10,356.30

million, while total income for the quarter

rose 23.78% to Rs 10,423.40 million,

when compared with the prior year period.


HUL: Hindustan Unilever Limited COMPANY - HUL

INDUSTRY - FMCG

MARKET CAP - 48571 Cr

BETA - 0.4

52 Week Hi/Lo - 306/215

Average daily volume - 431633

Face Value - Rs 1

ORGANIZATION STRUCTURE

VP

GM

Sr sales manager

Area sales manager

Territory sales manager

Team Leader

Sales executive


Distribution Channel of HUL

Market Penetration of HUL

SOAPS:43%

TOOTHPASTE:26%

SAMPOOS:21%

SKINKARE:10%

Penetration

HUL

C&F Agents

Redistribution Stockiest

Whole sellers

Rural Retailer Urban Retailer

CUSTOMERS


HUL products in India

Personal wash:- Laundry:-

· Lux. · Surf Excel,

· Lifebuoy, · sun light,

· Liril , · Rin

· Hamam, · Wheel

· Breeze, · Ala bleech

· Moti , Beauty Products:-

· Dove, · Fair & Lovely,

· Pears · Lakme,

· Rexona · Ponds,

Foods:- · Vaseline

-Kissan(Jam,Ketchup,Squashes), · Aviance

· Annapurna (Aata and salt), Hair-Care:-

· Knorr Soups, · Sunsilk naturals,

· Modern Bread · Clinic ,

Ice-cream:- · Dove

· Kwality Wall's Oral-Care:-

Bewerages:- · Pepsodent

Tea:- · Close-up

· Brooke bond, Deo spray:-

· Lipton, · Axe

· taj mahal · Rexona

Coffee:- Water Purifier:-

· Brooke bond bru · Pureit

Disinfectants:- Dishwasher :-

· Domex · Vim

· cif


Category wise sales growth of HUL in India:

Particulars Key Brands

Market Size (in Rs

Cr.)

Market Share

Rank

Fabric wash Surf Excel, Wheel

8988 37.5% 1

Personal Wash

Dove, Lux, Lifebuoy

6632 54.3% 1

Dish wash 57.3% 1

Skin Ponds 2792 54.5% 1

Shampoo Sunsilk, Clinic plus

2168 47.8% 1

Talcum Powder 59.7% 1

Packet Tea Red Label

4452 22.7% 1

Coffee Bru 708 44.0% 1

Jams 67.5% 1

Toothpaste Pepsodent, Closeup

2764 29.5% 2

Ketchups 28.1% 2


BCG ANALYSIS OF HUL

Soap & Detergent and Tea are CASH COW

for the company. It has high relative market

share and low growth rate. Personal Products

and Coffee are STARS for the company as it

have high relative market share as well as high

market growth rate.

Only food is a segment which is a

QUESTION MARK

HUL is taking several steps to capture more

market share so that food segment can also be

a part of Star.

for the company. The

company have a low relative market share

where as it is under high market growth rate.


Corporate Social Responsibility

HUL shows more interest in CSR also as-

From 2004 to 2008 it has reduced the

emission of Carbon di-oxide by more

than 25% in the manufacturing.

HUL follows 5 R strategies to deal

with the Green House Gases (GHG):

Reduce

Re-Use

Recycle

Recover

Renew

HUL uses Agriculture wastages as the

fuel (Ground nut shells, bagasse, saw

dust, Coconut shells, cashew etc)

DOMEX, a product of HUL is

planning to sponsor the “world toilet

day” on the 19th November every year.

PROJECT SHAKTI

(www.HULshakti.com)

ICICI bank is the financial partner of

HUL in the project Shakti

As competition is increasing day by

day, it’s 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)

Small, scattered settlements and poor

infrastructure make distribution

difficult.

To Reach:

Over 500,000 villages not reached

directly by HUL.

B)

Low literacy hampers effectiveness of

print media.

To Communicate:

Poor media-reach: 500 million Indians

lack TV& radio.

