PRODUCT AND BRAND MANAGEMENT

PROJECT
ON

Company study of
Hindustan Unilever Limited (HUL)
Submitted toProf. Pitamber Dwivedi

Submitted byAnish Bhattacharyya [FT-09-720]

Anurag Kumar Mishra [FT-09-729]
Durgesh Tiwari [FT -09-748]
Jagat Singh Nagar [FT -09-754]
Shwetank Kumar [FT-09-856]
Sourav Mukherjee [FT- 09-862]
Ravi Kumar Sinha [ FT- 09-813]

IILM-GSM-09-11_PBM_SEC-A_

1|Page

ACKNOWLEDGEMENT
We take this opportunity to convey our sincere thanks and gratitude to all those
who have directly or indirectly helped and contributed towards the completion
of this project.
First and foremost, we would like to thank Prof. Pitamber Dwivedi
for her constant guidance and support throughout this project. During the
project, we realized that the degree of relevance of the learning being imparted
in the class is very high. The learning enabled us to get a better understanding
of the nitty-gritty of the subject which we studied.
We would also like to thank our batch mates for the discussions that we had
with them. All these have resulted in the enrichment of our knowledge and their
inputs have helped us to incorporate relevant issues into our project.
Last but not the least we would like to thank God and our parents for their
cooperation and help.

IILM-GSM-09-11_PBM_SEC-A_

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TABLE OF CONTENTS
TOPICS

PAGE

1. Introduction to FMCG/HUL

2. FMCG industry analysis

3. Key players of FMCG industry and their brief

introduction
4. HUL

Organization Structure
Distribution Channel
Market segment wise penetration
Products of HUL
Category wise Sales growth
BCG analysis
5. Corporate Social Responsibility

14

Project Shakti
6. Competition In the FMCG market

16

HUL and ITC

HUL and P&G
7. Strategic growth and Strategic market entry

25

(Kissan Annapurna Iodized Salt)

8. Strategic Shifts

26

9. Financial Analysis

27

10. Brand Management

29

11. Conclusion and Recommendation

31

12. Bibliography

32

IILM-GSM-09-11_PBM_SEC-A_

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INTRODUCTION OF
FMCG INDUSTRY
AND HUL IN INDIA
FMCG is the 4th largest sector in Indian
economy with a market size of more than
$13.1 bn. And expected to become $33.4bn in
2015.200 million people are expected to shift
towards processed food. India needs Rs 28bn
investment in food sector. In the recession/

360675 individual shareholders and

financial institutions
Brooke bond is present in India
back to 1900 and its Red Label
band was launched in 1903. In
1912 it joined with lever brothers.
Unilever acquired LIPTON in 1972
Ponds India ltd is working in India
since 1947 and it is acquired by

slowdown period FMCG industry recorded a

HUL in 1986 by an international

growth of 14.5%. Growth of FMCG sector and

acquisition.
Tata oil Mills Company merged

Growth of HUL in India is as follows

FMCG came into in existence in

1888 when Sun Light soap was
firstly seen at KOLKATA harbor.
It was made by Lever brothers in
England.
After that in 1895 Lifebuoy and
after that Lux, Pears and Vim bar.
In 1918 Vanaspati was launched.
Dalda was launched in 1937.
In 1931 Lever brothers made 1st
subsidiary in India
In 1933 they joint with Hindustan
Vanaspati manufacturing company
In 1935 they joint with

united

traders limited
All these 3 players mixed together
and form HUL in 1957.
HUL offers 10% of its equity to
Indian public
Unilever holds 52.10% shares and

with HUL in 1993.

In 1996 Tata made 50-50% joint
venture for LAKME with HUL and
in 1998 it was completely sold to
HUL.
HUL made 50-50% joint venture
with Kimberley Clark corp. in
1994 as Kimberley clark lever ltd
which makes haggis diapers and
kotex sanitary pads.
Unilever established its subsidiary
in Nepal as NEPAL UNILEVER
LTD.
In 2002 HUL launched AYUSH
ayurvedic soap.
In 2004 it came into the water
purifier segment and launched
PURE-it
In 2007 it formally formed as HUL
from HUL that is HINDUSTAN
UNILEVER LIMITED.

rest is distributed amongst about

IILM-GSM-09-11_PBM_SEC-A_

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FMCG industry analysis

SUPPLIER POWER

Low

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

Low to medium

Relative power of
unions, govt

High
DEGREE OF
RIVALRY

BARRIERS TO ENTRY

High

OTHER
STAKEHOLDERS

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

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

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

BUYER POWER

Low
IILM-GSM-09-11_PBM_SEC-A_

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

High

5|Page

Rivalry among Competing Firms:

choices and needs give a sufficient room

In the FMCG Industry, rivalry among

for new product development that can

competitors is very fierce. There are scarce

replace existing goods. This leads to

customers because the industry is highly

higher consumers expectation.

