Distribution Management of

DISTRIBUTION MANAGEMENT OF HUL
pg. 1
CORPORATE INFORMATION
Hindustan Unilever Limited, 165/166, Backbay

Registered Office Reclamation Mumbai 400 020 Tel : +91 22
39830000 Fax no. : +91 22 22026712
Ashok.K.Gupta, Email : hllshare.cmpt@unilever.com
Executive Director (Legal) and Tel nos. : +91-22-39832567/ 39832358 / 39832557
Company Secretary
Lovelock & Lewes, Chartered Accountants 252, Veer

Statutory Auditors Savarkar Marg Dadar, Mumbai- 400 028
Crawford Bayley & Co. State Bank Building N.G.N.

Solicitors Vaidya Marg Mumbai 400 023
Karvy Computershare Private Limited Unit :

HINDUSTAN UNILEVER LIMITED Plot No. 17 to 24,
Registrar and Share Transfer Vittalrao Nagar, Madhapur, Hyderabad 500 081.
Agents Phone : +91- 40 23420818-823 Fax : +91- 40
23420814 Email : igkcpl@karvy.com Website :
www.karvy.com
Unilever India Exports Limited Bon Limited Unilever
Nepal Limited Ponds Exports Limited Daverashola
Subsidiary Companies Estates Private Limited Jamnagar Properties Private
Limited Shamnagar Estates Private Limited Brooke
Bond Real Estates Private Limited Hindustan Unilever
Field Services Private Limited Levers Associated
Trust Limited Levindra Trust Limited Hindlever Trust
Limited
pg. 2
pg. 3
1. INTRODUCTION OF HINDUSTAN UNILEVER LIMITED
Hindustan Unilever Limited (HUL), formerly Hindustan Lever Limited (it

was renamed in late June 2007 as 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. These products endow the
company with a scale of combined volumes of about 4 million tonnes and sales of
nearly Rs. 13718 crores.
HUL is also one of the country's largest exporters; it has been recognised 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 everyday 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
52.10% of the equity. The rest of the shareholding is distributed among 360,675
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. These products are manufactured over 40 factories across India. The
operations involve over 2,000 suppliers and associates. HUL's distribution network
comprises about 4,000 redistribution stockists, covering 6.3 million retail outlets
reaching the entire urban population, and about 250 million rural consumers.
We have analyzed the distribution network of HUL from the following aspects:
1. Evolution of HULs distribution network
pg. 4
2. Transportation & Logistics
3. Channel Design
4. Initiatives taken for channel member management.
5. Field force management
6. Analytical Framework
7. Financial Analysis
pg. 5
HULS BRANDS
1. Lifebuoy
2. Lux
3. Surf Excel
4. Rin
5. Wheel
6. Fair & Lovely
7. Pond's
8. Sunsilk
9. Clinic
10. Pepsodent
11. Close-up
12. Lakme
13. Brooke Bond
14. Kissan
15. Knorr-Annapurna
16. Kwality Wall's
17. Dove etc
pg. 6
pg. 7
pg. 8
pg. 9
DISTRIBUTION
NETWORK
pg. 10
2.1. Evolution over Time
The HULs distribution network has evolved with time. The first phase of the
HUL distribution network had wholesalers placing bulk orders directly with the
company. Large retailers also placed direct orders, which comprised almost 30 per cent
of the total orders collected. The company salesman grouped all these orders and
placed an indent with the Head Office. Goods were sent to these markets, with the
company salesman as the consignee. The salesman then collected and distributed the
products to the respective wholesalers, against cash payment, and the money was
remitted to the company.
The focus of the second phase, which spanned the decades of the 40s, was to provide
desired products and quality service to the company's customers. In order to achieve
this, one wholesaler in each market was appointed as a "Registered Wholesaler," a
stock point for the company's products in that market. The company salesman still
covered the market, canvassing for orders from the rest of the trade. He then
distributed stocks from the Registered Wholesaler through distribution units maintained
by the company. The Registered Wholesaler system, therefore, increased the distribution
reach of the company to a larger number of customers.
The highlight of the third phase was the concept of "Redistribution Stockist" (RS) who
replaced the RWs. The RS was required to provide the distribution units to the
company salesman. The second characteristic of this period was the establishment of
the "Company Depots" system. This system helped in transshipment, bulk breaking, and
as a stockpoint to minimise stock-outs at the RS level. In the recent past, a significant
change has been the replacement of the Company Depot by a system of third party
Carrying and Forwarding Agents (C&FAs). The C&FAs act as buffer stock-points to
ensure that stock-outs did not take place. The C&FA system has also resulted in cost
savings in terms of direct transportation and reduced time lag in delivery. The most
important benefit has been improved customer service to the RS.
pg. 11
The role performed by the Redistribution Stockists includes: Financing stocks, providing
warehousing facilities, providing manpower, providing service to retailers, implementing
promotional activities, extending indirect coverage, reporting sales and stock data,
demand simulation and screening for transit damages.
2.2. Detail Overview
The distribution network of HUL is one of the key strengths that help it to supply most
products to almost any place in the coutry from Srinagar to Kanyakumari. This
includes, maintaining favorable trade relations, providing innovative incentives to
retailers and organizing demand generation activities among a host of other things.
Each business of HUL portfolio has customized the network to meet its objectives. The
most obvious function of providing the logistics support is to get the companys
product to the end customer.
Distribution System of HUL
HUL's products, are distributed through a network of 4,000 redistribution stockists,