C)

Low category penetration,

consumption.

To Influence:

C)

Per capita consumption in Unilever

categories is 33% of urban level.

Awareness:

Project Shakti

HUL soon realized that although it was

enjoying a greater penetration in the rural

market when compared with its

competitor such as Nirma and ITC, its

direct reach was restricted to only 16%.

The FMCG giant was desperate to

increase this share. HUL saw its dream

fulfillment in the vast Indian rural market.

The company was already engaged in

rural development with the launch of the

Integrated Rural Development Programme

in 1976 in the Etah district of Uttar

http://www.hulshakti.com/�


Pradesh. This program was in tandem

with HUL's dairy operations and covered

500 villages in Etah. Subsequently, the

company introduced similar programs in

adjacent villages. These activities mainly

aimed at training farmers, animal

husbandry, generating alternative income,

health & hygiene and infrastructure

development. The main issue in rural

development was to create income-

generating prospects for the poor

villagers. Such initiatives, linked with the

company's core business, became

successful and sustainable and proved to

be mutually beneficial to both the

company ant its rural customers. However

much more remained to be done.

Project Shakti was conceived following

the pioneering work carried out by

Grameen Bank of Bangladesh , Self

Help Groups (SHGs) of rural women

were formed by several institutions,

NGOs and government bodies in villages

across India. This group of usually 15

members contributed a small amount of

money to a common pool and then offered

a micro-credit to a member of the group to

invest in a commonly approved economic

activity. Partnering with these SHGs,

HUL started its Project Shakti in

Nalgonda district of Andhra Pradesh in 50

villages in the year 2000. The social side

of the Project Shakti was that it was aimed

to create income-generating capabilities

for underprivileged rural women, by

providing a sustainable micro enterprise

opportunity, and to improve rural living

standards through health and hygiene

awareness. Most SHG women viewed

Project Shakti as a powerful business

proposition and are keen participants in it.

There after it was extended in other states

with the total strength of over 40,000

Shakti Entrepreneurs.

HUL offered a wide range of products

to the SHGs, which were relevant to

rural customers. HUL invested

significantly in resources who work

with the women on the field and

provide them with on-the-job training

and support. HUL provided the

necessary training to these groups on

the basics of enterprise management,

which the women need to manage their

enterprises. For the SHG women, this

translated into a much-needed,

sustainable income contributing

towards better living and prosperity.

Armed with micro-credit, women from

SHGs become direct-to-home

distributors in rural markets.


COMPETITION IN THE FMCG MARKET

Five main competitive strategies are:

• Overall low cost leadership strategy

• Best cost provider's strategy

• Broad differentiation strategy

• Focused low cost strategy

• Focused differentiation strategy

Here competitive strategy varies from

sector to sector and company to company.

Thus, it is not easy to predict a single or to

find a single strategy for the whole sector.

When we come on to FMCG Sector main

strategies lay behind market strategies, cost,

and quality strategies. Here in this report

you are going to get information about such

type of strategies of FMCG giants.

Competitive Strategies

and Comparison with

ITC

This Company is earlier known as Hindustan

Lever Ltd. This is India's largest FMCG sector

company with all type of household products

available with it. It has Home & Personal Care

products, and also food and Water Purifier

available with it. According to Brand Equity,

HUL has largest no of brands in most trusted

brands list

16 of HUL's brands featured in AC-Nielson

Brand Equity list of 100 most trusted brands in

2008 in an annual survey. For the entire year

ending March - 2009 net turnover of company

is Rs. 20'239.33 Crore which is 47.99% higher

than 31st December 2007's Rs. 13675.43 Crore

driven mainly by domestic FMCG's with net

profit stood at Rs. 2'496.45 Crore.

Products of HUL are: Annapurna; Ayush;

Axe; Breeze; Bru; Brooke bond; Clinic; Dove;

Fair & Lovely; Hamam; Liril; Lux; Pears;

Ponds; Pepsodent; Pureit; Rexona; Rin;

Sunlight; Surfexcel; Vaseline; Wheel.