saturated and the competitors try to snatch

their share of market. Market Players use

Bargaining Power of Suppliers:

all sorts of tactics and activities from

The bargaining power of suppliers of raw

intensive

to

materials and intermediate goods is not

promotional stuff and price wars etc.

very high. There is ample number of

Hence the intensity of rivalry is very high.

substitute suppliers available and the raw

advertisement

campaigns

materials are also readily available and

Potential Entry of New Competitors:

most

of

the

raw

materials

are

FMCG Industry does not have any

homogeneous. There is no monopoly

measures which can control the entry of

situation in the supplier side because the

new firms. The resistance is very low and

suppliers are also competing among

the structure of the industry is so complex

themselves.

that new firms can easily enter and also

offer tough competition due to cost

Bargaining Power of Consumers:

effectiveness. Hence potential entry of new

Bargaining power of consumers is also

firms is highly viable.

very high. This is because in FMCG

industry the switching costs of most of the

Potential Development of Substitute

goods is very low and there is no threat of

Products:

buying one product over other. Customers

There are complex and never ending

are never reluctant to buy or try new things

consumer needs and no firm can satisfy all

off the shelf.

sorts of needs alone. There are plenty of

substitute goods available in the market
that can be re-placed if consumers are not
satisfied with one. The wide range of

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Key

players

of

FMCG industry
According to the market survey done by
BUSINESS TODAY the top 10 companies of
FMCG sector are given below.

capture a market share of 10 per cent of

the Rs. 1,900 Crores malted food drink
market over the next two years.

Dabur has acquired 72.15 per cent of

Fem Care Pharma Ltd (FCPL), a leading
player in the womens skin care products
market, for Rs 203.7 Crores in an all-cash

1.

Hindustan Unilever Ltd.

2.

ITC

synergy by this deal.

3.

Nestl India

Dabur got approval from Government of

deal. The Company is expected to create

Himachal Pradesh to set up another

4.

GCMMF (AMUL)

5.

Dabur India

medicine manufacturing unit. The project

has an expected investment of Rs. 130
Crores.

6.

Asian Paints (India)

7.

Cadbury India

Colgate-Palmolive

(India)

Limited

8.

Britannia Industries

9.

Procter & Gamble

10.

Marico Industries

Colgate Palmolive (India) Ltd, which is

currently holding 75 per cent of the share
capital of SS Oral Hygiene Products
Private Ltd, Hyderabad, has acquired the
remaining 25 per cent share capital from
the local shareholders at an aggregate price
of Rs 77.70 lakh. Consequently, SS

A brief introduction about

Oral Hygiene Products has become a

major FMCG companies in

wholly owned subsidiary of the company.

India
Dabur India Limited (Dabur)

Nestle India Limited

Dabur has entered into the malted food

Nestle is planning to invest Rs 6 billion

drink market with the launch of a new

in India in 2009 for expansion of its

health drink Dabur Chyawan Junior.

business in the country.The company

According to the company, they expect to

which has allotted an investment of Rs 3

billion in the Indian market in 2008, would

IILM-GSM-09-11_PBM_SEC-A_

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be doubling the investment in 2009 as part

million from Rs 956.90 million in the

of its business strategy. Nestle

same quarter, last year. The company

International is reinvesting and expanding

posted earnings of Rs 12.56 a share during

in India and Nestle India will have all the

the quarter, registering 26.61% growth

financial resources to expand and grow

over prior year period. Net sales for the

from the parent company.

quarter rose 23.45% to Rs 10,356.30

Nestle India reported a good increase in

million, while total income for the quarter

its standalone net profit for the second

rose 23.78% to Rs 10,423.40 million,

quarter.During the quarter, the profit of the

when compared with the prior year period.

company rose 26.54% to Rs 1,210.90

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HUL: Hindustan Unilever Limited

COMPANY

HUL

INDUSTRY

FMCG

MARKET CAP

48571 Cr

BETA

0.4

52 Week Hi/Lo

306/215

Average daily volume

431633

Face Value

Rs 1

ORGANIZATION STRUCTURE

VP

GM

Sr sales manager

Area sales manager

Territory sales manager

Team Leader

Sales executive

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Distribution Channel of HUL

HUL

C&F Agents

Redistribution Stockiest

Whole sellers

Rural Retailer

Urban Retailer

CUSTOMERS

Market Penetration of HUL

SKINKARE:
10%

SAMPOOS:
21%

TOOTHPASTE:
26%

IILM-GSM-09-11_PBM_SEC-A_

SOAPS:
43%

Penetration
10 | P a g e

HUL products in India

Personal wash:-

Laundry:-

Lux.

