A study of strategies adopted by

Hindustan Unilever Limited

Term Paper submitted for the partial fulfillment of Continuous Assessment in the course of

Strategic Management

Submitted By: Submitted To:

Animesh Kumar Dr. Archi Mathur

579 BBA LLB Faculty of Management

V Sem. NLU Jodhpur NLU Jodhpur

Session 2010-2011
 Executive Summary
This project is an endeavor to learn how does Hindutan Unilever Ltd. formulate their strategies
and inculcate those in their products sale. This project focuses on study of the overall strategies
adopted by Hindustan Unilever Ltd. in their business fields and the way they do it in future.

Objectives

 To identify and analyze the overall strategies adopted by Hindustan Unilever Ltd.
 To identify and analyze the current strategies adopted by Hindustan Unilever Ltd.
 To suggest measures to strategies to Hindustan Unilever Ltd. to encash upon their future
prospects.

Research Methodology

1. This project shall comply with the regulations of research work in practice in

National Law University. The contents of the project shall be in order with the rules

of National Law University.

2. Secondary data shall also be collected since the area of work is wide. Moreover locals

may not come up as informant as worthy.

3. Suggestions and conclusive remarks shall be a sole idea which has been collected by

both market variability and theoretical analysis.

4. This project is a sincere effort to look for the market potential in FMCG industry. A

descriptive research procedure had been applied to come to the conclusions of the project. A

detailed questionnaire had been prepared and the responses of the concerned people had been

collected for the analysis.

 INTRODUCTION

Hindustan Unilever is Unilever's main operating business in India. It is the country's biggest

consumer goods company, and far and away the leading advertiser. The Hindustan Unilever

Ltd.’s (HUL) has taken the opportunity to offer us a broader view of FMCG category. The

Hindustan Unilever Ltd (HLL) is India’s no.1 FMCG is able to share with their market insights

based upon unparalleled breath of consumer goods experience.

Hindustan Unilever Ltd (HUL) has grown from strength to strength with new technologies being

introduced to make the HLL consumer goods business, one of the most efficient in the world.

The company’s history dates back to 1931 when 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 Hindustan Lever

Limited in November 1956. Effective July 19, 2007 the company has changed the name to

Hindustan Unilever Limited.

Hindustan Unilever Limited (HUL), a subsidiary of Unilever, is a fast moving consumer goods

(FMCG) company based in India. The company focuses on efficient delivery to consumers with

an improved supply chain, brand building initiatives and innovation, which has helped the

company to sustain its leadership position in the overall FMCG category in India.

Hindustan Unilever is Unilever's main operating business in India. It is the country's biggest

consumer goods company, and far and away the leading advertiser. HUL inhabits virtually every

sector of the consumer goods market, including several not occupied by Unilever in other

markets such as preserves and bakery products, and is also one of the country’s top five
exporters. In addition to FMCG products it is the country's biggest exporter of tea. It is generally

acknowledged to be one of India's best-run businesses, although performance slowed

dramatically between 2000 and 2004, prior to restructuring.

Unilever, which sells soap to more than 500 million Indians, may see global revenue growth

slow in 2010 as Procter & Gamble Co. and ITC Ltd. step up marketing in Asia's third-biggest

economy.

The world's second-largest consumer products maker has relied on accelerating shipments of

Surf Excel detergent in India to make up for sluggish sales in Europe. Now Cincinnati- based

Procter & Gamble is stocking Indian stores with Olay skin- care products after nearly halving the

local prices of Ariel and Tide detergents in 2004.

HUL always believes in customer friendly products swot analysis marketing definition business

technology optimization with major emphasis on low cost overall swot analysis marketing

definition business technology optimization without compromising on swot analysis business

technology optimization marketing definition the quality of swot analysis business technology

optimization marketing definition the product. They are leveraging swot analysis business

technology optimization marketing definition the capabilities marketing plan and scale of swot

analysis business technology optimization marketing definition the parent company marketing

plan and focusing on swot analysis business technology optimization marketing definition the

value of execution. The entire product portfolio is also being tweaked to include premium

offerings such as Pond’s Age Miracle marketing plan and dove shampoo in skin marketing plan

and hair care.

