hindustan unilever ltd ooh division sip report
DESCRIPTION
This is a report drafted by Sudip Dutta, PGPM 2010 - 2012, Globsyn Business School, Kolkata, West Bengal, IndiaTRANSCRIPT
HINDUSTAN UNILEVER LIMITED
SUMMER INTERNSHIP PROJECT REPORT
ON
SCOPE, OPPORTUNITY, MARKET PENETRATION &
SALES OF ALL PRODUCTS (FOOD & BEVERAGE) IN
THE INSTITUTIONAL SEGMENT
Submitted By:
SUDIP DUTTA
PGPM 2010 - 2012
010109131
Under the able guidance of
Prof. Debraj Datta Mr. Suvankar Banerjee Mr. Amitava Munshi Mr. Gagan Sidana
Project Guide (GBS) Project Guide (HUL) Area Sales Manager Regional Sales Manager
Senior Lecturer (Marketing) Territory Sales Officer Kolkata Metro & (Eastern Zone)
Globsyn Business School Kolkata Metro Rest of Bengal Hindustan Unilever Limited
Ph. No: +91 – 90382 77514 Hindustan Unilever Limited Hindustan Unilever Limited Ph. No.:+91 – 91633 53341
Ph. No: +91 - 96744 93489 Ph. No: +91 – 90070 56316
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ACKNOWLEDGEMENTS
I express my deep sense of gratitude for co-operation and support of all those people who made
me understand what is needed time and again for completing this project.
I am thankful to Hindustan Unilever Limited (HUL) for giving me the opportunity to work with
them and make the best out of this internship.
I thank my company guide, Mr. Suvankar Banerjee, Territory Sales Officer (Cal-Metro) for
having constantly guided and supported me throughout the training period.
I am thankful to my institution, Globsyn Business School for giving me the opportunity to work
with such an esteemed organization.
I owe a deep sense of gratitude to my faculty guide, Prof. Debraj Datta, Senior Lecturer
(Marketing), for providing me with proper support and guidance for the completion of this
project.
My heartfelt gratitude also goes out to all those employees at HUL whom I interacted with
throughout the two months of my internship period.
I take this opportunity to thank my parents and loved ones who have always stood by me and
offered emotional strength and moral support and encouragement.
Last but not the least; I am thankful to all the customers, who gave their precious time and
insights, without which the completion of this project would not have been envisaged.
Sudip Dutta PGPM 2010 -2012
Globsyn Business School
Kolkata
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DECLARATION
Title of the Project:
SCOPE, OPPORTUNITY, MARKET PENETRATION & SALES OF ALL
PRODUCTS (FOOD & BEVERAGE) IN THE INSTITUTIONAL SEGMENT.
I hereby declare that the report (containing words, data, arguments and ideas)
presented for assessment in this Summer Internship Project is my own, and has not
been submitted elsewhere for any evaluation.
This project is in partial fulfillment for the award of the diploma of Post Graduate
Program in Management from Globsyn Business School, Kolkata.
I hereby declare that the information provided in this report is true to the best of
my knowledge.
Sudip Dutta
PGPM 2010 – 2012
010109131
Globsyn Business School, Kolkata
SUMMER INTERNSHIP PROJECT REPORT
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COMPANY CERTIFICATE
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TABLE OF CONTENTS Page Numbers
EXECUTIVE SUMMARY 6
INTRODUCTION 8
CHAPTER 1: BRIEF OVERVIEW OF HUL & THE INDUSTRY 10
1.1 Company Profile 11
1.2 Company History 12
1.3 Brief Overview of the Indian Beverage Industry 14
CHAPTER 2: ALL ABOUT HUL - OOH DIVISION 15
2.1 Objective of the Project 16
2.2 HUL OOH Division 17
2.3 A Study of HUL Product Prices 26
2.4 Distribution Network of HUL OOH Division 27
2.5 Competitor Products 28
2.6 Competitor‘s Prices 30
2.7 Financial Aspects – Benefits for the Customers 31
2.8 Key Responsibility Areas 32
2.9 HUL Vending Business Model 36
2.10 Stock Taking at RS points at the End of Every Month 37
CHAPTER 3: S.W.O.T ANALYSIS, RECOMMENDATIONS & CONCLUSIONS 38
3.1 S.W.O.T Analysis 39
3.2 Recommendations 40
3.3 Conclusions 41
APPENDICES: 42
Additional References
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EXECUTIVE SUMMARY
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EXECUTIVE SUMMARY:
Assigned in Kolkata, the main objective was to understand the scope, opportunity, market
penetration and sales of all products (Foods & Beverage Division) in the institutional segment.
This resulted in successful conversion of six accounts for the company, viz,
COAL INDIA LTD. (Navratna, Govt. of India) – 200 kg monthly consumption,
DABUR INDIA LTD. – 100 kg monthly consumption,
SALVA RESOURCES PVT. LTD. – 70 kg monthly consumption,
SIP RESTAURANT, NEAR LILUAH INOX – 60 kg monthly consumption,
ECC ENGINEERING PVT. LTD. – 50 kg monthly consumption, and
DELTA POWER SYSTEMS PVT. LTD. – 20 kg monthly consumption,
TOTAL CONSUMPTION – 500 kg monthly consumption.
While doing the market mapping, I asked a few questions to the customers like which brand of
coffee, tea and vending machines do they use in order to understand the customer‘s purchase
decision process so that I can pitch them with the right approach. That often revealed some
critical facts about the brand image of the Lipton and BRU brands of HUL. The customer
purchase behavior can be largely explained by two components, which were namely, "Life Cycle
Cost‖ and ―Brand Value‖.
This report holds its importance in the sense that these results can be further utilized by the
company to design basic packages for different types of industries.
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INTRODUCTION
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INTRODUCTION: Ref: http://www.hul.co.in/aboutus/ourvision/
Hindustan Unilever Ltd. products touch the lives of over 2 billion people every day – whether
that's through feeling great because they've got shiny hair and a brilliant smile, keeping their
homes fresh and clean, or by enjoying a great cup of tea, satisfying meal or healthy snack.
