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HUL-Plans and Strtegies

HUL-Plans and Strtegies

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Published by Zas Arora

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Published by: Zas Arora on Jun 19, 2012
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05/13/2014

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PLANS AND STRATEGIES
 
HUL's performance in the past two years has been below expectations,when Asia, Africa and central and eastern Europe have contributed 36per cent to Unilever's global revenues, and 3 8 per cent of the profits.HUL has lost market share across categories year on year. The declinehas been visible in all its businesses: soaps and detergents, whichaccount for 48 per cent of revenues, personal care products, beverages,food and ice creams, though there are signs that the fall has hit a plateau.A number of factors contributed to the loss.1.
 
First, there were price cuts taken in the battle for market share withProcter & Gamble (P&G).2.
 
Second, there was the commodity price inflation of 2008. Inresponse, HUL raised prices relatively steeply on soaps anddetergents. Inflation-conscious consumers turned to cheaperproducts from Godrej Consumer Products, Wipro and other playerswhose price hikes were much smaller. Sure enough, commodityprices softened again. "But HUL was unable to drop its pricesimmediately, as it had contracted a large part of its raw material for5-6 months,"3.
 
Third, analysts say HUL ignored its strong local soap anddetergent brands (Rexona, Liril and Hamam, for example). It lostmarket share to self-help groups targeting rural markets that madeand sold much cheaper brands such as Akhruti and Winner Turbo.4.
 
Finally, there is the story of high food inflation (16 per cent plus inJanuary). It impacts HUL's food and beverages business, whichaccounts for 17 per cent of its revenues.In the past decade, owing to constant changes in the environment, HULhas adopted new strategies as per the environment.
 
PLANS AND STRATEGIES
 
IN THE PAST 10 YEARS , HUL HAS MADEFOUR SHIFTS IN ITS BUSINESSSTRATEGY, TARGETED AT BOOSTINGGROWTH AND REACH
POWER BRANDS
: Strategy in 2000. Focusing onfewer brands, 30 of them, and showering marketingattention on them
MASSTIGE
: Strategy in 2005-06. Making premiumbrands (prestige) attainable for a larger section of consumers (mass)
ONE UNILEVER
: Strategy in 2007. Buildingleadership position in fast-growing markets
PUMP UP THE VOLUMES
: Strategy in 2010. GlobalCEO Paul Polman is pushing the Indian operationschasing value growth to deliver on the volumes as well
 Pumping up the volumes: strategy 2010
1.
 
HUL has hiked its advertising-to-sales ratio in the past threequarters; it is at a time when the number of brands advertising ontelevision has gone up by 82 per cent in the past decade. HUL triedadvertising innovations with advertising roadblocks (only HULbrands advertising on a given channel on a particular day) orhaving five personal care brands starring in a single advert (LUX).2.
 
HUL sent its bright stars to Wal-Mart for training in managingmodern trade.3.
 
So, from a strategy based on power brands, HUL is going back tostraddling the entire pyramid in search of adding market share. In

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