 A study of market variable which affects Hindustan Unilever Limited

In order to understand the company’s profile and the market variables this affects the company in

one or other way during its course of business. For this we have to go for a strategically thinking

process. HUL counts on all the minor and major details of its management, from vision of the

company to the extent of execution of its objectives. Following are the analysis of what exactly

are the vision, objective and goal of Hindustan Unilever Ltd.

VISION OF HUL

HUL's vision is to continuously innovate technologies to further reduce water consumption and

further increase conservation in its operations. Simultaneously, HUL sites will progressively help

communities, wherever required, to develop watersheds.

MISSION OF HUL

Unilever's mission is to add Vitality to life. We meet every day needs for nutrition, hygiene, and

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

CORPORATE PUPROSE

Unilever's mission is to add vitality to life. According to the management of HUL, “We meet

every day needs for nutrition; hygiene and personal care with brands that help people feel good,

look good and get more out of life.”

Their deep roots in local cultures and markets around the world give them strong relationship

with consumers and are the foundation for their future growth. This way they bring wealth of
knowledge and international expertise to the service of local consumers - a truly multi-local

multinational.

Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods company,

touching the lives of two out of three Indians with over 20 distinct categories in Home &

Personal Care Products and Foods & Beverages. They endow the company with a scale of

combined volumes of about 4 million tonnes and sales of Rs.10, 000 crores. HUL is also one of

the country's largest exporters; it has been recognized as a Golden Super Star Trading House by

the Government of India. The mission that inspires HUL's over 15,000 employees, including

over 1,300 managers, is to "add vitality to life." HUL meets every day needs for nutrition,

hygiene, and personal care with brands that help people feel good, look good and get more out of

life. It is a mission HUL shares with its parent company, Unilever, which holds 51.55% of the

equity. The rest of the shareholding is distributed among 380,000 individual shareholders and

financial institutions.

HUL's brands - like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's, Sunsilk,

Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, Knorr-Annapurna, Kwality Wall's –

are household names across the country and span many categories - soaps, detergents, personal

products, tea, coffee, branded staples, ice cream and culinary products. They are manufactured

over 40 factories across India. The operations involve over 2,000 suppliers and associates. HUL's

distribution network, comprising about 4,000 redistribution stockists, covering 6.3 million retail

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

traditionally been a company, which incorporates latest technology in all its operations. The

Hindustan Unilever Research Centre (HLRC) was set up in 1958, and now has facilities in

Mumbai and Bangalore. HLRC and the Global Technology Centres in India have over 200
highly qualified scientists and technologists, many with post-doctoral experience acquired in the

US and Europe.

HUL believes that an organisation's worth is also in the service it renders to the community.

HUL is focusing on health & hygiene education, women empowerment, and water management.

It is also involved in education and rehabilitation of special or underprivileged children, care for

the destitute and HIV-positive, and rural development. HUL has also responded in case of

national calamities / adversities and contributes through various welfare measures, most recent

being the village built by HUL in earthquake affected Gujarat, and relief & rehabilitation after

the Tsunami caused devastation in South India.

In 2001, the company embarked on an ambitious programme, Shakti. Through Shakti, HUL is

creating micro-enterprise opportunities for rural women, thereby improving their livelihood and

the standard of living in rural communities. Shakti also includes health and hygiene education

through the Shakti Vani Programme, and creating access to relevant information through the

iShakti community portal. The program now covers 15 states in India and has over 31,000

women entrepreneurs in its fold, reaching out to 100,000 villages and directly reaching to 150

million rural consumers. By the end of 2010, Shakti aims to have 100,000 Shakti entrepreneurs

covering 500,000 villages, touching the lives of over 600 million people.

HUL is also running a rural health programme – Lifebuoy Swasthya Chetana. The programme

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

the incidence of diarrhoea. It has already touched 70 million people in approximately 15000

villages of 8 states. The vision is to make a billion Indians feel safe and secure.