Hindustan Unilever Ltd. is always a dream company for marketers, and having got an
opportunity to do a summer internship in such an esteemed organization as a Marketing student
has benefitted me hugely to understand the institutional business of the largest FMCG Company
in India.
Designated in OOH – Foods & Beverage Division, I worked in Kolkata with the primary
objective of determining the scope, opportunity, market penetration and sales of all products
(Foods & Beverage Division) in the institutional segment.
I am obliged to have got an opportunity where I could use my theoretical knowledge of B2B
marketing, in the field through this project which has given me full scope to understand the
market and more importantly understand the behavior of the large corporate customers.
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CHAPTER – 1:
BRIEF OVERVIEW OF HUL
& THE INDUSTRY
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1.1 Company Profile: Ref: http://www.hul.co.in/aboutus/introductiontohul/
Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods Company
with a heritage of over 75 years in India and touches the lives of two out of three Indians.
HUL works to create a better future every day and helps people feel good, look good and get
more out of life with brands and services that are good for them and good for others.
With over 35 brands spanning 20 distinct categories such as soaps, detergents, shampoos, skin
care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water
purifiers, the Company is a part of the everyday life of millions of consumers across India. Its
portfolio includes leading household brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair
& Lovely, Pond‘s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe,
Brooke Bond, Bru, Knorr, Kissan, Kwality Wall‘s and Pureit.
The Company has over 16,000 employees and has an annual turnover of around Rs.19, 400
crores (financial year 2010 - 2011). HUL is a subsidiary of Unilever, one of the world‘s leading
suppliers of fast moving consumer goods with strong local roots in more than 100 countries
across the globe with annual sales of about €44 billion in 2011. Unilever has about 52%
shareholding in HUL. The rest of the shareholding is distributed among 3, 60,675 individual
shareholders and financial institutions.
The Mission that inspires all the HUL employees is ―Adding Vitality to Life‖.
The Vision of HUL is that, ‗it touches the lives of over 2 billion people every day – whether
that‘s through feeling great because they have got shiny hair and a brilliant smile, keeping their
homes fresh and clean, or by enjoying a great cup of tea, satisfying meal or healthy snack.‘
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1.2 Company History: Ref: http://www.hul.co.in/aboutus/ourhistory/
In the summer of 1888, visitors to the Kolkata harbor noticed crates full of Sunlight soap bars,
embossed with the words "Made in England by Lever Brothers". With it began an era of
marketing branded Fast Moving Consumer Goods (FMCG). Soon after that, followed Lifebuoy
in 1895 and other famous brands like Pears, Lux and Vim. Vanaspati was launched in 1918 and
the famous Dalda brand came to the market in 1937. In 1931, Unilever set up its first Indian
subsidiary, Hindustan Vanaspati Manufacturing Company, followed by Lever Brothers India
Limited (1933) and United Traders Limited (1935). These three companies merged to form HUL
in November 1956; HUL offered 10% of its equity to the Indian public, being the first among the
foreign subsidiaries to do so. Unilever now holds 52.10% equity in the company. The rest of the
shareholding is distributed among about 360,675 individual shareholders and financial
institutions. The erstwhile Brooke Bond's presence in India dates back to 1900. By 1903, the
company had launched Red Label tea in the country. In 1912, Brooke Bond & Co. India Limited
was formed. The erstwhile Lipton's links with India were forged in 1898. Unilever acquired
Lipton in 1972 and in 1977 Lipton Tea (India) Limited was incorporated. Pond's (India) Limited
had been present in India since 1947. It joined the Unilever fold through an international
acquisition of Chesebrough Pond's USA in 1986. The liberalization of the Indian economy,
started in 1991, clearly marked an inflexion in HUL's and the Group's growth curve. Removal of
the regulatory framework allowed the company to explore every single product and opportunity
segment, without any constraints on production capacity. Simultaneously, deregulation permitted
alliances, acquisitions and mergers. In one of the most visible and talked about events of India's
corporate history, the erstwhile Tata Oil Mills Company (TOMCO) merged with HUL, effective
from April 1, 1993. In 1996, HUL and yet another Tata company, Lakmé Limited, formed a
50:50 joint venture, Lakme Unilever Limited, to market Lakmé‘s market-leading cosmetics and
other appropriate products of both the companies. HUL formed a 50-50 joint venture with the
US-based Kimberly Clark Corporation in 1994, Kimberly-Clark Lever Ltd, which markets
Huggies Diapers and Kotex Sanitary Pads. The 1990s also witnessed a string of crucial mergers,
acquisitions and alliances on the Foods and Beverages front. In 1992, the erstwhile Brooke Bond
acquired Kothari General Foods, with significant interests in Instant Coffee. In 1993, it acquired
the Kissan business from the UB Group and the Dollops Ice-cream business from Cadbury India.
As a measure of backward integration, Tea Estates and Doom Dooma, two plantation companies
of Unilever, were merged with Brooke Bond. Then in 1994, Brooke Bond India and Lipton India
merged to form Brooke Bond Lipton India Limited (BBLIL). By the end of the year, the
company entered into a strategic alliance with the Kwality Ice-cream Group families and in 1995
the Milk food 100% Ice-cream marketing and distribution rights too were acquired. Finally,
BBLIL merged with HUL, with effect from January 1, 1996. The internal restructuring
culminated in the merger of Pond's (India) Limited (PIL) with HUL in 1998. In 2002, HUL made
its foray into Ayurvedic health & beauty centre category with the Ayush product range and
Ayush Therapy Centres. Hindustan Unilever Network, Direct to home business was launched in
2003 and this was followed by the launch of ‗Pureit‘ water purifier in 2004. In 2007, the
Company name was formally changed to Hindustan Unilever Limited after receiving the
approval of shareholders during the 74th AGM on 18 May 2007. On 17th October 2008, HUL
completed 75 years of corporate existence in India.
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From 2013, the company will be known as UNILEVER INDIA LTD.