HUL (Hindustan Unilever Ltd.)

This Company was earlier known as Imperial

Tobacco Company of India Ltd. It is Currently

headed by Yogesh Chander Deveshwar.

Company mainly operates in the industry like

Tobacco, Foods, Hotels, Stationary and

Greeting Cards with the major products

constitutes Cigarettes, packed foods, hotels,

and apparels. For the entire year ending Mar-

2009 the turnover of company is at Rs. 15388

Crore which is 10.3% higher than previous

year's Rs. 13947.53 Crore, driven mainly by

robust 20% growth in non cigarette FMCG

business with net profit stood at Rs. 3324

Crore.

ITC Limited


Analysis of Both Companies

HUL & ITC are major companies in FMCG

market in India. When we compare both

companies on the basis of their strategies i.e. ,

their competitive strategies in the present

market. When we look at the present segment

breakup for both of the companies then we

came to know that their different products vary

too much in the market.

Now let us take a comparative analysis of both

the companies under some heads:

HUL

Hindustan Unilever (HUL) is the largest pure-

play FMCG Company in the country and has

one of the widest portfolio of products sold via

a strong distribution channel. It owns and

markets some of the most popular brands in

the country across various categories,

including soaps, detergents, shampoos, tea and

face creams.

ITC

ITC is not a pure-play FMCG company, since

cigarettes is its primary business. It is

diversifying into non-tobacco. FMCG

segments like foods, personal care, paper

products, hotels and agri-business to reduce its

exposure to cigarettes.

Performance

After stagnating between 1999 and '04, the

company is back on the growth track. In the

past three years, till 2008 HUL's net sales have

witnessed a CAGR of 11%, while net profit

has posted a CAGR of 17%.

Despite diversification, ITC's reliance on

cigarettes is still huge. The tobacco business

contributes 40% to its revenues, and accounts

for over 80% of its profit. This cash-generating

business has enabled it to take ambitious, but

expensive bets in new segments and deliver

modest profit growth.

Overall Strategy:

HUL always believes in customer friendly

products with major emphasis on low cost

overall without compromising on the quality

of the product. They are leveraging the

capabilities and scale of the parent company

and focusing on the value of execution. The

entire product portfolio is also being tweaked

to include premium offerings such as Pond's

Age Miracle and dove shampoo in skin and

hair care. HUL introduced Project Shakti to

penetrate the rural market.

ITC is focusing on delivering value at

competitive prices. Its tremendous reach

through extensive distribution chain has been a

competitive advantage. Additionally, the

company's e-choupal model for direct


procurement is well known under which ITC

partners with over 100,000 farmers for spices

and wheat procurement and an even larger

number for oilseeds. This kind of rural

pedigree is hard to beat.

Growth Drivers

HUL has been launching new products and

brand extensions, with investments being

made towards brand-building and increasing

its market share. HUL is also streamlining its

various business operations, in line with the

‘One Unilever' philosophy adopted by the

Unilever group worldwide. Introduction of

premium products and addition of new

consumers via market expansion will be

HUL's growth drivers.

ITC's backward integration to ensure that its

products pass efficiently from the farms to

consumers has helped it to cut down supply

and procurement costs. ITC's non-cigarette

FMCG business leverages the large

distribution network the company has

developed by selling cigarettes over the years.

A rich product mix, along with ramp-up of

investments in its new sectors, will be

instrumental in charting ITC's growth path.

Risk for both the companies

Being an MNC operating in India, HUL is

more conservative in its strategies than its

Indian counterparts. Moreover, given

increasing competition, it faces the risk of

being overtaken by domestic players in various

categories. Prolonged inflation may lead to

margin contraction, in case HUL is not able to

pass on this burden to consumers. The

company's large size also poses a problem,

since it does not give HUL the agility to

address the competition it faces from national

and regional players.