If Hindustan Unilever straddles the Indian corporate world, it is because of being single-minded
in identifying itself with Indian aspirations and needs in every walk of life. Hindustan Unilever

Limited is India's largest Fast Moving Consumer Goods (FMCG) Company. It is present in

Home & Personal Care and Foods & Beverages categories. HUL and Group companies have

about 16,000 employees, including 1200 managers.

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

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

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

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

leverage economies of scale wherever relevant.

Board: At the apex is the Board, headed by the Chairman, and comprising 5 whole time

Directors and 5 independent non-executive Directors. The day to day operations are supervised

by the National Management comprising the Vice Chairman, Managing Director (HPC),

Managing Director (Foods) and the Finance Director.

Divisions: Each division is self-sufficient with dedicated resources and assets in sales, marketing,

commercial, and manufacturing. The two divisions are further reorganised into categories.

Typically, each category and each function - Sales, Commercial, Manufacturing - is headed by a

Vice President. They with their respective Managing Director, comprise that Division's

Management Committee.

For managing sales operations, HUL divides the country into four regions, with regional

branches in Delhi, Kolkata, Chennai and Mumbai. Headed by a Regional Manager, they

comprise Regional Sales Managers and Area Sales Managers, assisted by dedicated field forces,

comprising Sales Officers and Territory Sales Incharges.

In Marketing, each category has a Marketing Manager who heads a team of Brand Managers

dedicated to each or a group of brands. The commercial team of a Division is responsible for its

supply chain management. There are teams dedicated to sourcing, planning and logistics.

Each Division has a nationwide manufacturing base, with each factory peopled by teams of

Production, Engineering, Quality Assurance, Commercial and Personnel Managers.

Central functions HUL's Central Functions are Finance, Human Resources, Technology,

Research, Information Technology, Legal & Secretarial, and Corporate Affairs. Their services

are shared across the company. But, wherever necessary, managerial resources are dedicated

exclusively to a business. For example, each Division now has dedicated HR managers. HUL

believes that while it leverages the scale of a large corporate, it must also retain the soul of a

small company. Its organisation structure, which has and will continue to evolve with time, is

aimed at achieving this knitting.

Some quick facts about Hindustan Unilever Ltd.:

Hindustan Unilever – A 75 Year Commitment

15,000 employees 1,200 managers

2,000 suppliers & associates 75 Manufacturing Locations
45 C&FAs, 4,000 Stockists Total Coverage 6.3 Mln Outlets
Direct Coverage 1 Mln outlets

Population of INDIA: 1027 Mln

5,545 Towns 2.5 Mln outlets

6,38,000 Villages 5.0 Mln outlets

Organizational Structure of Hindustan Unilever Ltd.

Managing Director being the head of the company, following flow chart depicts the lower level
of management:

General Manager
Vice President

Marketing Manufacturing Sales Distribution

A study of the product profile of Hindustan Unilever Ltd.

HUL’s business activities are divided into four broad areas:

Home And Personal Care: Personal Wash, Fabric Wash, Home Care, Oral Care, Skin

Care, Hair Care, Deodorants And Talcs, Colour Cosmetic

Foods: tea, coffee, branded staples, culinary products, ice creams, Modern Foods

ranges

New Ventures are seen in the form of Hindustan Lever Network, Ayush Ayurveda products and

services, Sangam, Pureit water purifiers. Whereas the company also has endeavored into the
fields of exports with HPC, beverages, marine products, rice and other daily house hold

processed food items.

Moving further since we need to apply the 5’s of marketing in the case of Hindustan Unilever

Ltd. so that the product variations and overall strategies is clear in our minds.