Future targets of the company includes: -
2015 – Pachas ki pyaas (Rs. 50, 000 crores turnover)
2018 – Aassi ki aas (Rs. 80, 000 crores turnover)
2020 – Sau ka sapna (Rs. 100, 000 crores turnover) – Mission Universal Unilever
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1.3 Brief Overview of the Indian Beverage Industry:
Indian beverage industry has the following types of beverages as: -
Alcoholic Beverages
Non-alcoholic Beverages
o Soft Drinks
o Fruit Juices
o Hot Beverages
o Others
This project‘s scope lies only in the non-alcoholic beverage industry as briefed under: -
Non-alcoholic Beverages: Ref: http://www.ibef.org/download/Food_Processing_270608.pdf
Sec 1:5 Pg. 7 of 28.
Non-alcoholic beverages include carbonated drinks, non-carbonated drinks and hot beverages
such as tea, coffee and health drinks.
It is estimated that the total size of the beverage market is $333 million by value and 85,000 tons
by volume. 65% of the market accounts for white beverages whereas remaining 35% is
constituted of brown beverages. India is the largest producer of tea in the world and has 28% of
the total global production, at 857 million kgs. Tea production in India has been growing at 1.2%
per annum and India is the fourth largest exporter of tea in the world. India is also the sixth
largest producer of coffee accounting for 4.5% of the total production in the world. Nearly 75%
of India‘s production is exported.
Major companies in this market are as listed under: - (* marked are International Players)
Nestle*
Hindustan Unilever Limited*
Georgia*
Tata Global Beverages*
Fresh n Honest (LAVAZZA)*
Aqua Java (Local players)
Café Coffee Day (ACBCL)
Godrej
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CHAPTER – 2:
ALL ABOUT HUL OOH DIVISION
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2.1 Objective of the Project:
The main objective of this project lies in understanding the market for hot beverage vending
machines, and also to analyze the latest and emerging trends.
This is relatively a new emerging market with lot of growth opportunities for food and beverage
companies, which is why all major FMCG players in this business are already eying for a
sizeable chunk of the market share; few of these major players are Nestle, HUL, Georgia, CCD,
Aqua Java, Godrej etc.
This project also tries to analyze the purchase decision behavior of corporate customers, which
forms majority of the customer base. Customer purchase behavior analysis will provide valuable
insight to the company for deciding the sales and promotional strategy, and hence will give it a
competitive edge.
This project also involves creation of a strong database of potential consumers (customers) for
the company and in the process, generates leads for sales.
This project also involved monthly visits to the Redistribution Stockist points and taking the
stock report and subsequent calculations thereafter.
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2.2 HUL Out-Of-Home Home Division: Ref: http://www.hulfnbservices.com/abouthul.htm
OOH is an arm of HUL that caters to the on-premise F&B requirements, using state-of-the art
modern vending machines, with branded product premixes that enable people to sip their favorite
drink (either tea / coffee) when outside the comfort of their homes. So whether one is at work, or
at mall/multiplex, or in a college cafeteria, or simply waiting at the airport/railway station, they
can enjoy their favorite drink at the push of a button.
We also supply our products directly to caterers, confectionary manufacturers, ship chandlers
and others to meet their bulk requirements.
Product Portfolio: Ref: http://www.hulfnbservices.com/chooseyourproduct.htm
OOH F&B services are again sub-divided as vending solutions and non-vending solutions.
a) Vending Solutions:
Lipton Cardamom Tea: - A classic blend of Sri Lankan and Indian teas with natural cardamom
flavors, which is a rewarding treat with its delicious taste and cardamom aroma.
Lipton Hot Lemon Tea: - Delightfully refreshing lemon flavor – A whole new way to experience
black tea.
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Taj Mahal Tea Bags: - The selection of the finest teas to create a robust, full bodies brew with a
lingering aroma.
Lipton Instant Tea: - Simply a refreshing, convenient beverage that is a great tasting, low-calorie,
low-sugar alternative to soda.
Lipton Masala Tea: - Masala Chai is an ancient tea brew from the Hindu healing process
called Ayurveda. Lipton Spiced Chai is one of the domestic brands that include the black pepper
which is absolutely delicious to sip.
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Bru 100% Coffee: - A complete cup of hot coffee with a rich feel to keep you refreshed and
energized round the clock.
Bru Cappuccino: - Creamy, frothy and irresistible cup of coffee.
Bru Fresh Bean Coffee: - 100% purest form of highly aromatic coffee made from crushed beans.
Hot Chocolate: - Hot chocolate (also known as hot cocoa or just cocoa or chocolate milk) is
a heated beverage typically consisting of shaved chocolate, melted chocolate or cocoa powder,
heated milk or water, and sugar. Drinking chocolate is similar to hot chocolate, but is made from
melted chocolate shavings or paste rather than a powdered mix that's soluble in water. HUL
OOH division‘s hot chocolate is launched this year (2011) only and it‘s just delicious.
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Knorr Tomato Soup: - A tasty and healthy tomato soup.
b) Non-vending Solutions: Ref: http://www.hulfnbservices.com/ibs.htm
HUL - OOH division also handles large customers for their non-vending requirements and helps
them choose from a wide range of products.
It also offers bulk packs for the factories/caterers/ship chandlers to provide greater value.
OOH division is currently supplying BRU instant coffee to almost all the leading confectionary
manufacturers in the country for their confectionary requirements.
Besides this, OOH division also provides services to choose products from their food and
beverage or home and personal care basket to gift to patrons and customers. It supplies products
like Taj Mahal Tea Bags, Lifebuoy Hand Wash, Lakmé Skin Care range etc. to pharmaceutical
companies at attractive prices for gifting it to the doctors.
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Services: Ref: http://www.hulfnbservices.com/services.htm
Wide Coverage - The service infrastructure of OOH covers over 300 concessionaires
across 100 plus towns with over 600 dedicated skilled technicians to facilitate 24/7
technical support and assistance.
Strong Resourcing - Our trained and well-equipped technical, sales and support teams
are fully geared to meet all your services and maintenance requirements. We also have a
wide foot print to support national deals, keeping pace with the growth aspirations of our
clients as they expand into new towns.
World Class Research - We have a global Unilever Research Centre (HURC) at
Bangalore, which has world class research facilities which give us an edge in product and
technical innovation.