Surf Excel,

Lifebuoy,

sun light,

Liril ,

Rin

Hamam,

Wheel

Breeze,

Ala bleech

Moti ,

Dove,

Fair & Lovely,

Pears

Lakme,

Rexona

Ponds,

Vaseline

Aviance

Beauty Products:-

Foods:-Kissan(Jam,Ketchup,Squashes),

Annapurna (Aata and salt),

Hair-Care:-

Knorr Soups,

Sunsilk naturals,

Modern Bread

Clinic ,

Dove

Pepsodent

Close-up

Ice-cream:

Kwality Wall's

Oral-Care:-

Bewerages:Tea:

Brooke bond,

Lipton,

Axe

taj mahal

Rexona

Coffee:

Brooke bond bru

Disinfectants:-

Deo spray:-

Water Purifier:

Pureit

Dishwasher :-

Domex

cif

IILM-GSM-09-11_PBM_SEC-A_

Vim

11 | P a g e

Category wise sales growth of HUL in India:

Particulars

Key
Brands

Market
Size (in Rs
Cr.)
8988

Market
Share

Rank

Fabric wash

Surf
Excel,
Wheel
Dove,
Lux,
Lifebuoy

37.5%

6632

54.3%

57.3%

2792

54.5%

Sunsilk,
Clinic
plus
Talcum Powder

2168

47.8%

59.7%

Packet Tea

4452

22.7%

708

44.0%

67.5%

29.5%

28.1%

Personal
Wash
Dish wash
Skin

Ponds

Shampoo

Coffee

Red
Label
Bru

Jams
Toothpaste

Pepsoden
t,
Closeup

Ketchups

IILM-GSM-09-11_PBM_SEC-A_

2764

12 | P a g e

BCG ANALYSIS OF HUL

Soap & Detergent and Tea are CASH COW

Only food

for the company. It has high relative market

QUESTION MARK for the company. The

share and low growth rate. Personal Products

company have a low relative market share

and Coffee are STARS for the company as it

where as it is under high market growth rate.

have high relative market share as well as high

market growth rate.

is

a segment

which

is

HUL is taking several steps to capture more

market share so that food segment can also be
a part of Star.

IILM-GSM-09-11_PBM_SEC-A_

13 | P a g e

Corporate Social
Responsibility

called project SHAKTI which will serve the

following purpose:

HUL shows more interest in CSR also

as-

A) To Reach:

From 2004 to 2008 it has reduced the

infrastructure

emission of Carbon di-oxide by more

make

distribution

difficult.

than 25% in the manufacturing.

Small, scattered settlements and poor

Over 500,000 villages not reached

directly by HUL.

HUL follows 5 R strategies to deal

with the Green House Gases (GHG):

B) To Communicate:

Low literacy hampers effectiveness of

print media.

Reduce

Re-Use

Poor media-reach: 500 million Indians

lack TV& radio.

Recycle

C) To Influence:

Recover

Renew

Low

category

penetration,

consumption.
HUL uses Agriculture wastages as the
fuel (Ground nut shells, bagasse, saw

C) Awareness:

dust, Coconut shells, cashew etc)

DOMEX, a product

Per capita consumption in Unilever

categories is 33% of urban level.

of HUL is

Project Shakti

planning to sponsor the world toilet

day on the 19th November every year.

HUL soon realized that although it was

enjoying a greater penetration in the rural

PROJECT SHAKTI

market

when

compared

with

its

competitor such as Nirma and ITC, its

(www.HULshakti.com)

direct reach was restricted to only 16%.

ICICI bank is the financial partner of

HUL in the project Shakti

The FMCG giant was desperate to

increase this share. HUL saw its dream
fulfillment in the vast Indian rural market.

As competition is increasing day by

day, its difficult to maintain the leader
position

&

to

further

strengthen

the

distribution network HUL made a project

IILM-GSM-09-11_PBM_SEC-A_

The company was already engaged in

rural development with the launch of the
Integrated Rural Development Programme
in 1976 in the Etah district of Uttar
14 | P a g e

Pradesh. This program was in tandem

of the Project Shakti was that it was aimed

with HUL's dairy operations and covered

to create income-generating capabilities

500 villages in Etah. Subsequently, the

for underprivileged rural women, by

company introduced similar programs in

providing a sustainable micro enterprise

adjacent villages. These activities mainly

opportunity, and to improve rural living

aimed

animal

standards through health and hygiene

husbandry, generating alternative income,

awareness. Most SHG women viewed

health & hygiene and infrastructure

Project Shakti as a powerful business

development. The main issue in rural

proposition and are keen participants in it.

development was to

create income-

There after it was extended in other states

generating

for

with the total strength of over 40,000

at

training

farmers,

prospects

the

poor

villagers. Such initiatives, linked with the

company's

core

business,

Shakti Entrepreneurs.

became

successful and sustainable and proved to

be mutually beneficial to both the
company ant its rural customers. However

HUL offered a wide range of products

to the SHGs, which were relevant to
rural

customers.