FIVE P’S OF MARKETING

Product

Satisfaction suffices. But delight dazzles the average company will compete for customer by

conforming to her expectation consistently. But the winner will surpass them by constantly

exceeding her expectation, delivering to her door step additional benefits which she would never

have imagined possible. Hindustan Unilever Ltd(HUL) offer such product. The wide variety

products offered by the company include:

The company’s popular product’s including:

 Bathing soaps : Lux, Lifebuoy, Liril, Hamam, Breeze, Dove, Pears and Rexona

 Laundry items : Surf Excel, Rin and Wheel

 Skin care: Fair & Lovely, Pond’s and Vaseline

 Hair care: Sunsilk and Clinic

 Oral care: Pepsodent and Close up

 Deodorants : Axe and Rexona

 Colour cosmetics : Lakme

 Ayurvedic: Ayush
  Tea: Brooke Bond and Lipton

 Coffee : Bru

 Foods: Kissan, Annapurna and Knorr

 Ice cream: Kwality Wall’s

Pricing

Second P of marketing is not another name for blindly lowering prices and relying on this

strategy alone to increase sales dramatically. The strategy used by Hindustan Unilever Ltd

(HUL) is for matching the value that customer pays to buy the product with the expectation they

have about what the production is worth to them.

Hindustan Unilever Ltd(HUL) has launched various products which cater to all customer

segments. So every customer segment has different price expectation from the product.

Therefore maximizing the returns involves identifying right price level for each segment, and

then progressively moving through them.

Physical Distribution – “Place”

BRAND ISN’T THE ONLY ANY MORE. Marketers and finance manager need a new term to

evaluate their business:

Distribution Equity. It takes much more time and effort to build, but once built, distribution

equity is much together to erode.

The fundamental axiom of Indian consumer market is this: You can set up a state-of –the-art

manufacturing facility, hire the hottest strategies on the block, swamp prime television with best

Ads, but the end of it all, you would be known of selling your products. The cardinal task before
the Indian market is managing is to shoe-horn its product on retail shelves. Buyers are paying for

distribution equity not brand equity and market shares.

Hindustan Unilever Ltd(HUL) distributes the product in the manner stated below:

The operations involve over 2,000 suppliers and associates. HUL's distribution network,

comprising about 4,000 redistribution stockists, covering 6.3 million retail outlets reaching the

entire urban population, and about 250 million rural consumers.television has already primed and

population for consumption, and the marketer who can get to the to the consumer ahead of

competition will give a hard – to – overtake lead. But getting their means managing wildly

different terrains-climate, language, value system, life style, transport and communication

network. And your brand equity isn’t going to help when it comes to tackling these issues.

Own distribution network consist of clearing and forwarding (C&F) agents & distribution

stockiest. This network of distribution can either contact wholesalers and which in turn retailers

or the distributors can contact to the retailers directly.

Once the stock product reaches retailers, the prospective customers can have access to the

product.

The current position of HUL in terms of choosing the places of business and their strategies:

Hindustan Unilever Ltd (HUL) distribution network has expanded. Beside use of improved

logistics, Hindustan Unilever Ltd (HUL) is also attempting to improve the distribution quality.

To address the issue of product stability, it has installed vision colors at several outlets. This

helps in maintaining consumption in summer when sales usually drops due to the fact that the

heal effects product quality and thereby off takes.

Looking at the low penetration of few products, a distribution expansion would itself being

incremental volume. The other reason is arch rival Procter & Gamble Co. reaches more than a

million retailers.

Analysis of the current strategy:

This increase in distribution is going to be accompanied by reduction in channel costs. Hindustan

Unilever Ltd (HUL) marketing costs, at 18% of total costs, is much higher than Procter &

Gamble Co. The company is looking to reduce this parity level. At Hindustan Unilever Ltd

(HUL), they believe that selling FMCG is it like selling soft drinks.

Promotion

If an advertisement is to communicate effectively, the receiver must at least half want it to, and

be prepared to take step toward the sender. Effective advertising is rarely hectoring or loudly

explicit…. It often both attracts and generates arm feelings. More often than not, a successful

campaign has a stronger element of the unexpected a quality that good advertising shares with

much worthwhile literature.