Safety - Hot water auto flush feature in machines for auto cleaning of mixing unit at
regular intervals. Also temperature lock feature in machines ensures that drinks don't get
dispensed below a minimum specified temperature.
Hygiene - Easily detachable machine parts to facilitate cleaning. Also the machine has an
intrusion resistant design so as to have minimum possibility of external impurities getting
inside.
Quality – All machines undergo strict internal quality checks and audits. All products are
microbiologically tested, and are safe for consumption.
Consistency – The DC motors in the machine are better suited to handle voltage
fluctuations. Patented canister design for smooth and consistent flow of premixes.
External Audit - For regular monitoring and better control we have engaged an
independent agency to conduct external audits and provide MIS reports to generate
unbiased feedback. The agency also provides elaborate demonstrations to the operators
for uplifting the safety and hygiene standards at sites.
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Vending Machines: Ref: http://www.hulfnbservices.com/chooseyourmachine.htm
1. Fresh Bean Coffee Machine:
Features: -
Option of 4 ingredients in the nature of coffee beans, dairy whitener, soup etc.
Providing 10 drinks option including 6 options of fresh bean coffee.
Dispensing rate – 2 cup/min of 100ml.
Temperature interlocking.
Water Source – Online / Bubble top.
Specifications: -
Dimensions
Height - 665 mm
Length - 410 mm
Depth - 560 mm
Weight 50 kg
Power Supply 230 Volts / 50 Hz
Absorbed Power 2000 Watts
Pre-mix Canister Capacity 1 kg
Coffee Bean Canister
Capacity 1 kg
Products: - This machine is capable of dispensing 10 beverages, with 6 fresh bean coffee
beverages. It has options of dispensing Espresso, Americano, Latte normal sugar, Latte low
sugar, Cappuccino normal sugar, Cappuccino low sugar, Cardamom tea, Tea Bag tea (black) and
another option of extra sugar for beverages.
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2. High Speed Hot Machine:
Features: -
Options of 5 ingredients in nature of coffee, dairy whitener, soup etc.
Option of simultaneous dispensing of any 3 drinks.
Option of cappuccino.
Staggered dispensing option for dairy whitener.
Dispensing rate – 15 cups/min of 100 ml each. (approx. 250 cups non-stop)
Temperature interlocking.
Auto cleaning.
Water Source – Built-in / Online.
Specifications: -
Dimensions
Height - 890 mm
Length - 440 mm
Depth - 585 mm
Weight 60 kg
Power Supply 230 Volts / 50 Hz
Absorbed Power 2500 Watts
Pre-mix Canister Capacity 1.2 kg
Products: - This machine has five options along with cappuccino; it dispenses cardamom tea, tea
bag tea, soup and hot water for black tea.
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3. New 4-Lane U Cup Machine:
Features: -
Option of 4 ingredients in nature of coffee, tea, hot water, soup etc both in half/full cup.
Staggered dispensing option for tea bags.
Temperature interlocking.
Auto cleaning.
Water Source – Bubble – top / Online.
Specifications: -
Dimensions
Height - 650 mm
Length - 325 mm
Depth - 590 mm
Weight 25 kg
Power Supply 230 Volts / 50 Hz
Absorbed Power 2500 Watts
Pre-mix Canister Capacity 1 kg
Products: - This machine can be used to dispense four beverages, in terms of coffee, tea bag tea,
black tea, and any other hot beverage of choice e.g. soup, cardamom tea etc. This machine has
also facility of half cup dispensing option, so as to control wastage.
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4. Smart Card Machine:
Features: -
Option of 4 ingredients in nature of coffee, tea, soup etc.
Post or pre-paid option through smart card.
Option of consumption data downloading to PC for MIS processing.
Temperature interlocking.
Staggered dispensing option for tea bags.
Auto-cleaning.
Water Source – Built-in tank/Bubble top.
Specifications: -
Dimensions
Height - 645 mm
Length - 445 mm
Depth - 545 mm
Weight 35 kg
Power Supply 230 Volts / 50 Hz
Absorbed Power 2500 Watts
Pre-mix Canister Capacity 1.2 kg
Products: - This machine is specially designed for educational institutes and canteens where
students and employees are provided with smart card facility post or pre-paid, as per their
requirements. This machine can dispense 4 beverages, usual tea, coffee and any other two hot
beverages of choice.
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A Lipton vending machine is the most advanced of its kind. Features like microprocessor
controlled water temperature, inbuilt digital counter, hardware lock, and auto-flush system helps
to maintain a low failure rate. It is also hygienic and insect proof, which also contributes to its
durability. Flexibility in cup-offerings – half and full; is another attribute which makes the
Lipton vending machine stand out as the most convenient vending machine. The technologically
superior equipment has been put through intense stress tests so that it can withstand the
demanding local market. Lipton vending machine is fitted with any of four different types of
filters: - single, double, triple and resin filter. This makes sure that the best and safest quality of
water goes into the vended Lipton cup. The filter thus enhances the quality of water, taste of the
beverage and also increases equipment life.
2.3 A Study of HUL Product Prices: (Table 1) Ref: HUL Quotation
Paper Cup Cost (Additional): Re. 0.50 per cup
Coffee Grammage Settings: 9gm. per cup
Tea Grammage Settings: 8gm. per cup
Hot Chocolate/Soup Grammage Settings: 9gm. per cup
On an average, all the above SKUs will generate 110 cups of coffee & tea per kg. as applicable
(if the serving size is 90 ml).
Sl. Particulars Price
(market rate
per kg)
Per cup cost
1. Bru Instant Coffee Premix 200/- 1.80
2. Bru 100% Coffee Premix (Crushed Beans) 250/- 2.25
3. Lipton Hot Lemon Tea Premix 200/- 1.60
4. Lipton Instant Tea Premix 260/- 2.08
5. Lipton Cardamom Tea Premix 250/- 2.00
6. Lipton Masala Tea Premix 260/- 2.08
7. Lipton Dairy Whitener( Normal Sugar) 170/-
8. Lipton Dairy Whitener(Low Sugar) 250/-
9. TAJMAHAL TEA BAGS 82/-
(Per 100pc)
0.82
10. Hot Chocolate 500/- Rs. 4.50
11. Knorr Tomato Soup 400/- Rs. 3.60
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2.4 Distribution Network of HUL OOH Division: Ref: Company Guide
FACTORY
DEPOT DEPOT
R.S R.S R.S R.S
CONSUMER CONSUMER CONSUMER CONSUMER
In FMCG business, we generally deal with indirect selling, i.e., we sell the product to someone
who then sells it to someone else.