covering 6.3 million retail outlets reaching the entire urban population, and about 250
million rural consumers. There are 35 C&FAs in the country who feed these
redistribution stockists regularly. The general trade comprises grocery stores, chemists,
wholesale, kiosks and general stores. Hindustan Unilever provides tailor made services
to each of its channel partners. It has developed customer management and supply
chain capabilities for partnering emerging self-service stores and supermarkets. Around
2,000 suppliers and associates serve HULs 40 manufacturing plants which are
decentralized across 2 million square mile of territory.
pg. 12
(Fig. 1 Schematic of HULs Distribution Network)
Distribution at the Villages:
The company has brought all markets with populations of below 50,000 under
one rural sales organisation.The team comprises an exclusive sales force and exclusive
redistribution stockists.The team focuses on building superior availability of products. In
rural India, the network directly covers about 50,000 villages, reaching 250 million
consumers, through 6000 sub-stockists.
pg. 13
(Fig. 2 Rural Distribution Model of HUL)
pg. 14
HUL approached the rural market with two criteria - the accessibility and viability. To
service this segment, HUL appointed a Redistribution stockist who was responsible for
all outlets and all business within his particular town. In the 25% of the accessible
markets with low business potential, HUL assigned a sub stockist who was responsible
to access all the villages at least once in a fortnight and send stocks to thoe markets.
This sub-stockist distributes the company's products to outlets in adjacent smaller
villages using transportation suitable to interconneting roads, like cycles, scooters or the
age-old bullock cart. Thus, Hindustan Unilever is trying to circumvent the barrier of
motorable roads. The company simultaneously uses the wholesale channel, suitably
incentivising them to distribute company products. The most common form of trading
remains the grassroots buy-and-sell mode. This enables HUL to influence the retailers
stocks and quantities sold through credit extension and trade discounts. HUL launched
this Indirect Coverage (IDC) in 1960s.Under the Indirect Coverage (IDC) method,
company vans were replaced by vans belonging to Redistribution Stockists, which
serviced a select group of neighbouring markets.
Distribution at the Urban centres:
Distribution of goods from the manufacturing site to C & F agents take place through
either the trucks or rail roads depending on the time factor for delivery and cost of
transportatin. Generally the manufacturing site is located such that it covers a bigger
geographical segment of India. From the C & F agents, the goods are transported to
RSs by means of trucks and the products finally make the last mile based on the
local popular and cheap mode of transport.
pg. 15
New distribution channels
Project Shakti
This model creates a symbiotic partnership between HUL and its consumers.
Started in the late 2000, Project Shakti had enabled Hindustan Lever to access 80,000
of India's 638,000 villages .HUL's partnership with Self Help Groups(SHGs) of rural
women, is becoming an extended arm of the company's operation in rural hinterlands.
Project Shakti has already been extended to about 12 states - Andhra Pradesh,