For HUL

Increased regulatory clamps on tobacco, along

with rising tax burden, pose a business risk for

ITC. So, it has started an ambitious

diversification plan, which has its own set of

risks. With its foray into the conventional

FMCG space, ITC has entered the high-clutter

branded products market. This will burden its

resources in terms of ad spend and brand-

building. Creating brand recall and building

market share in new products are ITC's key

challenges. Export ban and rising crop prices

pose a threat for its agri-business, taxing its

margins.

For ITC


HUL AND P&G

Procter & Gamble was founded in 1837 by

William Procter, a British citizen who

immigrated to the United States. The company

first sold candles. Procter & Gamble Co.

(P&G, NYSE: PG

P&G is credited with many business

innovations including brand management and

the soap opera.

) is a Fortune 500 American

multinational corporation headquartered in

Downtown Cincinnati, Ohio that manufactures

a wide range of consumer goods. As of mid

2010, P&G is the 6th most profitable

corporation in the world, and the 5th largest

corporation in the United States by market

capitalization, surpassed only by Apple, Exxon

Mobil, Microsoft, and Wal-Mart. It is 6th in

Fortune's Most Admired Companies 2010 list.

According to the Nielsen Company, in 2007

P&G spent more on U.S. advertising than any

other company; the $2.62 billion spent by

P&G is almost twice as much as that spent by

General Motors, the next company on the

Nielsen list.

P&G was named 2008 Advertiser of the Year

by Cannes International Advertising Festival.

Proctor & Gamble is a leading member of the

U.S. Global Leadership Coalition, a

Washington D.C.-based coalition of over 400

major companies and NGOs that advocates for

a larger International Affairs Budget, which

funds American diplomatic and development

efforts abroad.


Major products of P&G

Coconut-based cleaning and food products

Laundry and personal cleansing products

Purico Tide Star DariCreme Perla Primex Sunshine Safeguard Camay Ariel Mayon Gain PMC Bonus Victor Daz Ola Lava Agro Mr. Clean Fresco Prell Health care Crest Vicks Zest Fibresure Moncler Thermacare Ivory Pepto Bismol Laundry, personal care and hair care Hair care and laundry categories Secret Pampers Safeguard Whisper Ascend Rejoice Ariel Tide Old Spice Max Factor Zest Vidal Sassoon Clairol Ivory Nice n Easy Pantene Wella Dishwashing, fabric care and food categories

Camay

Joy Mr. Clean Downy Alldays Pringles


STRATEGIES OF P&G

P&G focuses on five core strengths

required to win in the consumer products

industry. We are designed to lead in each

of these areas.

Consumer Understanding

No company in the world has invested

more in consumer and market research

than P&G. We interact with more than five

million consumers each year in nearly 60

countries around the world. P&G invest

more than $350 million a year in consumer

understanding. This results in insights that

tell us where the innovation opportunities

are and how to serve and communicate

with consumers.

Innovation

P&G is the innovation leader in this

industry. Virtually all the organic sales

growth delivered in the past nine years has

come from new brands and new or

improved product innovation. We

continually strengthen our innovation

capability and pipeline by investing two

times more, on average, than our major

competitors. In addition, we multiply our

internal innovation capability with a global

network of innovation partners outside

P&G. More than half of all product


innovation coming from P&G today

includes at least one major component

from an external partner. The IRI New

Product Pacesetter Report ranks the best-

selling new products in our industry in the

U.S. every year. Over the past 14 years,

P&G has had 114 top 25 Pacesetters—

more than our six largest competitors

combined. In the last year alone, P&G had

five of the top 10 new product launches in

the U.S. and 10 of the top 25.

Brand-Building

P&G is the brand-building leader of this

industry. It has built the strongest portfolio

of brands in the industry with 22 billion-

dollar brands and 20 half-billion-dollar

brands. Eleven of the billion-dollar brands

are the #1 global market share leaders of

their categories. The majority of the

balances are #2.

Go-to-Market Capabilities

It has established industry-leading go-to-

market capabilities. P&G is consistently

ranked by leading retailers in industry

surveys as a preferred supplier and as the

industry leader in a wide range of

capabilities including clearest company

strategy, brands most important to

retailers, strong business fundamentals and

innovative marketing programs.

