Case Studies on FMCG Company

and Nestle

Presented by:

SUDHIR J K PRANEETA NERLEKAR

SACHIN TIRLAPUR JANANI REDDY

ABRAR SHEIKH

In our presentation we have:

Introduction to HLL & FMCG.

Briefing of the given case.

Major challenges companies faced in accessing rural markets in India.

SWOT analysis & Conclusion to FMCG case.

Introduction to Nestle

Case study about revitalizing the Kit-Kat brand and SWOT

Introduction to HLL:

Hindustan Vanaspati Manufactu

ring Company

Lever Brothers

India Limited

United Traders Limited

•India’s largest F.M.C.G. company with turnover of over Rs.11000 cr. per annum.

•HLL’s brands are present in more than three million retail outlets in India.

•HLL has 36,000 employees, including about 1,350 managers

FMCG:

Products that are sold quickly at relatively low cost.

Absolute profit made on FMCG products is relatively small & cumulative profit is large as they are sold in large quantities.

FMCG sector is the fourth largest sector in the Indian Economy .

- Personal care, Oral Care, Hair Care, Skin Care, Personal Wash (soaps).

- Cosmetics and toiletries, deodorant perfumes, feminine hygiene, paper products.

- synthetic detergents, household cleaners, toilet cleaners, air fresheners, insecticides, furniture polish etc.

FMCG Products and Categories:

Regarding the Case:

HLL (after merging) increased production capacity of Vanaspati by purchasing factories.

Between 1960 and 1970 HLL launched:

LUX SOAP

SUNSILK SHAMPOO

RIN WASHING BAR

CLINIC SHAMPOO

LIRIL SOAP

Established 70 small scale and medium production units in rural areas.

Between 1983 to 1989 there was much more expansion and HLL moved into agro-products.

Introduced new variants of Lux soap, Lifebuoy Personal and Breeze soaps.

MISSION

Hindustan Lever LimitedINDIA”S LARGEST FMCG MARKETER

To add vitality to life and to meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life

RURAL MARKETS

Backdrops with rural markets towards FMCG sector

1. Lack of awareness2. Economicaly poor3. Out of reach for companies4. Different attitudes and habits of consumers5. Lesser population in each area

HLL’s penetration through rural markets

PROJECT STREAMLINE: Focused on rural distribution system, Targetted poorly developed places Appointed substockists

Increased from 25% in ‘95 to 37% in ‘98

Project BHARAT

Aimed at addressing issues of awarness attitudes and habits.

Was largest rural HOME-TO-HOME operation. Appointed company vans with professionals

to take campaign on their products Started follow up campaign called

INTEGRATED RURAL PROMOTION VAN

Contd…

By the end of ‘99 the company had covered 13 million housesSHAMPOO sale was growing at 16%SKINCARE products was at growth of 14%PEPSODANT sale was at 58% growth

PROJECT MILLENNIUM:

Aimed to increase HLL share in TEA market.Tapped tea vendors to sell packets with blend

of strong tea, to suit rural consumers.Introduced CHAI-KI-GOLI(small tea balls), with

Re. 1 for a pack of 4 balls.

PROJECT SHAKTI:

Started in Andhra Pradesh, to create partnership with consumers.

This was done by providing micro credit and opprotunity to work as HLL’s distributors

Helped self-help groups, in turn increased consumption rate by 25%

The project was further extended to states like GJ, MH, MP.

SWOT ANALYSISStrengths- 1. Strong brand portfolio,

pricing strategies & large product range.

2. Strong distribution network.3. Solid base of the company.4. Corporate social

responsibility.

Weakness-

1.Strong competitors.2.Low export level.3.High price of some products.

4.High advertising costs.

Opportunities-

1.Large domestic market. 2.Untapped rural market.3.Changing lifestyle of people.

4. Exploring foreign market.

Threats-1.Tax & regulatory structure.2.Slowdown in economy can

have an impact on FMCG industry.

3.Cut-throat competition.

The Road Ahead…. Direct-To-Home channel Research & Development

programs to sustain high levels of innovation.