There are various reasons for which the company operates this chain through Re-Distribution
Stockist (distributor) sales management which can be summarized as follows:
The Re-Distribution Stockist (distributor‘s) ability to offer a more complete package of
services is not only an inventory support, but also an administrative, technical and
logistic support.
Re-distribution Stockists provide an increased market share for the manufacturers
bringing the company in front of a larger customer base.
Some businesses can be too small for the company to handle, or too much trouble
because of its location. A strong re-distribution stockist network will take this burden off
from the company by changing it into an opportunity. Because the re-distribution
stockist is service-oriented, he works with the business regardless of its size or scope.
Re-distribution Stockists provide flexibility that manufacturers do not, such as
rescheduling the delivery and responding to very small quantity requirements.
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2.5 Competitor Products: Ref: Respective Company Websites
The chief competitors of Hindustan Unilever Ltd in tea and coffee vending business are Nescafe,
Tata, Georgia and Café Coffee Day which have their presence in the market with following
products: -
1) Café Coffee Day
Café Coffee Day is a chain of coffee shops in India. A division of
Amalgamated Bean Coffee Trading Company Ltd. (ABCTCL), it is
commonly known as Coffee Day. It opened its first cafe in 1996 on
Brigade Road in Bangalore, and today has the largest cafe retail chain
in India - with 436 cafes in 69 cities.
Headquartered in Bangalore, a majority of its cafes are also located in
Bangalore. The cafe chain has had much success riding, and to some
extent creating, the cafe culture wave that swept across metropolitan
Coffee Day sources coffee from 10000 acres of coffee estates, the 2nd largest in Asia, that is
owned by a sister concern and from 11,000 small growers. It is one of India‘s leading coffee
exporters, with clients across the USA, Middle East Europe and Japan.
(2) FRESH & HONEST Till recently a company selling beverages, Fresh & Honest, solely owned by Lavazza, world‘s
second largest coffee producer after Starbucks has now added noodles and corn flakes to its
product basket by signing up deals with Indo Nissan Foods Limited
(makers of Top Ramen noodles) and Kellogg's. Fresh & Honest imports soup powder and Swiss chocolate powder from
two Swiss companies Haco and Domaco respectively. The coffee bean,
dip tea packs, milk and sugar are sourced within India. The coffee bean
is sourced from Chikmagalur, Karnataka.
Fresh & Honest imports soup powder and Swiss chocolate powder from
two Swiss companies Haco and Domaco respectively. The coffee bean,
dip tea packs, milk and sugar are sourced within India. The coffee bean
is sourced from Chikmagalur, Karnataka.
(3) TATA GLOBAL BEVERAGES Another competitor of HUL is Tata with its brand Tetley.
Tata Coffee Limited, one of the world‘s largest integrated coffee
companies. The company earlier known as Consolidated Coffee was
renamed as Tata Coffee with the merger of Coffee Land and Asian
Coffee.
Tetley has been a member of the Tata Group since March 2000 and
today contributes around two-thirds of the total turnover of Tata Tea.
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The company is a joint venture between Tata Tea, which produces 40 million kg of tea per
annum at its gardens, and the UK-based Tetley Group, a tea blender and tea bag producer of
international repute. The Tata-Tetley combine offers a wide range of international quality
products, such as round tea bags, string and tag tea bags, and packet tea.
VENDING MACHINE & THEIR FEATURES SINGLE OPTION—simple-sleek, detachable drip tray, hot water facility.
DOUBLE OPTION-HOT—detachable drip tray, hot water facility.
TRIPLE OPTION-HOT—built in stabilizer, auto cleaning, digital counter, temperature
interlocking.
FOUR OPTION-HOT— auto-cleaning, digital counter, temperature interlocking, auto
flushing.
MULTIPLE OPTION-HOT— Provision for mineral water bubble top, auto flushing,
temperature interlocking, digital counter.
(4) NESTLE
The main competitor of HUL vending products in the market is Nestle.
And listed below are some points about Nestle. All about Nestlé
Nestlé was founded in 1866 by Henri Nestlé, a pharmacist, who
developed a food for babies who were unable to breastfeed. The Nestlé
Company has aimed to build a business based on sound human values
and principles.
Nestlé is committed to the following Business Principles in all countries,
taking into account local legislation, cultural and religious practices:
Nestlé's business objective is to manufacture and market the Company's
products in such a way as to create value that can be sustained over the long term for
shareholders, employees, consumers, and business partners.
Nestlé does not favor short-term profit at the expense of successful long-term business
development.
Nestlé recognizes that its consumers have a sincere and legitimate interest in the behavior,
beliefs and actions of the Company behind brands in which they place their trust and that without
its consumers the Company would not exist.
Nestlé believes that, as a general rule, legislation is the most effective safeguard of responsible
conduct, although in certain areas, additional guidance to staff in the form of voluntary business
principles is beneficial in order to ensure that the highest standards are met throughout the
organization.
Nestlé is conscious of the fact that the success of a corporation is a reflection of the
professionalism, conduct and the responsible attitude of its management and employees.
Therefore recruitment of the right people and ongoing training and development are crucial.
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Nestlé continues to maintain its commitment to follow and respect all applicable local laws in
each of its markets.
TEA
Nestea Tea Bags, Instant Tea Premix (Cardamom Flavor), Instant Tea Premix (Plain Tea),
Lemon Tea, Dairy Whitener, Everyday Sugar Free
COFFEE
Nescafé Premix, Nescafe Low Sugar, Cappuccino, Moccachino.