HUL

invested

significantly in resources who work

much more remained to be done.

with the women on the field and

Project Shakti was conceived following

provide them with on-the-job training

the pioneering work carried out by

and

Grameen Bank of Bangladesh , Self

necessary training to these groups on

Help Groups (SHGs) of rural women

the basics of enterprise management,

were formed by several institutions,

which the women need to manage their

NGOs and government bodies in villages

enterprises. For the SHG women, this

across India. This group of usually 15

translated

members contributed a small amount of

sustainable

money to a common pool and then offered

towards better living and prosperity.

a micro-credit to a member of the group to

Armed with micro-credit, women from

invest in a commonly approved economic

SHGs

activity. Partnering with these SHGs,

distributors in rural markets.

HUL

started

its

Project

Shakti

support.

HUL

into

income

become

provided

the

much-needed,
contributing

direct-to-home

in

Nalgonda district of Andhra Pradesh in 50

villages in the year 2000. The social side
IILM-GSM-09-11_PBM_SEC-A_

15 | P a g e

COMPETITION IN THE
FMCG MARKET

HUL has largest no of brands in most trusted

Five main competitive strategies are:

Brand Equity list of 100 most trusted brands in

brands

list

16 of HUL's brands featured in AC-Nielson

2008 in an annual survey. For the entire year

Overall low cost leadership strategy

Best cost provider's strategy

Broad differentiation strategy

Focused low cost strategy

Focused differentiation strategy

ending March - 2009 net turnover of company

is Rs. 20'239.33 Crore which is 47.99% higher
than 31st December 2007's Rs. 13675.43 Crore
driven mainly by domestic FMCG's with net
profit

stood

at

Rs.

2'496.45

Crore.

Here competitive strategy varies from

sector to sector and company to company.

Products of HUL are: Annapurna; Ayush;

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

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

find a single strategy for the whole sector.

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

When we come on to FMCG Sector main

Ponds;

strategies lay behind market strategies, cost,

Sunlight; Surfexcel; Vaseline; Wheel.

and quality strategies. Here in this report

Pepsodent;

Pureit;

Rexona;

Rin;

ITC Limited

you are going to get information about such

type of strategies of FMCG giants.

Competitive Strategies
and Comparison with

This Company was earlier known as Imperial

Tobacco Company of India Ltd. It is Currently
headed by Yogesh Chander Deveshwar.
Company mainly operates in the industry like
Tobacco,

ITC

Foods,

Hotels,

Stationary

and

Greeting Cards with the major products

constitutes Cigarettes, packed foods, hotels,

HUL (Hindustan Unilever Ltd.)

This Company is earlier known as Hindustan
Lever Ltd. This is India's largest FMCG sector
company with all type of household products
available with it. It has Home & Personal Care
products, and also food and Water Purifier
available with it. According to Brand Equity,
IILM-GSM-09-11_PBM_SEC-A_

and apparels. For the entire year ending Mar2009 the turnover of company is at Rs. 15388
Crore which is 10.3% higher than previous
year's Rs. 13947.53 Crore, driven mainly by
robust 20% growth in non cigarette FMCG
business with net profit stood at Rs. 3324
Crore.

16 | P a g e

Analysis of Both Companies

Performance

HUL & ITC are major companies in FMCG

After stagnating between 1999 and '04, the

market in India. When we compare both

company is back on the growth track. In the

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

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

their competitive strategies in the present

witnessed a CAGR of 11%, while net profit

market. When we look at the present segment

has posted a CAGR of 17%.

breakup for both of the companies then we

came to know that their different products vary

Despite diversification, ITC's reliance on

cigarettes is still huge. The tobacco business

too much in the market.

contributes 40% to its revenues, and accounts

Now let us take a comparative analysis of both

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

the companies under some heads:

business has enabled it to take ambitious, but

expensive bets in new segments and deliver

HUL

modest profit growth.

Hindustan Unilever (HUL) is the largest pure-

Overall Strategy:

play FMCG Company in the country and has

one of the widest portfolio of products sold via

HUL always believes in customer friendly

a strong distribution channel. It owns and

products with major emphasis on low cost

markets some of the most popular brands in

overall without compromising on the quality

the

categories,

of the product. They are leveraging the

including soaps, detergents, shampoos, tea and

capabilities and scale of the parent company

face creams.

and focusing on the value of execution. The

country

across

various

entire product portfolio is also being tweaked

ITC

to include premium offerings such as Pond's

ITC is not a pure-play FMCG company, since

cigarettes is its primary business. It is
diversifying

into

non-tobacco.