High level of investment in the area of modern trade and supply chain.

Relationship building.

Nestle History

Nestlé started off from a single man's idea, and developed into a giant corporation.

Henri Nestlé

• In 1866 Henri Nestlé, a pharmacist, developed a milk food formula for infants.

•His product became a success, and it created a demand throughout Europe.

• As Nestlé’s popularity grew more businesses wanted to merge and become partners.

•This allowed them expand to new regions and territories throughout the world, making them the world’s biggest food and beverage company.

• Nestlé’s headquarters are located in Vevey, Switzerland, but the Nestlé Company has factories or operation in almost every country in the world.

• In 1998, Nestle had employed 2,30,000 people worldwide, with $71.7 billion in sales.

• Moving forward to 2003, Nestle has increased the amount of employees to 2,53,000 people with $88 billion in sales.

Nestle India• Nestlé India is a subsidiary

of Nestlé of Switzerland.

• The Company insists on honesty, integrity and fairness in all aspects of its business and expects the same in its relationships.

• This has earned it the trust and respect of every strata of society and is acknowledged amongst India's 'Most Respected Companies' & amongst the 'Top Wealth Creators of India'.

Nestlé is increasing the size of the company year by year and so is their variety…

• MILO Energy Drink.• MAGGI Noodles.• BAR-ONE Chocolates.• MILKMAID Sweetened Condensed Milk.• MAGGI Sauces.• NESCAFÉ Instant Coffee.• Daily doses of POLO Lozenges freshness...!

http://www.dailyexcelsior.com/00mar02/busi.htm

NESTLE: GLOBAL STRATEGY

• Nestle tries to enter emerging markets ahead of competitors, and build a substantial position in basic foodstuffs.

• As income levels rise, the company progressively moves from these niches into more upscale items.

• It very much focuses on developing local goods for local markets, however, and places relatively less emphasis on its global brands in emerging markets.

• It also localizes its distribution and marketing strategy to the requirements of the local market.

• When good opportunities are available, Nestle acquires local firms.

KIT KAT: REVITALISING A BRAND LEADER

• A Kit Kat is a confection which was first created by Rowntree's (UK) and now produced worldwide by Nestlé, which acquired Rowntree in 1988

• Its UK's best-selling chocolate bar

• One secret of success is to retain enough of the old image to keep the loyalty of present enthusiasts for the product, whilst making sufficient innovations to attract a whole new group of consumers.

Project Tyson

• To find out exactly what consumers were looking for Nestlé carried out detailed market research.

• It included group discussions with young people who were 17, 18, 19 or 20 years old

• Project Tyson resulted in the launch of Kit Kat ChunKy!!!

• IT proved to be most popular with the 12-20 year old group, and was also the most distinctive form that the new product could take.

• This would lead to Kit Kat competing against itself; By contrast, the single-finger Kit Kat ChunKy provided a promising line extension.

OBJECTIVES FOR THE LAUNCHQuantitative objectives

• achieve 90distribution in all sectors of the confectionery market within the first four weeks after the launch

• sell 50 million units (ie 2,750 tonnes of product) in 1999, the year of the launch

Qualitative objectives

• broaden the number of occasions on which people consume Kit Kat, with the vision that Kit Kat would be the natural choice for all breaks

• increase Kit Kat's market penetration.

SUPPORTING THE LAUNCH: media, PR and point of sale

The advertising focused on the age group of 17-18 year olds without alienating others.

Nestlé invested in public relations point-of-saleField sales staff were involved in detailed communication.

The success of the launch

Proved to be one of the best marketing success stories in recent times.

Both the quantitative and the qualitative objectives for the launch were quickly met.

Revitalised interest in the Kit Kat line, particularly among the 12-20 year old age group.

Nestle - A SWOT analysis

Strengths• Parent

support

• Product innovation

• Brand strength

Weakness

• Exports• Supply

chain

Opportunities

• Expansion

• Product offerings

• Global hub

Threat

• Competition

• Changing consumer trends

• Sectoral woes

Thank you