To penetrate into the inner recesses of her memory, communication must first ensure exposure,

grab her attention evoke her comprehension, grab her acceptance and then extract retention

competing with thousands of other units of communication trying to do the same.

Finding showed that the adults felt too conscious to be seen consuming a product actually meant

for children. The strategic response addresses the emotional appeal of the band to the child

within the adult. Naturally, that produced just the value vacuum that Hindustan Unilever Ltd

(HUL) was looking to fill. Thereafter it was the job of the advertising to communicate customer

the wonderful feeling that he could experience by re-discoursing the careful, unself conscious,
pleasure – seeking child within himself – a graft these feeling onto the Ad campaign like “hasso

to khul k hasso for close up”, “cream bathing bar for dove soap” and “daag ache hai for surf

excel” have been sure shot winner with the audience.

It has also launched Pureit, a home water purifier which supplies drinking water without

boiling/need of electricity , As well as outdoor and radio ads, ad agency contract has created

communication for cinemas and even ATM machines for the brand.

All ICICI’s ATM a message flashes on the screen as soon as customer inserts his ATM card.

Something familiar is planned for phone-book as well. In cinemas, Hindustan Unilever Ltd has a

message on-screen just before the lights are dimmed to give them a chance to get their product

there will also be after dinner sampling in restaurants – to begin with, 30 catteries in Mumbai

have been selected.

Positioning

In the 1970s consumers were ready to pay “more for more”, and luxury goods flourished. In the

1980s, consumers began to demand “more for same”, and the discounting era grew strong.

Today’s consumer demanding “more for less”, and the winner will be that super value

marketers…. Some of today’s most successful companies recognize those customers are more

educated and able to recognize true customer value…

Positioning is simply concentrating on an idea – or – even a word defines that company in the

mind of the consumer. It is more efficient to market one successful concept to one large group of

people than 50 product or service ideas to 50 separate groups. Repositioning is a must when

customer attitude have changed and product have strayed away from the consumer’s long

standing perception of them.

Hindustan Unilever Ltd is an anchor in sea of consumer products. As a variety of competitive

claims assails her senses, today customer uses complicated decision making process to assess the

alternative before making a purchase. Since Hindustan Unilever Ltd is more clearly associated

with a particular set of attributes in terms of benefits and prices, the quicker becomes her search

process.

Studying the strategies involved in the positioning of particular products we have:

Positioning of individual product:

 Lifebuoy is ‘one of Unilever’s oldest brands’ with more than a hundred-year history, as

www.unilever.com informs. “Lifebuoy has become more than just a red bar of soap –

today the brand provides hygiene and health solutions for families

 Fair & Lovely, a hot-selling “fairness” cream, which promises a lighter skin tone for

many of India’s complexion-conscious consumers

A study of competitive strategy and SWOT analysis of Hindustan Unilever Ltd.

We need to analyze the environmental factors which affect the company in its business strategy

in short-run and long-run. For this we need to have a SWOT analysis of the company as a whole.

SWOT ANALYSIS

Strength:

 Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods

company, touching the lives of two out of three Indians with over 20 distinct categories in

Home & Personal Care Products and Foods & Beverages.

 Due to its long presence in India – has deep penetration – 20 consumer product category,

over 15,000 employees, including over 1,300 managers, is to "add vitality to life."

 The company derives 44.3% of its revenues from soaps and detergents, 26.6% from

personal care products, 10.5% from beverages, and the rest from foods, ice creams,

exports, and other products.

 Low cost of production due to economic of scale. That means higher profits and / or more

competitions. Better market penetration.

 HUL is also one of the country's largest exporters; it has been recognized as a Golden

Super Star Trading House by the Government of India.

Weaknesses:

 Continuously low on strategies in context of competitors.

  Increased consumer spends on education, consumer durable, entertainment, travel etc.

resulting in lower share of wallet for FMCG.

 Limited success in changing eating habits of people.

 Complex supply chain configuration, unwieldy number. Of SKU’s with dispersed

manufacturing locations.