FMCG

segments like foods, personal care, paper

products, hotels and agri-business to reduce its
exposure to cigarettes.

Age Miracle and dove shampoo in skin and

hair care. HUL introduced Project Shakti to
penetrate the rural market.
ITC is focusing on delivering value at
competitive prices. Its tremendous reach
through extensive distribution chain has been a
competitive
company's

IILM-GSM-09-11_PBM_SEC-A_

advantage.
e-choupal

Additionally,
model

for

the
direct

17 | P a g e

procurement is well known under which ITC

Being an MNC operating in India, HUL is

partners with over 100,000 farmers for spices

more conservative in its strategies than its

and wheat procurement and an even larger

Indian

number for oilseeds. This kind of rural

increasing competition, it faces the risk of

pedigree is hard to beat.

being overtaken by domestic players in various

counterparts.

Moreover,

given

categories. Prolonged inflation may lead to

Growth Drivers

margin contraction, in case HUL is not able to

HUL has been launching new products and

brand extensions, with investments being
made towards brand-building and increasing
its market share. HUL is also streamlining its
various business operations, in line with the
One Unilever' philosophy adopted by the

pass on this burden to consumers. The

company's large size also poses a problem,
since it does not give HUL the agility to
address the competition it faces from national
and regional players.
For ITC

Unilever group worldwide. Introduction of

premium products and addition of new

Increased regulatory clamps on tobacco, along

consumers via market expansion will be

with rising tax burden, pose a business risk for

HUL's growth drivers.

ITC.

So,

it

has

started

an

ambitious

diversification plan, which has its own set of

ITC's backward integration to ensure that its
products pass efficiently from the farms to
consumers has helped it to cut down supply
and procurement costs. ITC's non-cigarette
FMCG

business

distribution

leverages

network

the

the

large

company

has

developed by selling cigarettes over the years.

A rich product mix, along with ramp-up of
investments in its new sectors, will be

risks. With its foray into the conventional

FMCG space, ITC has entered the high-clutter
branded products market. This will burden its
resources in terms of ad spend and brandbuilding. Creating brand recall and building
market share in new products are ITC's key
challenges. Export ban and rising crop prices
pose a threat for its agri-business, taxing its
margins.

instrumental in charting ITC's growth path.

Risk for both the companies
For HUL

IILM-GSM-09-11_PBM_SEC-A_

18 | P a g e

HUL AND P&G

According to the Nielsen Company, in 2007

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

Procter & Gamble was founded in 1837 by

William Procter, a British citizen who
immigrated to the United States. The company
first sold candles. Procter & Gamble Co.
(P&G, NYSE: PG) is a Fortune 500 American
multinational corporation headquartered in

other company; the $2.62 billion spent by

P&G is almost twice as much as that spent by
General Motors, the next company on the
Nielsen list.
P&G was named 2008 Advertiser of the Year
by Cannes International Advertising Festival.

Downtown Cincinnati, Ohio that manufactures

a wide range of consumer goods. As of mid

Proctor & Gamble is a leading member of the

2010, P&G is the 6th most profitable

U.S.

corporation in the world, and the 5th largest

Washington D.C.-based coalition of over 400

corporation in the United States by market

major companies and NGOs that advocates for

capitalization, surpassed only by Apple, Exxon

a larger International Affairs Budget, which

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

funds American diplomatic and development

Fortune's Most Admired Companies 2010 list.

efforts abroad.

P&G

is

credited

with

many

Global

Leadership

Coalition,

business

innovations including brand management and

the soap opera.

IILM-GSM-09-11_PBM_SEC-A_

19 | P a g e

Major products of P&G

Coconut-based cleaning and food
products
Purico

Laundry and personal cleansing products

Star

DariCreme

Perla

Primex

Sunshine

Safeguard

Camay

Ariel

Mayon

Gain

PMC

Bonus

Victor

Daz

Ola

Lava

Agro

Mr. Clean

Fresco

Prell

Health care

Crest

Vicks

Zest

Fibresure

Moncler

Thermacare

Ivory

Pepto Bismol

Laundry, personal care and hair care

Hair care and laundry categories

Secret

Pampers

Safeguard

Whisper

Ascend

Rejoice

Ariel

Tide

Old Spice

Max Factor

Zest

Vidal Sassoon

Clairol

Ivory

Nice n Easy

Pantene

Wella

Dishwashing, fabric care and food

categories
Joy

Camay

Tide

Mr. Clean
Downy
Alldays
Pringles

IILM-GSM-09-11_PBM_SEC-A_

20 | P a g e

STRATEGIES OF P&G

industry. We are designed to lead in each

of these areas.