Karnataka, Gujarat, Madhya Pradesh, Tamil Nadu, Chattisgarh, Uttar Pradesh, Orissa,
Punjab, Rajasthan, Maharashtra and West Bengal. The respective state governments and
several NGOs are actively involved in the initiative. The SHGs have chosen to partner
with HUL as a business venture, armed with training from HUL and support from
government agencies concerned and NGOs. Armed with micro-credit, women from SHGs
become direct-to-home distributors in rural markets.
The model consists of groups of (15-20) villagers below the poverty line (Rs.750 per
month) taking micro-credit from banks, and using that to buy our products, which they
will then directly sell to consumers. In general, a member from a SHG selected as a
Shakti entrepreneur, commonly referred as 'Shakti Amma' receives stocks from the HUL
rural distributor. After being trained by the company, the Shakti entrepreneur then sells
those goods directly to consumers and retailers in the village. Each Shakti entrepreneur
usually service 6-10 villages in the population strata of 1,000-2,000. The Shakti
entrepreneurs are given HUL products on a `cash and carry basis.'
pg. 16
The following two diagrams show the Project Shakti model as initiated
pg. 17
Project Streamline
To cater to the needs of the inaccessible market with high business potential
HUL initiated a Streamline initiative in 1997. Project Streamline is an innovative and
effective distribution network for rural areas that focuses on extending distribution o
villages with less than 2000 people with the help of rural sub-stockists/Star Sellers
pg. 18
who are based in these very villages. As a result, the distribution network directly
covers as of now about 40 per cent of the rural population.
Under Project Streamline, the goods are distributed from C & F Agents to Rural
Distributors (RD), who has 15-20 rural sub-stockists attached to him. Each of these
sub-stockists / star sellers is located in a rural market. The sub-stockists then perform
the role of driving distribution in neighboring villages using unconventional means of
transport such astractor and bullock carts. Project Streamline being a cross functional
initiative, the Star Seller sells everything from detergents to personal products.
Higher quality servicing, in terms of frequency, credit and full-line availability, is to be
provided to rural trade as part of the new distribution strategy.
The diagram in the next page shows the model of Project Streamline.
pg. 19
pg. 20
HINDUSTAN LIVER
NETWORK
pg. 21
Hindustan Lever Network (HLN)
It is the company's arm in the Direct Selling channel, one of the fastest growing
in India today. It already has about several lakh consultants - all independent
entrepreneurs, trained and guided by HLN's expert managers. HLN has already spread
to over 1500 towns and cities, covering 80% of the urban population, backed by 42
offices and 240 service centres across the country. It presents a range of customised
offerings in Home & Personal Care and Foods.
The New Compensation plan for HLN partners provides new exciting ways of earning
substantial income in addition to offering rewrds like revenue sharing through the
innovative concept of pools Mother Depot and Just in Time System
In order to rationalise the logistics and planning task, an innovative