 Price positioning in some categories allows for low price competition.

 High Social costs (housing, food grains & firewood, health and other welfare measures)

in the Plantation business

 Price positioning in some categories allows for low price competition like Amul captured

Kwality’s market.

 Limited success in changing eating habits of people.

 Competitors focusing on a particular product and eating up HUL’s share, like Nirma

focusingon soaps and detergents

Opportunities

 Increasing per capita national income resulting in higher disposable income.

 Growing middle class and growing urban population.

 Increasing gifts cultures.

 Increasing departmental stores concept – impulse at cash counters.

 Globalization

Threats
  HLL's tea business has declined marginally; reason is that, cost pressure is likely due to

rising crude and freight costs.

 Tie-ups are loosing grounds. Because of government regulated company like ITC.

 Low priced competition now present in all categories.

 Grey imports.

 Spurious/counterfeit products in rural areas and small towns.

 Changes in fiscal benefits.

 Unfavorable raw material prices in oils, tea commodity etc

 Unfavorable raw material prices due to inflation, reducing profitability.

 Heavy onslaught of competition in the core categories from emerging players like ITC

will result in higher advertising expenditure

 Spurious/counterfeit products in rural areas and small towns.

 Reduction in real income of consumers due to high inflation

MICHAEL PORTER’ FIVE FORCES ANALYSIS

 Threat of new entrants

 Bargaining power of customers – powerful customers usually bargain for better services

which involve cost and investment

 Bargaining power of suppliers – may determine the cost of raw materials and other inputs

effecting profitability
  Rivalry among competitors – competition influences the pricing and other costs like

advertising etc.

 Threats from substitutes – where-ever substantial investments in R&D is taking place, the

threat of substitutes is large. It also affects profitability.

Balance Score Card System:

HUL follows a very good balanced score card system. Every department right from marketing,

logistics, sales, finance and Human resource are internally connected. It is very important for an

organization like HUL to have an internal fixed process in a company which has very less profit

margin. Every department is very well connected. With the Indian retail boom started already

HUL has identified the flaws in the system and has successfully modified entire system of sales

and marketing internally. It has had good competition from proctor and gamble but it has

emerged out as a leader in the fight between both of them.

HR strategy of HUL is so good that the employee satisfaction is to the highest level which

enhances the motivation in the employees and allows them to be very open in their minds for the

effectiveness of the organization.

Hence, we can say that balanced score card system has been successful be it any organization. Be

it any sector or market. Organizations have definitely improved their performance using this

system

Competitive Strategy as whole:

COMPETITIVE STRATEGY

Hindustan Unilever has traditionally relied on small traders and mom-and-pop corner stores to

retail its products. But India’s recent retail boom has created large stores and malls, so the

company wants to make sure it’s in with the new marketing crowd. Hence Baillie’s Hypercity

visits, and the calls he makes on the headquarters of the big retail chains.

This is quite a change for Hindustan Unilever, whose executives used to have emissaries make

obeisance at Lever house in downtown Mumbai.

Facing Competition From P&G And Others

The reason for this new found egalitarianism is that the $3 billion Hindustan Unilever is facing

serious competition. The company, which is practically synonymous with India, makes

everything from detergents, soaps, and shampoos to soups, sauces and tea, and dominates most

of those categories.

Now Hindustan Unilever is under siege from aggressive Indian and foreign competitors such as

Procter & Gamble (PG), Nivea, and L’Oréal. In the last year, ACNielsen data shows, Hindustan

Unilever’s lead in hand soaps, including the popular Lux, is down from 55.2% to 54%. Favorite

detergent brands like Surf Excel and Rin are barely hanging onto their 37% share. Hindustan

Lever tea brands like Brooke Bond and Lipton have dipped from a combined market share of

29.2% to 24.3%.