P&G focuses on five core strengths

required to win in the consumer products

Consumer Understanding
No company in the world has invested
more in consumer and market research
than P&G. We interact with more than five
million consumers each year in nearly 60
countries around the world. P&G invest
more than $350 million a year in consumer
understanding. This results in insights that
tell us where the innovation opportunities
are and how to serve and communicate
with consumers.

Innovation
P&G is the innovation leader in this
industry. Virtually all the organic sales
growth delivered in the past nine years has
come from new brands and new or
improved

product

continually

strengthen

innovation.
our

We

innovation

capability and pipeline by investing two

times more, on average, than our major
competitors. In addition, we multiply our
internal innovation capability with a global
network of innovation partners outside
P&G. More than half of all product

IILM-GSM-09-11_PBM_SEC-A_

21 | P a g e

innovation coming from P&G today

ranked by leading retailers in industry

includes at least one major component

surveys as a preferred supplier and as the

from an external partner. The IRI New

industry leader in a wide range of

Product Pacesetter Report ranks the best-

capabilities including clearest company

selling new products in our industry in the

strategy,

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

retailers, strong business fundamentals and

P&G has had 114 top 25 Pacesetters

innovative marketing programs.

brands

most

important

to

more than our six largest competitors

combined. In the last year alone, P&G had
five of the top 10 new product launches in
the U.S. and 10 of the top 25.
Brand-Building

Scale
Over the decades, we have also established
significant scale advantages as a total
company and in individual categories,
countries and retail channels. P&Gs scale

P&G is the brand-building leader of this

advantage

is

driven

as

much

by

industry. It has built the strongest portfolio

knowledge-sharing, common systems and

of brands in the industry with 22 billion-

processes, and best practices as it is by size

dollar brands and 20 half-billion-dollar

and scope. These scale benefits enable us

brands. Eleven of the billion-dollar brands

to deliver consistently superior consumer

are the #1 global market share leaders of

and shareholder value.

their categories. The majority of the

balances are #2.

P&G follows Connect + Develop strategy

which enables to bring innovations to life

Go-to-Market Capabilities

faster, more economically and more

sustainably.

It has established industry-leading go-tomarket capabilities. P&G is consistently

IILM-GSM-09-11_PBM_SEC-A_

22 | P a g e

HUL AND P&G ADVERTIESMENT

WAR

7. Lady 1

gets

astonished

by the

whiteness seen.
8. Lady 2s kid reacts by asking he

The new campaign started by Rin, a

product of Hindustan Unilever Limited. It
is

direct

attack

on

the Tide

Naturals product by Procter & Gamble.

Note that when It is said a direct attack it
means an uncensored visual shows the
competitor product and then highlights
how the other product is better then the
former. The sequence of the ad is as
follows
1. Two ladies are standing on a bus stop,
waiting to pick their kids from the
school bus.
2. Both are carrying their shopping
basket/bag with them.
3. Lady 1 has Tide Naturals in her bag.
4. Lady 2 has Rin in her bag
5. Both ladies have a look at each others

mother, as to why is the other lady so

observant and amazed
9. There is a disclaimer during the ad
that the analysis has been done by an
independent agency
10. Its then claimed that now there is
promotional price of Rs. 25 on Rin as
opposed to the earlier Rs. 35.
As it can be noticed, there is a direct
mention of the competitor product along
with the visuals. This one seems to be an
absolute direct attack. It is difficult to say
if the ad will continue on TV. Tide would
definitely come out with a protest.
However, I think the damage is already
done. The main point about the reduced
price of Rin would definitely catch the
consumers eye benefiting HUL.

bag and Lady 1 boasts that Tide has a

good fragrance and provide better
whiteness/brightness to the clothes
6. In the meantime, the school bus
arrives and its shown that the white
shirt of Lady 2s kid is strikingly
brighter and whiter then the Lady 1s
kid.

IILM-GSM-09-11_PBM_SEC-A_

23 | P a g e

PRICE WAR BETWEEN HUL AND P&G

HUL increase the grammage for wheel

P&G increase the grammage of Tide by 25%

P&G cut the price of ARIEL

HUL reduces the price of surf exel in comparision to Ariel

In the year 2010 HUL has reduced 11-17%
price in detergents, 7-17% in toilet soaps
and 6-7% in the toothpastes.

Due to which P&G reacts by cutting 20%

indirect price (25% grammage hike) in
TIDE.

HUL cut the price of RIN by 30% (price

war with P&G).

IILM-GSM-09-11_PBM_SEC-A_

24 | P a g e

Strategic growth

Strategies - market

summary of HUL

entry:

HUL

prioritized

opportunities

which build upon the existing

assets and capabilities. It avoided
spreading their management thinly.
For example: HUL first made its
sales and distribution channel &
supply

chain

management

in

manufacturing and selling wheat

flour and utilized it into the selling
breads produced by wheat flour.