MAGGI TOMATO SOUP
2.6 COMPETITOR’S PRICES
GEORGIA (Table 2) Ref: Company Guide
Product Name Rate SPECIFICATION
Georgia Milk 110.00 Per Kg( Approx. 100 cups)
Georgia Cardamom Tea/ Ginger
Tea/ Masala Tea
220.00 Per Kg (Approx.95 Cups)
Georgia Coffee 200.00 Per Kg (Approx. 95 Cups)
Georgia Hot Lemon Tea 190.00 Per Kg ( Approx. 125 Cups)
Georgia Without Sugar Milk 310.00 Per Kg (Approx. 200 cups)
Sun fill Soup 330.00 Per Kg ( Approx. 167 Cups)
NESTLE (Table 3) Ref: Company Guide
Product Name Rate SPECIFICATION
Nescafe Coffee Premix 185.00 Per kg (Approx. 80 cups)
Nescafe Classic coffee 450.00 Per 500 gm.
Everyday Whitener Premix 112.00 Per kg (Approx. 100 cups)
Everyday Dairy Whitener Poly 180.00 Per kg
Badam Milk Premix 220.00 Per Kg
Nestea Lemon Premix 98.00 Per 500 gm. (Approx. 15
cups)
Nestea Cardamom Tea Premix 190.00 Per kg (Approx. 80 cups)
Maggie Hot Cup Soup Tomato 375.00 Per kg (Approx. 170 cups)
Tea Bags 0.70 Per Bag
Creamer 3Gm 101.83 Per Case( 24pkt)
Paper Beaker 150 Ml 0.45 Per Beaker
Plastic Beaker 150 Ml 0.50 Per Beaker
Sugar Powder 43.50 Per Kg
Sugar Cube [Economy Pack] 42.00 Per kg
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2.7 Financial Aspects – Benefits needed to be explained to Customers:
A deal is confirmed and the negotiation ends at that point where both the parties are assured of
their benefits. HUL tries to ensure a margin of at least 13% on all of its consumerables to its re-
distribution stockists. Hence, I tried to analyze the account in the following way: -
A comparison of cost if consumed from a local vendor vis-à-vis Lipton vending Machine: -
Let primary billing = Rs 15000
13% of Rs 15000 = Rs 1950
Here, distributor is in benefit even if he does not charge monthly maintenance charges.
Now, the customer doesn‘t enter into deal unless he is made acquainted with the benefit available
Let us consider a firm ‗A‘ having 60 employees and consumption is 120 cups per day (say, 60
cups of tea and coffee each).
TEA: 60 cups * Rs. 4 = Rs 240
COFFEE: 60 cups * Rs. 5 = Rs 300
Total = Rs 540
For 1 month = Rs 540 * 25 working days = Rs. 13, 500
Add: Salary of Service boy = Rs 1, 000
Add: Breakage = Rs 100
Total = Rs 14, 600
[Here, each cup of tea and coffee is assumed to be of Rs 4 and Rs 5 respectively]
Now, with Lipton vending machine this cost will minimize as follows: -
Masala TEA (with paper cups) = Rs. 2.58 * 60 cups = Rs. 154.80
Fresh beans COFFEE (with paper cups) = Rs. 2.75 * 60 cups = Rs. 165
Total = Rs. 319.80
Total for 1 month = Rs 319.80 * 25 working days = Rs. 7, 995
Add: Rent (done for a 4-lane machine) = Rs. 700
Commercial Rate for 1unit of electricity = Rs. 6 per KWh
Power Consumption by a vending machine = 2500 W (i.e. 2.5 KW) * 9 working hrs. /day =
22.5 KWh * Rs. 6 per KWh = Rs. 135 /day
Monthly electricity bill from machine = Rs. 135 / day * 25 working days = Rs. 3, 375
Total = Rs. 12, 070
Benefit of customer = Rs. 14, 600 – Rs. 12, 070 = Rs. 2, 530
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2.8 Key Responsibility Areas
Infrastructural Development Market / Business Development
R.S. Related Issues Market Mapping
a. Primary Sales Monitoring Client Generation by
b. Secondary Sales Monitoring making cold calls
New R.S. Appointment Client Conversion
Claim Calculation - Earlier Prospects
Negotiation & Deal
Closure
Post installation
Service
INFRASRTUCTURAL DEVELOPMENT:
Primary Sales Monitoring: -
Primary sales monitoring is done through 2 ways;
a. Cheque Party: The redistribution stockist who is assigned as the cheque party, material
is sent to the R.S. point every week by the company irrespective of the R.S. giving order
or not.
e.g.: If secondary sales of R.S. is 8 tons, material will be sent to the R.S. point as PDP
(Pre-Determined Primary) billing in 2 tons per week. A closing stock of 4 tons has to be
kept every month.
Company will prefer to have a cheque party since HUL will have a strong grip on the
primary. If HUL has more primary target in any particular month, then they will send 3
tons (i.e. 8+4 = 12 tons / 4week = 3 tons) in that month.
b. RTGS Party: If any cheque bounces or is purposely bounced by any R.S. point who is
under Cheque Party system, R.S. gets shifted automatically to RTGS (Funds Transfer)
system. After 12 successful transactions, the R.S. gets shifted back to the PDP billing
system. If 3 successive cheque bounces in 3 months, then that R.S. code is locked and
suspended by HUL.
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Secondary Sales Monitoring: -
R.S. point‘s clients are monitored by a Territory Sales Officer on a monthly basis. During April
to July, secondary sales drop due to low consumption of tea and coffee during summer. The TSO
will have to follow up with each existing client of the R.S. points and tell them to order some
more materials in the current month since there will be a shortage of materials in the next month,
which is a marketing strategy to increase secondary sales volume. In this way, if the TSO is able
to make each client order 10 kg more than what they usually order, then if any R.S. has suppose
100 clients; then 1 ton of secondary sales increases for that R.S. point just by follow up.
New R.S. Appointment – ROI Calculations: -
Landing rate of one 4-lane vending machine is Rs. 16, 000 to Rs. 18, 000. So, we assume that on
an average, the landing rate will be Rs.17, 000.
The landing rate of the premixes will be on an average Rs. 200.