Scale

Over the decades, we have also established

significant scale advantages as a total

company and in individual categories,

countries and retail channels. P&G’s scale

advantage is driven as much by

knowledge-sharing, common systems and

processes, and best practices as it is by size

and scope. These scale benefits enable us

to deliver consistently superior consumer

and shareholder value.

P&G follows Connect + Develop strategy

which enables to bring innovations to life

faster, more economically and more

sustainably.


HUL AND P&G ADVERTIESMENT

WAR

The new campaign started by Rin, a

product of Hindustan Unilever Limited. It

is a direct attack on the Tide

Naturals product by Procter & Gamble.

Note that when It is said a direct attack – it

means an uncensored visual shows the

competitor product and then highlights

how the other product is better then the

former. The sequence of the ad is as

follows

1. Two ladies are standing on a bus stop,

waiting to pick their kids from the

school bus.

2. Both are carrying their shopping

basket/bag with them.

3. Lady 1 has Tide Naturals in her bag.

4. Lady 2 has Rin in her bag

5. Both ladies have a look at each other’s

bag and Lady 1 boasts that Tide has a

good fragrance and provide better

whiteness/brightness to the clothes

6. In the meantime, the school bus

arrives and it’s shown that the white

shirt of Lady 2’s kid is strikingly

brighter and whiter then the Lady 1’s

kid.

7. Lady 1 gets astonished by the

whiteness seen.

8. Lady 2’s kid reacts by asking he

mother, as to why is the other lady so

observant and amazed

9. There is a disclaimer during the ad

that the analysis has been done by an

independent agency

10. It’s then claimed that now there is

promotional price of Rs. 25 on Rin as

opposed to the earlier Rs. 35.

As it can be noticed, there is a direct

mention of the competitor product along

with the visuals. This one seems to be an

absolute direct attack. It is difficult to say

if the ad will continue on TV. Tide would

definitely come out with a protest.

However, I think the damage is already

done. The main point about the reduced

price of Rin would definitely catch the

consumer’s eye benefiting HUL.


PRICE WAR BETWEEN HUL AND P&G

HUL increase the grammage for wheel

P&G increase the grammage of Tide by 25%

P&G cut the price of ARIEL

HUL reduces the price of surf exel in comparision to Ariel

In the year 2010 HUL has reduced 11-17% price in detergents, 7-17% in toilet soaps and 6-7% in the toothpastes. HUL cut the price of RIN by 30% (price war with P&G).

Due to which P&G reacts by cutting 20% indirect price (25% grammage hike) in TIDE.


Strategic growth

summary of HUL HUL prioritized opportunities

which build upon the existing

assets and capabilities. It avoided

spreading their management thinly.

For example: HUL first made its

sales and distribution channel &

supply chain management in

manufacturing and selling wheat

flour and utilized it into the selling

breads produced by wheat flour.

HUL is more focused on the

innovations Example: In 1995

launched KISSAN ANNAPURNA

staple foods with the message

“staple food including iodized salt”

Serving Rural population: In 2000

the 32% of the sales were from

rural sector but in 2010 it is more

than 50%.

It follows direct communication

from the customers.

It believes in expanding the

portfolio.

Each category has a different set of

supply chain, production and

consumer decision making process

issuing associated with it.

Strategies - market

entry: (Kissan Annapurna

iodized salt)

In 1995 HUL launched Kissan

Annapurna iodized salt at that time

only 10% of 6.5 million ton of salts

were branded and refined HUL

identified it and launched the

KISSAN ANNAPURNA SALT.

Firstly it launched in the few cities

of the country for test marketing

and then for all.

Shifted from “purity- a product

attribute” to “Health –consumer

benefit” (As a positioning strategy)

Tried to shift the consumers from

unbranded to brand.

Started Using IODINE as a

marketing strategy as there were

other salts including iodine but no

one was focused on that. HUL

started it.