Example:

In

1995

launched KISSAN ANNAPURNA

staple foods with the message
staple food including iodized salt
Serving Rural population: In 2000
the 32% of the sales were from
rural sector but in 2010 it is more
than 50%.

from the customers.

believes

Annapurna iodized salt at that time

only 10% of 6.5 million ton of salts
were branded and refined HUL
identified it and launched the
KISSAN ANNAPURNA SALT.
Firstly it launched in the few cities

and then for all.

Shifted from purity- a product
attribute to Health consumer
benefit (As a positioning strategy)
Tried to shift the consumers from
unbranded to brand.
Started

Using

IODINE

as

marketing strategy as there were

in

expanding

one was focused on that. HUL

started it.

the

portfolio.

Started

endorsement

through

trusted government agencies.

Each category has a different set of

supply

In 1995 HUL launched Kissan

other salts including iodine but no

It follows direct communication

It

iodized salt)

of the country for test marketing

HUL is more focused on the

innovations

(Kissan Annapurna

chain,

production

and

In 2002 it has made iodine patented

in 80 countries.

consumer decision making process

issuing associated with it.

IILM-GSM-09-11_PBM_SEC-A_

25 | P a g e

Strategic Shifts
In the past 10 years, HUL has made four
shifts in its business strategy, targeted at
boosting growth and reach
POWER BRANDS: Strategy in
2000. Focusing on fewer brands,
30 of them, and showering
marketing attention on them.

MASSTIGE: Strategy in 2005-06.

Making premium brands (prestige)

IILM-GSM-09-11_PBM_SEC-A_

attainable for a larger section of

consumers (mass).

ONE UNILEVER: Strategy in

2007. Building leadership position
in fast-growing markets.

PUMP UP THE VOLUMES:

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

26 | P a g e

Financial analysis of HUL

INCOME STATEMENT (RS MILLION)
Y/E

MARCH 07

FY09

FY10

FY11E

FY12E

Net Sales

136,754

202,393

173,844

190,848

213,504

Income

1,937

3,622

1,838

3,298

3,608

Total Revenue

138,691

206,016

175,683

194,147 2

17,112

Change (%)

13.0

48.5

-14.7

10.5

11.8

COGS

72,685

108,379

88,498

101,159

112,531

Gross Profit

66,006

97,636

87,185

92,987

104,581

Operating Exp

45,281

67,235

60,612

66,314

73,424

EBIDTA

20,724

30,402

26,573

26,673

31,157

Change (%)

13.7

46.7

-12.6

0.4

16.8

Margin (%)

14.9

14.8

15.1

13.7

14.4

Depreciation

1,384

1,953

1,814

2,006

2,132

255

253

75

112

91

2,379

2,056

1,692

1,457

1,623

T axes

21,464

30,251

26,376

26,013

30,557

Change (%)

15.3

40.9

-12.8

-1.4

17.5

Margin (%)

15.7

14.9

15.2

13.6

14.3

Tax

3,643

5,244

5,644

5,463

6,417

Deferred Tax

389

475

468

550

Tax Rate (%)

18.8

17.3

23.2

22.8

22.8

25,007

20,256

20,082

23,590

Other Operating

Int. and Fin.

Charges
Other Income
Recurring
Pro fit before

Profit after Taxes 17,432

Change (%)

13.2

43.5

-19.0

-0.9

17.5

Margin (%)

12.7

12.4

11.7

10.5

11.0

(Exp)/Income

1,824

-43

-144

Reported P AT

19,256

24,965

20,112

20,082

23,590

Non-rec.

IILM-GSM-09-11_PBM_SEC-A_

27 | P a g e

If we analyze this financial statement we

getting full competition from the

can see that the performance of HUL has

P&G

decreased over the last two years and the

AMUL,DABUR,NESTLE etc

possible reasons for that are-

others

like

ITC,

One of most important factors is

the power branding strategy of

Higher

expenses

on

the

advertisement part.

and

HUL is the king of distribution

HUL due to which it has ignored

most of the brands and just
focusing only on the power brands.

channel in India but now it is

IILM-GSM-09-11_PBM_SEC-A_

28 | P a g e

Brand Management
at HUL

HUL has the objective of being a national

player (not a niche or a regional marketer)
and the leader therein. HUL also wants

HUL has a large brand portfolio consisting

of nearly 110 bands. In every product line,

about 30 per cent of the corporate income

to come from this line.

it has built a number of brands over a

period of time. Quite a few brands have

So, HUL opted for the strategy of

come to its fold from the parent company.

developing quite a few strong brands in

It has also acquired several ongoing brands

this line, and among them they cover

from the market. HUL also vigorously

different market segments and price points.