step has been the formation of the Mother Depot and Just in Time System (MD-JIT).
Certain C&FAs were selected across the country to act as mother depots. Each of them
has a minimum number of JIT depots attached for stock requirements. All brands and
packs required for the set of markets which the MD and JITs service in a given area
are sent to the mother depo by all manufacturing units. The JITs draw their
requirements from the MD on a weekly or bi-weekly basis.
Leveraging Information technology
HUL customers are serviced on continuous replenishment. This is possible

because of IT connectivity across the extended supply chain of about 2,000 suppliers,
80 factories and 7,000 stockists. This sophisticated network with its voice and data
communication facilities has linked more than 200 locations all over the contry,
including the head office, branch offices, factories, depots and the key redistribution
stockists. They have also combined backend processes into a common Shared Service
infrastructure, which supports the units across the country. All these initiatives together
pg. 22
have enhanced operational efficiencies, improved the service to the customers and have
brought us closer to the marketplace.
RS Net Initiative:
The RS Net initiative, launched in 2001, aims at connecting Redistribution Stockists

(RSs) through an internet based system. It now covers stockists of the Home &
Personal Care business and Foods & Beverages in close to 1200 towns and cities.
Together they account for about 80% of the company's turnover. RS Net is one of the
largest B2B e-commerce initiatives ever undertaken in India. It provides linkages with
the RSs own transaction systems, enables monitoring of stocks and secondary sales
and optimises RSs orders and inventories on a daily basis through online intraction on
orders, despatches, information sharing and monitoring. The IT-powered system has
been implemented to supply stocks to redistribution stockists on a continuous
replenishment basis. Today, the sales system gets to know every day what HUL
stockists have sold to almost a million outlets across the country. Information on
secondary sales is now available on RS Net every day.
RS Net is part of Project Leap. Project Leap begins with the supplier runs through the
factories and depots and reaches up to the RSs. This ensures HULs growth by ensuring
that the right product is available at the right place in the right quantities and at th
right time in the most cost-effective manner. Leap also aims at reducing inventories and
improving efficiencies right through the extended supply chain.
RS Net has come as a force multiplier for HUL Way, the company's action-plan to not
only maximise the number of outlets reached but also to achieve leadership in every
outlet. RS Net has enabled stockists to place orders on a Continuous Replenishment
System. This in turn has unshackled the field force to solely focus on secondary sales
from the stockists to retailers and market actiation. It has also enabled RSs to provide
improved service to retail outlets. Simultaneously, HUL is servicing the rural market,
key urban outlets, and the modern trade as a single concern.
pg. 23
Adexa iCollaboration suite
In 2000, HUL identified improved supply chain management as a critical business

priority and launched a comprehensive initiative, Project Leap, tasked with increasing
supplier/distributor responsiveness, reducing inventory buffers, and optimizing planning
and scheduling. HUL chose the Adexa iCollaboration suite for facilitating centralized
monitoring of the SCM, live customer /supplier collaboration, and integrating demand
and distribution planning with production scheduling. With the aggregated view of data
provided by the iCollaboration suite, HUL was able to combine sales and 11
distribution efforts on the diverse product lines, which resulted in significant savings on
the cost side for inventories and distribution. HUL updates inventory positions,
shipments and customer orders on a daily basis with these software packages and can
get a pulse on the market real time.
pg. 24
(Fig. 3 HULs Turnover Compared with Competitors, 2006)
pg. 25
(Fig. 4 HULs Market Leadership across various FMCG Categories)
pg. 26
CHANNEL
DESIGN
pg. 27
3. Channel Design
Hindustan Lever Limited (HUL) has two types of channel selling -
i. Regular (traditional) retail channel,
ii. Direct Selling Channel in the name of Hindustan Lever Network (HLN).
HUL has a well entrenched high distribution model which comprises of C&FAs,
Redistribution Stockists, wholesalers and retailers (as shown earlier). Hindustan
Unilever's distribution network is recognized as one of its key strengths. Its focuses on
Product availability, Brand communication, and higher levels of brand experience.
HULs Sales Breakup through different channels:
pg. 28
Channel Structure (Special Focus is on Jamshedpur)
Typically, the goods produced in each of the HUL's 40 factories are sent to a depot
with the help of a carrying and forwarding agent (C&FA). The company has its depot
in every state of the country. The C&FA is a third party and gets servicing fee for
stock and delivery of the products. In each town, there is at least a redistribution
stockist (RS) who takes the goods from the C&FA and sells them to retail outlets. In
Jharkhand the C&FA is in Ranchi and Jamshedpur is serviced by 3 Redistribution
Stockists at Sakchi (M/s Om Prakash Agarwal), Bistupur and Parsudih.
The HUL management realized certain problems with the existing sales model. First, the
model was not viable for small towns with small population and small business. HUL
found it expensive to appoint one stockist exclusively for each town. Secondly, the retail
revolution in the country has changed the pattern the customers shop. Large retail self
service shops are becoming commonplace. In response of these problems, HUL
redesigned its sales and distribution channel and the new system is known as
'diamond model' in the company. At the top end of the diamond, there are the self
service retail stores which constitute 10% of the total FMCG market. The middle, fatter
part of the diamond represents the profit-center based sales team. In the bottom of the
pyramid is the rural marketing and distribution which accounts for 20% of the
business. As a result of the new distribution plan the company has planned to reduce
the number of RS in small towns.
Redistribution Stockists:
Total number of RS in Jamshedpur = 3 (at Sakchi, Bistupur, Parsudih). This is going to