All this has taken a toll on Hindustan Unilever’s operating margins, down from 21% a few years

ago to just 11.84% now. That’s why the company is wooing consumers in big retail stores. These
newly affluent shoppers present the best hope for the company’s future in India. According to

retail consultant KSA Technopak, organized retail, currently just 3.5% of India’s total $336

billion retail market, will grow to 28% by 2017. Hindustan Unilever’s managers hope their

revenues from big retail will increase from 5% today to over 25% in 2012.

The strategy to be followed to have such objective fulfilled is that Unilever will develop the

brands and streamline product offerings across the world, while its subsidiaries will sell the

products. This means that all of Unilever’s brands will be available across global markets, fitting

in quite nicely with India’s turn towards more international products being sold in supermarkets.

Price war and the strategies:

And there was some stiff competition from rival Procter & Gamble; a 2004 price war with P&G

in the detergent business forced Hindustan Unilever to slash prices on its premium brand Surf

Excel. The effect: The Company’s sales and operating profits stagnated at $2.5 billion for five

years while operating profit plunged 37%, to $274 million in 2004. Last year operating profits

reached $357 million, thanks to price increases. But the rich margins of the past have not

returned. What can be inferred is that HUL marketing is rapidly going to touch the grounds if

players like TATA who have a brand image of their own in all the urban and rural market keep

their strategy directed towards the middle and lower middle classes. For example Tata NANO.
An analysis of the strategies followed by HUL in the rural market which consists of major

population chunk:

Quick look over the rural market of India:

 Rural population larger than Europe(800 million)

 Low growth in agriculture; however rural income are growing faster with 70% population

here, income growth is crucial.

 Structural changes in the economy which are affecting this are:

o Disintermediation in the agricultural market price discovery mechanism has

benefited farmers.

o Government grants and subsidies.

The product which is most famous in the rural market is Lifebuoy. It is nice to see that HUL has

formulated their strategy very well into keeping the product intact in the market. The strategy

followed by it was the price and the protection level shown through advertisement. Other

products which are aimed towards rural market are very scarce. So there can also be an
understanding that HUL has still not done by far best possible manner to grope in the rural

market.

Some of the successful initiatives in the rural market are EVERYDAY I WILL SELL.

EVERYDAY I WILL EARN, MONEY, RESPECT.

Started in 2001, Shakti is HUL's rural initiative, which targets small villages with population of

less than 2000 people or less. micro-enterprise opportunities for rural women Providing health n

hygiene education through shaktivani program ishakti portal Shakti has already been extended to

about 15 states ,80,000 villages in with 45,000 women entrepreneurs and generating Rs.700-

1000 per month to each women.

The strategy behind this was to fulfill the Corporate Social Responsibility. Other initiatives were

providing education on health and hygiene, women empowerment, water management,

rehabilitation of special or underprivileged children, care for the destitute and HIV-positive.

Introduction of new products and their strategies:

Unilever has brought new products into the market of India which were already existent in the

foreign market like Dove international and Dove range of Hair care.

The strategy formulated by the company was the flank strategy to counter the Hair care business

in India which was full of products like L’oreal and Clinic products. HUL kept the prices of their

product very aggressive and a huge number of ads and promotion were taken up to fit the

product in the market.

HUL is also getting aggressive on foods, focusing on the Knorr brand of soups and curry mixes

—ideal for the Indian market. Analysts believe the company’s current strategy of concentrating
on premium products and marketing them in the large retail stores is a winning one. Sumeet

Budhraja, consumer analyst at Mumbai brokerage First Global Securities, says that Hindustan

Unilever “could have addressed a lot more categories, but they are more focused and regaining

their aggressiveness.” He points to the demand for safe drinking water in India, which Hindustan

Unilever exploited with the launch of water purifier Pureit in 2005, at one- third the price of

established Indian brands such as Aqua guard. These efforts have delivered some promising

results, and Baillie is pleased with the modest turnaround. In the quarter ended June, 2007, the

company’s sales grew 13%, with net profit up 29.6%. Reason enough to keep patrolling those

store aisles.

A study of marketing strategies followed by HUL in urban India:

HUL has dominated the urban market for over a decade. Following is the diagram of what is the

products in the market of urban India and how are they fairing.