Re-distribution Stockist has to start business with HUL with at least 30 vending machines at the
starting of the business.
Re-distribution Stockist is assumed to be having an average tonnage of 2 tons of premix p.m.
Net Investment = (Rs. 17, 000 * 30 nos. vending machines = Rs. 5, 10, 000) + (2000 kg * Rs.
200 = Rs. 4, 00, 000) + (Overhead Costs = Rs. 90, 000 say) = Rs. 10, 00, 000.
Assumed the machines will be installed @ Rs. 500 p.m.
Total rent per year = Rs. 500 * 30 nos. * 12 months = Rs. 1, 80, 000.
So, in about 3 year‘s duration, the R.S. point will be able to raise profit through those 30 vending
machines.
Selling Price of premixes = 2000 kg * Rs. 225 (~ 13% margin) = Rs. 4, 50, 000.
But, gross profit p.a. = [{(Rs. 4, 50, 000 – Rs. 4, 00, 000) * 12months} + (Rs. 1, 80, 000)] =
Rs. 7, 80, 000.
Net Profit = Rs. 7, 80, 000 – Rs. 90, 000 (Overhead costs such as, Service Boy Salary,
Technician Charges, Transportation Cost, and Inventory Cost) = Rs. 6, 90, 000
ROI = (Net Profit / Net Investment) * 100 = 69%
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Claim: -
There are 5 types of claim that can be made: -
TPR (Temporary Price Reduction) claim: - When the landing rate is greater than the customer
rate, then the balance amount is raised from the company as TPR (Temporary Price Reduction)
claim.
Damage: - Damage in the materials (premixes) often occurs due to mainly; Rat Bites, Rainfall,
Bad transportation etc. A ceiling of Rs. 5, 000 is assigned for damage claims p.m. by HUL.
Demo: - Demo is under the discretion of the Territory Sales Officer for accounting a conversion.
A maximum ceiling of Rs. 5, 000 is assigned by HUL on a monthly basis.
Manpower: - Manpower is provided by HUL mainly in hospitals, shopping malls, colleges, etc.
A limit of Rs. 4, 000 per person p.m. is assigned by HUL. Also, the manpower is audited from
time to time.
Shortage: - There are two types of sealed packs namely, Company Sealed Pack and Depot
Sealed Pack. The Company Sealed Pack is not considered for any claim. However, in a Depot
Sealed Pack; if shortage is there, then the truck driver has to immediately sign or put a thumb
impression in the challan. The maximum ceiling is Rs. 5, 000 p.m. as assigned by HUL.
Branding: - Hindustan Unilever Limited usually assigns Rs. 4, 000 p.m. for branding in the
form of hoisted banners and kiosks placed at different corners of the city.
MARKET / BUSINESS DEVELOPMENT:
Market Mapping: -
Generation of sales lead by performing cold calling and collecting market information was a
major part of my project. All the interns were assigned to different locations around the city of
Kolkata where they had to generate sales lead. Before this, a brief overview of the industry,
market scenario, competitors, prices etc. was given by the industry guide, Mr. Suvankar
Banerjee, TSO (Cal Metro). On an average, I had to do about 15 cold callings in a day. The
bigger leads (in terms of monthly consumption) were followed up by the guide accompanied
with the interns initially but later on after a few weeks; the initial study of the market, sales lead
generation as well as their follow up, meeting with the customers, demo provided if requested
for, and subsequent closure of the deals was handled independently by the interns. Overall, I
visited more than 250 prospective client locations.
Client Generation by making Cold Calls: -
Sales lead generation and subsequent closure of deals are done in the following three steps: -
Do Cold Callings.
Meet the respective administration / human resources heads and negotiate.
Install the Lipton Vending Machine on successful negotiation.
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The job of installing a vending machine gets accomplished at times in one or two meeting only
otherwise it takes on an average three to even six rounds of negotiation. The respective company
representative is made to understand the benefit; his organization will get with the installation of
Lipton vending machine. For this, a comprehensive cost-benefit analysis has to be presented to
him to convert the prospect into a key account of HUL.
Price plays a major role in the decision-making process for any customer, who is ordering a
vending machine for its organization, and this prompted me to formulate a comprehensive cost
comparison sheet between local vendors and Lipton vending machine in the section dealing with
financial aspects as mentioned above.
Out of all the corporate offices that I visited; at Coal India Ltd. which is a Govt. of India
company having almost 500 employees, I went through several rounds of negotiation after which
Mr. Santanu Mukhopadhyay, DGM was convinced and he issued a confirmation mail. The
purchase order is yet to be received since it‘s a government body and has several time-
consuming procedures of approvals before they issue that. Later it was confirmed by Mr.
Mukhopadhyay that the purchase order will be issued to HUL by the first week of July, 2011.
But, penetrating into the government sector was very fruitful to HUL.
Again, at Dabur India Ltd. after almost 8 to 9 rounds of negotiation; they confirmed us through
mail and later gave the purchase order since they liked our brand. There, I was able to convince
Mr. Somnath Paul, Admin Head to discontinue with Nestle machine and premixes (which is the
market leader) and have a taste of HUL Lipton vending machine and product premixes. They
asked for a demo at their office premises. I arranged the demo by talking to the R.S. point,
Unique Traders. The demo was very successful. I had been also able to pitch the diet products
there which had zero percent calorie-content and a bit costly than the normal premixes. They
gave quite a positive feedback about the taste of both tea and coffee they tasted.
At different locations that I had visited and successfully converted the customers, I had one thing
in common that everybody had to be convinced on the cuppage consumption and cost. Some
customers even bargained a lot regarding the quoted rate which I had to very tactfully handle
keeping in mind the profit margin.
Client Conversion from Earlier Prospects: -
Sometimes, several clients who show interest at the first interaction during market mapping but
do not want to negotiate then; those clients are approached at a later stage and convinced about
the different benefits that the organization will get upon installation of a Lipton Vending
Machine.