Started endorsement through

trusted government agencies.

In 2002 it has made iodine patented

in 80 countries.


Strategic Shifts In the past 10 years, HUL has made four shifts in its business strategy, targeted at boosting growth and reach POWER BRANDS: Strategy in

2000. Focusing on fewer brands, 30 of them, and showering marketing attention on them.

MASSTIGE: Strategy in 2005-06.

Making premium brands (prestige)

attainable for a larger section of consumers (mass).

ONE UNILEVER: Strategy in

2007. Building leadership position in fast-growing markets.

PUMP UP THE VOLUMES: Strategy in 2010. Global CEO Paul Polman is pushing the Indian operations chasing value growth to deliver on the volumes as well.


Financial analysis of HUL

INCOME STATEMENT (RS MILLION)

Y/E MARCH 07 FY09 FY10 FY11E FY12E

Net Sales 136,754 202,393 173,844 190,848 213,504 Other Operating

Income 1,937 3,622 1,838 3,298 3,608

Total Revenue 138,691 206,016 175,683 194,147 2 17,112

Change (%) 13.0 48.5 -14.7 10.5 11.8

COGS 72,685 108,379 88,498 101,159 112,531 Gross Profit 66,006 97,636 87,185 92,987 104,581

Operating Exp 45,281 67,235 60,612 66,314 73,424

EBIDTA 20,724 30,402 26,573 26,673 31,157

Change (%) 13.7 46.7 -12.6 0.4 16.8

Margin (%) 14.9 14.8 15.1 13.7 14.4

Depreciation 1,384 1,953 1,814 2,006 2,132 Int. and Fin.

Charges 255 253 75 112 91 Other Income –

Recurring 2,379 2,056 1,692 1,457 1,623 Pro fit before

T axes 21,464 30,251 26,376 26,013 30,557

Change (%) 15.3 40.9 -12.8 -1.4 17.5

Margin (%) 15.7 14.9 15.2 13.6 14.3

Tax 3,643 5,244 5,644 5,463 6,417

Deferred Tax 389 0 475 468 550 Tax Rate (%) 18.8 17.3 23.2 22.8 22.8

Profit after Taxes 17,432 25,007 20,256 20,082 23,590

Change (%) 13.2 43.5 -19.0 -0.9 17.5

Margin (%) 12.7 12.4 11.7 10.5 11.0 Non-rec.

(Exp)/Income 1,824 -43 -144 0 0

Reported P AT 19,256 24,965 20,112 20,082 23,590


If we analyze this financial statement we

can see that the performance of HUL has

decreased over the last two years and the

possible reasons for that are-

Higher expenses on the

advertisement part. HUL is the king of distribution

channel in India but now it is

getting full competition from the

P&G and others like ITC,

AMUL,DABUR,NESTLE etc One of most important factors is

the power branding strategy of

HUL due to which it has ignored

most of the brands and just

focusing only on the power brands.


Brand Management at HUL

HUL has a large brand portfolio consisting

of nearly 110 bands. In every product line,

it has built a number of brands over a

period of time. Quite a few brands have

come to its fold from the parent company.

It has also acquired several ongoing brands

from the market. HUL also vigorously

pursues brand extension strategy. And

concurrently, HUL undertakes line pruning

and brand restructuring and consolidation,

based on marketing compulsions. HUL is

also playing the rejuvenation and re-launch

game. With great benefit the corporate-

level endeavors at business expansion and

diversification are also throwing new

challenges on the brand strategy front.

HUL lends itself for a proper

understanding of the complexity of the

brand management task. We shall examine

how HUL handles the complex demands

in brand management. Such an array of

brands is the outcome of a conscious

corporate strategy by HUL. As a corporate,

HUL wants to be a leader in every one of

its businesses and the strategy is to fight

on the strength of the competitive

advantage arising from the possession of

strong brands. It is this strategy that is

getting reflected in the development of a

multitude of strong brands. If we take the

business of bathing soaps, as an example,

HUL has the objective of being a national

player (not a niche or a regional marketer)

and the leader therein. HUL also wants

about 30 per cent of the corporate income

to come from this line.