Position as No. 1 Position as No. 2

Laundary, Soaps Only in Oral care.
Tea
Hair care and Skin care
Dish Wash and home care
 Adopted Total Productive Maintenance(TPM) to meet zero error, zero loss.

 Focuses on short supply chain for distribution.

 To meet the every needs of people everywhere.

 Uses Direct selling channel (HUN), franchisee to reach everyone e.g. Aviance, Ayush.

 Build segments & market for the future where Unilever has strong expertise.

A study of the future prospects of HUL to encash upon the profits and gains
P&G, the world's largest consumer-goods maker, will continue to gain share in the next five

years in India, according to Ali Dibadj, an analyst at Sanford C. Bernstein in New York, who

rates the stock ``outperform.'' Hindustan Unilever Ltd., 52 percent owned by the London- and

Rotterdam-based parent, lost ground in shampoo, bath soap, toothpaste and tea in the quarter

ended Sept. 30, compared with the year earlier, according to the company. Its share of the

shampoo market declined by more than a percentage point to 47.7 percent, the company said.

ITC, the largest Indian cigarette maker and partly owned by British American Tobacco Plc, is

also making inroads. It started selling more brands including Fiama Di Wills shampoo and

Superia soap last year as the government raised tobacco taxes.

Profitable' Cigarettes

The tobacco maker ``has a very profitable cigarettes business which will help it to invest and

expand its personal- care portfolio,'' said Anand Shah, an analyst at Angel Broking in Mumbai,

who has a ``neutral'' rating on the stock. ``It has the ability to take losses in this segment as long

as it grows its sales. This strategy will still satisfy investors.''

Rising prices of raw materials have made it more difficult for consumer-goods makers to pass on

higher costs. The price of palm oil, used to make soaps and foods, has surged 70 percent in the

past year. Given the competition, profitability will continue to be under pressure,'' said

Macquarie Securities Ltd. analyst Unmesh Sharma, who has an ``underperform'' rating on

Hindustan Unilever. He expects the stock to drop to 180 rupees ($4.57) in the next year from

190.9 rupees. The company has a market value of about $11.8 billion.
India is Unilever's biggest market in Asia, generating about 6 percent of annual sales. It has sold

soap in the country since 1888 and controls about half of the sales of products such as skin

creams, bathing soaps and shampoo.

JOINT VENTURE

Hindustan Unilever Limited (HUL) has decided to set up a Joint Venture (JV) with Smollan

Holdings of South Africa and the JV will be operational from January 1, 2008. The strategic tie-

up aims to build long term capabilities and bring ‘in-store’ execution focus in servicing the

Company’s Modern Trade customers.

Other Acquisitions

Hindustan Unilever has acquired several Indian FMCG companies so far. This includes:

It acquired Kissan brand from UB group; Dollops ice cream brand from Cadbury India; Lakme

cosmetics brands from Tata. It has also launched Pureit, a home water purifier which supplies

drinking water without boiling/need of electricity.

 Tata Oil Mills Company

 Brooke Bond
 Lipton India
 Modern Food
HLL has drawn up a comprehensive plan to expand its portfolio in the area of Health Care and

Contraceptives. Chemicals business (like encompassing Flavours, Fragrances and other Specialty

Chemicals), as well as several non-FMCG export businesses such as Thermometers and

Mushrooms. HLL has been pepping up its rural distribution systems and has launched low unit

price variants of its popular brands to draw in new users in the rural areas.
With its long and luminous history HUL is India’s true pride. It is a company which the

customers in rural as well as urban India relate to. This explains the deep penetration of HUL in

Indian market. Past few years trends may be disturbing but there has been multi facets to the

decrease in profits. It would be innocent thought to rule out a behemoth of the ranks of HUL.

The future for HUL is demanding newer and high level innovations so as to cope up with

increasing competition. However HUL is well equipped with all what is needed of this Indian

Giant.

Suggestions for HUL for their future openings into business after analyzing the market of

India