One such incident happened in my internship where I went to a company called Delta Energy
Solutions (India) Pvt. Ltd. at Sector V, Salt Lake City where I met the Sr. Sales Engineer and
A/C Manager, Mr. Amit Paul while doing the market mapping. He seemed quite convinced with
the proposal from Hindustan Unilever Ltd. which I gave him and told me to contact after 2
weeks. Two weeks later, I met Mr. Animesh Paul, Admin Head of the organization and
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convinced him by negotiating the prices of different premixes. Then, finally they were
successfully converted and the vending machine was installed.
Negotiation and Deal Closure: -
Several rounds of negotiation occur at every prospective client location in terms of monthly
rental on the machine as well as the prices of different premixes of HUL. After successful
negotiation with the organization, the deal is closed by issue of the purchase order by the
organization to HUL and the Lipton Vending Machine is installed.
Post-Installation Services: -
After successful installation of the vending machine in the organization, post-installation services
are provided by HUL which includes several features like four free monthly servicing by the
technician, replacement of the vending machine in case of any fault in the machine and its
disposal etc. These post-installation services are normally monitored by the Territory Sales
Officer, which helps in strengthening the brand image of Hindustan Unilever Ltd.
2.9 HUL Vending Business Model: Ref: Company Guide
Hindustan Unilever Limited‘s vending business can be broadly categorized into 3 heads: -
General Trade (52% share)
o Primary Sales Monitoring – Monitoring sales between the company and R.S.
o Secondary Sales Monitoring – Monitoring sales between the company and the
customers.
Modern Trade (43% share)
o New R.S. Appointment – Searching for prospective distributors and their
appointment.
o Area Expansion – Expansion of the area of sales.
Institutional Sales (5% share)
o Making Cold Callings in the corporate sectors and finding out prospective clients.
In General Trade and Modern Trade, the margin for Re-distribution stockists is 5%. The target in
General and Modern trades is in terms of Gross Sales Volume whereas in the Institutional
Business, the target is in terms of tonnage.
In Modern Trade, there are risks involved such as Undercutting and Less Re-Ordering quantity.
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2.10 Stock Taking at RS points at the end of every month: Ref: Company Guide
The Territory Sales Officer visits the R.S. points every month ends and physically counts the
number of cases present at the inventory of the distributor.
Each box/case of any normal product contains 12 kgs, whereas each case of tea bags has
6.48kgs. (1case = 36 tea bags each of 0.18 kg). Each case of diet products contains 9kgs. of
premix.
The no. of cases are counted and multiplied with their weights as mentioned above and hence the
CLOSING STOCK is calculated.
The formula used is: -
OPENING STOCK + PRIMARY SALES – CLOSING STOCK = SECONDARY SALES
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CHAPTER – 3:
S.W.O.T ANALYSIS,
RECOMMENDATIONS &
CONCLUSIONS
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3.1 S.W.O.T Analysis:
STRENGTHS:
Strong brands like Lipton and Bru under Hindustan Unilever Ltd.
Quality products endorsed by HUL Seal of Guarantee at affordable prices.
Highly skilled manpower resources are there in HUL.
Customized beverage solution.
Convenient to use.
Machine with Auto-Flush technology.
Attractive design and distinctive features of the machine. Excellent range of tea and coffee premixes providing flexibility of sweetness and diet
option for concerned people.
WEAKNESSES:
Absence of one or three lane machines.
High priced as compared to competitors.
Limited success in changing the consumption habits of people.
Hot beverages are less preferred during summers.
Stock-out in case of much advertised flavors of premixes acts as a major barrier.
OPPORTUNITIES:
Penetrate locations around Kolkata like New Town, Rajarhat where new offices are built
recently for the growth of business.
Launch cold beverage solutions also like other players (Nestle, CCD) and expand the
reach in the market.
Lowering the price marginally in order to sustain & capture the market in the long run.
Bring new types of machines (i.e. 1 lane and 3 lanes) in the market.
THREATS:
Nescafe has created the image on the customer‘s mind that ‗Coffee means Nescafe‘.
New one lane machine called, ‗Nano‘ is introduced by Nestle.
Lowest rate provided by many competitors to grab the market of the major eateries
around the city.
Different variations in flavors are introduced by the competitors to grab the market.
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3.2 RECOMMENDATIONS:
Based on the work done during the project and experiences gathered, following are some
recommendations which, if implemented can benefit the OOH division: -
a. Opening of a voice-based customer care:
A voice-based customer care has to be introduced to take care of all the issues that crop up
among the customers. If such a facility is implemented, then the issues can be addressed to the
HUL representatives at the earliest and the issues can be resolved smoothly very soon.
b. Opening up cafés and kiosks around the country:
As done by Café Coffee Day, to create a strong recall; HUL should also open some cafés and
kiosks around the country to win the share of mind of the customers.
c. To lower its product prices to win a competitive edge:
HUL should lower its product prices for some time to attract new customers and retain old ones
and win a competitive edge over its competitors.
d. To improve the efficiency of the after-sales services:
HUL has a very good after-sales services but it can be improved if some new techniques can be
developed by the company to monitor its re-distribution stockists and their activities.
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3.3 Conclusions:
Based on the experiences gathered during the tenure of this internship, I am able to draw the
following conclusions: -
The customer purchase decision behavior largely depends on the way the representative
pitches the product to them.
The benefits should be made clear to them in terms of cuppage, cost per cup and
efficiency of the machine.
The representative has to critically analyze the problems that exist in the company at
present before he/she pitches the HUL product.
The representative has to always portray HUL‘s brand larger than life.
Indians are gift lovers; so the representative of HUL should be able to pitch the products
in such a way without affecting the margin that there is at least something to gift to the
customers.
The HUL‘s representative has to be thorough with the company‘s business policies so as
to perform better.
The representative has to develop a great client-customer relationship with every
customer so that it helps in strengthening the brand image.
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APPENDICES ADDITIONAL REFERENCES:
http://www.hulfnbservices.com/
http://www.nestle.in/
http://www.cafecoffeeday.com
http://www.fresh-honest.com/
http://www.godrejcp.com/
http://www.ibef.org/
http://www.teaboard.gov.in/
http://www.indiacoffee.org/
Research Methodology & Techniques – C.R.Kothari