So, HUL opted for the strategy of

developing quite a few strong brands in

this line, and among them they cover

different market segments and price points.

Dove, Lux, Liril, Rexona, Pears and

Lifebuoy are the outcome of such a well

planned brand strategy implemented over

time. Lifebuoy is 100 years old and Liril

15 years old. In fact, HUL has about 10

brands of toilet soaps each having good

volume of sale to its credit . The point is

that decisions on brand portfolio are a

fundamental expression of the company’s

objectives and strategy governing a given

business.

HUL Locates Positioning Opportunities:

HUL methodically goes about the task of

developing a brand portfolio across a

product category. It first identifies the

various positioning opportunities across

benefits, target groups and price points.

Existing brads are mapped across these

positioning opportunities, and gaps for

possible new offers are explored.The

company then estimates the likely volumes

for each of the possible opportunity and

the financial viability and sustainability of


the propositions in the long term. If some

of these gaps look promising, HUL goes

ahead with the plans. It examines the

existing set of brands with the company,

the product technologies available, the

benefits that can be provided and other

considerations that have a bearing on the

company’s long term interests in the

business. Finally, if the company decides

to go in for the new offer, a decision has to

be taken as to whether new brands should

be created or extensions if existing brands

should be preferred or ongoing brands

from the market acquired.

HUL hires brands to capture new

opportunities: Towards the close of the

1990s, HUL found that the germicide

segment of the soap market was growing

fast, with RCI’s Dettol antiseptic soap

leading it. HUL did not have suitable offer

in its stable to capture a share of this

segment. Lifebuoy was not strictly

meeting the particular benefit. HUL knew

that launching and developing a new brand

would take a lot of time and resources, and

the company would miss the market if it

chose this route. HUL did not have the

product formula either to enter this

segment. It was in this background that

HUL decided to hire the Savlon brand

from J&J. Savlon was a successful

antiseptic lotion, a competitor to Dettol

lotion. Just as the Dettol soap owed its

origin to the success of the Dettol lotion,

HUL assessed that a Savlon antiseptic

soap could be successfully extended from

the Savlon lotion. It entered into an

agreement with J&J for the use of Savlon

brand name and the product formula, and

launched the Savlon antiseptic soap. HUL

very deftly managed successfully new

brand launch and merged as a challenger

to Dettol soap. J&J secures a good royalty

from HUL for lending the brand. It is a

potentially win-win arrangement for both

companies.

Repositioning and rebranding

HUL has done the process of repositioning

the brands. Few of them as follows;

SUNSILK: Sunsilk co-creations ,

collaboration with 7 pioneer global

hair experts

BREEZE: New fragrances over the

world, new look more colors,

packaging

Rexona: relaunched it with the

coconut moistening

Lifebuoy hand sanitizer: kills

99.99% germs in 15 seconds

Fairness cream: Fair & lovely

multivitamin

Close-up: peppermint splash

Pepsodent toothbrush: 25%

flexibility.


Conclusion &

Recommendations

HUL's up-and-running business model is a

treat for investors seeking exposure in the

FMCG segment. The company has

delivered in the past and has the potential

to do better in future. In short term. HUL’s

growth story is evolving.

ITC is eyeing the pie which HUL and

other FMCG players currently enjoy.

Though risky, the company's business

model will pay off in the long run. ITC has

proved its expertise in the cigarettes,

hotels, paper and agri-businesses. Investors

who want to bank on its execution ability

in FMCG can consider the stock with a

long-term horizon.

According to us the companies should

continue with their CSR and also continue

with their strategies. The thing that needs

to be changed is that, ITC should go for

more diversification in Non cigarette

segment (FMCG) while HUL should come

up with the new strategies that could take

the new product forward to create a new

segment. A recommendation For HUL is

that it should focus on rural area more.


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