pursues brand extension strategy. And

Dove, Lux, Liril, Rexona, Pears and

concurrently, HUL undertakes line pruning

Lifebuoy are the outcome of such a well

and brand restructuring and consolidation,

planned brand strategy implemented over

based on marketing compulsions. HUL is

time. Lifebuoy is 100 years old and Liril

also playing the rejuvenation and re-launch

15 years old. In fact, HUL has about 10

game. With great benefit the corporate-

brands of toilet soaps each having good

level endeavors at business expansion and

volume of sale to its credit . The point is

diversification are also throwing new

that decisions on brand portfolio are a

challenges on the brand strategy front.

fundamental expression of the companys

HUL

objectives and strategy governing a given

lends

itself

for

proper

understanding of the complexity of the

business.

brand management task. We shall examine

how HUL handles the complex demands
in brand management. Such an array of
brands is the outcome of a conscious
corporate strategy by HUL. As a corporate,
HUL wants to be a leader in every one of
its businesses and the strategy is to fight
on

the

strength

of

the

competitive

advantage arising from the possession of

strong brands. It is this strategy that is
getting reflected in the development of a
multitude of strong brands. If we take the
business of bathing soaps, as an example,
IILM-GSM-09-11_PBM_SEC-A_

HUL Locates Positioning Opportunities:

HUL methodically goes about the task of
developing a brand portfolio across a
product category. It first identifies the
various positioning opportunities across
benefits, target groups and price points.
Existing brads are mapped across these
positioning opportunities, and gaps for
possible new offers are explored.The
company then estimates the likely volumes
for each of the possible opportunity and
the financial viability and sustainability of
29 | P a g e

the propositions in the long term. If some

origin to the success of the Dettol lotion,

of these gaps look promising, HUL goes

HUL assessed that a Savlon antiseptic

ahead with the plans. It examines the

soap could be successfully extended from

existing set of brands with the company,

the Savlon lotion. It entered into an

the product technologies available, the

agreement with J&J for the use of Savlon

benefits that can be provided and other

brand name and the product formula, and

considerations that have a bearing on the

launched the Savlon antiseptic soap. HUL

companys long term interests in the

very deftly managed successfully new

business. Finally, if the company decides

brand launch and merged as a challenger

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

to Dettol soap. J&J secures a good royalty

be taken as to whether new brands should

from HUL for lending the brand. It is a

be created or extensions if existing brands

potentially win-win arrangement for both

should be preferred or ongoing brands

companies.

from the market acquired.

Repositioning and rebranding

HUL hires brands to capture new
opportunities: Towards the close of the
1990s, HUL found that the germicide

HUL has done the process of repositioning

the brands. Few of them as follows;

segment of the soap market was growing

SUNSILK: Sunsilk co-creations ,

fast, with RCIs Dettol antiseptic soap

collaboration with 7 pioneer global

leading it. HUL did not have suitable offer

hair experts

in its stable to capture a share of this

segment.

Lifebuoy

was

not

strictly

meeting the particular benefit. HUL knew

that launching and developing a new brand
would take a lot of time and resources, and
the company would miss the market if it
chose this route. HUL did not have the
product formula either to enter this
segment. It was in this background that

BREEZE: New fragrances over the

world, new look more colors,
packaging
Rexona: relaunched it with the
coconut moistening
Lifebuoy

hand

sanitizer:

kills

99.99% germs in 15 seconds

Fairness cream: Fair & lovely
multivitamin

HUL decided to hire the Savlon brand

Close-up: peppermint splash

from J&J. Savlon was a successful

Pepsodent

antiseptic lotion, a competitor to Dettol

flexibility.

toothbrush:

25%

lotion. Just as the Dettol soap owed its

IILM-GSM-09-11_PBM_SEC-A_

30 | P a g e

Conclusion

&

Recommendations

hotels, paper and agri-businesses. Investors

who want to bank on its execution ability
in FMCG can consider the stock with a
long-term horizon.

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

treat for investors seeking exposure in the

According to us the companies should

FMCG

has

continue with their CSR and also continue

delivered in the past and has the potential

with their strategies. The thing that needs

to do better in future. In short term. HULs

to be changed is that, ITC should go for

growth story is evolving.

more diversification in Non cigarette

segment.

The

company

segment (FMCG) while HUL should come

ITC is eyeing the pie which HUL and

up with the new strategies that could take

other FMCG players currently enjoy.

the new product forward to create a new

Though risky, the company's business

segment. A recommendation For HUL is

model will pay off in the long run. ITC has

that it should focus on rural area more.

proved its expertise in the cigarettes,

IILM-GSM-09-11_PBM_SEC-A_

31 | P a g e

Bibilography
www.google.com
www.hul.com
www.projectshakti.com
www.wikipedia.com
www.youtube.com

IILM-GSM-09-11_PBM_SEC-A_

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