be reduced to only one with effect from next month of this year.
pg. 29
Sales Margin: 4.76% which includes cash discount, unloading expenses from
depot, distribution expenses to retailers, incentive schemes & other incidental
expenses.
Modes of transport used: Rickshaw, tempo.
Incentive schemes: Before 2000 holiday packages and tours but after 2000 no
non-monetary incentive for RS.
Software systems and Information System: UNIFY 8.3 (Developed by IBM & CMC).
This software needs to be synchronized daily and the system updates any
information/ incentive schemes / sales figures etc to and from the common
shared platform.
Areas of Operations: Marked for each of the RS.
Selling Operations: RSs sells the goods to -
Wholesaler (gets 1.5 % max. discount from RS)
Retailers (gets 1.0% max. discount from RS)
Wholesaler:
Gets cash discounts and other schemes promoted by HUL (gets points under Vijeta
Scheme).
Retailers:
pg. 30
Total retailer base in Jamshedpur: Approximately 1070.
Sales Margin: Depends on the product
o Soap, detergents - 8% on MRP
o Cosmetics - 10% on MRP
o Food items - 8% on MRP
Incentive schemes:
Company programs (Scheme Discounts + Cash Discounts)
TPR schemes based on Sales (1 % to 4 %)
Vijeta scheme is not for retailers.
Field Sales Force:

To meet the ever-changing needs of the consumer, HUL has set up a distribution
network that ensures availability of all their products, in all outlets, at all times. This
includes, maintaining favourable trade relations, providing innovative incentives to
retailers and organizing demand generation activities among a host of other things.
The important activities that HUL field sales force does are (i) target chasing and (ii)
reporting on a daily basis. Account information is maintained on palmtops given by
HUL. During our research and informal survey of HUL field sales force, we came to
know that for the last two years, training is not being given at all to the sales force.
HUL has limited the network channel selling to categories of Home & Personal Care
(HPC) and Food products with exclusive brands for this channel. That is, these
particular brands (products) are all exclusive to HLN, specifically developed for the
Direct Selling channel, and not available in the retail channel. The general trade
pg. 31
comprises grocery stores, chemists, wholesaler, kiosks and general stores. Hindustan
Unilever services each with a tailor-made mix of services.
pg. 32
INITIATIVE TAKEN
TO IMPROVE
THE DISTRIBUTION NETWORK
pg. 33
4. INITIATIVES TAKEN TO IMPROVE THE DISTRIBUTION NETWORK
HUL has taken the following initiatives to improve its distribution network:
Setting up of a full scale sales organisation comprising key account management

and activation to impact, fully engage and service modern retailers as they
emerge.
Servicing Channel partners and customers with continuous daily replenishment.
Leveraging scale and building expertise to service Modern Trade and Rural
Markets.
Delayering of sales force to improve response times and service levels.
Revamping of its sales organisation in the rural markets to fully meet the
emerging needs and increased purchasing power of therural population. HULs
distribution network in rural India already directly covers about 50,000 villages,
reaching about 250 million consumers through about 6,000 sub stockists.
Implementation of supply chain system that connects stockists across the country,
and also includes a back-end system connecting suppliers, all company sites and
stretching right up to stockists. IT tools have been deployed for connectivity
across the extended supply chains. Backend processes have been combined into a
common Shared Service infrastructure.
Launching of Project Shakti through which the company is able to extend its
operations in villages. HUL has also included several NGOs and state
governments as the initiative helps rural women to improve their financial
positin.
pg. 34
Launching of HUL Network to leverage the channel of direct selling by presenting

customised offerings in 11 home and personal cre and food categories. Started in
2003, it already has a base of 300,000 consultants across the country.
Starting of franchised Lakme Beauty Salons and Ayush Therapy centres to offer
standardised services, in line with the strategy to leverage the equity of its
brands through relevant services.
Finding out Innovative ways to reach out to its consumers, particularly in rural
areas by leveraging non-conventional media like wall paintings, cinema vans,
weekly markets (haats), fairs and festivals.
Initiating the concept of Super Value Stores (SVS) in urban areas to partner
traditional stores to provide a range of services ranging from managing their
inventory to setting u POS (point of sale) banners. In addition to this, to boost
up traditional retail in the face increasing in-roads made by large, modern
retailing chains like Spencers, Reliance Fresh etc (where HUL is squeezed harder
for discounts), HUL started restructuring some of the selected SVSs into the form
of self-service retail shops a la modern retails. This is to protect & maintain the
competitive advantage that HUL has over its biggest competitors in the other
markets (e.g., P&G), with its very deep distribution reach through traditional
retail.
Launching the Unicare scheme with upmarket pharmacies and retailers to sale its
premium brands.
Undertaking several initiatives for traditional channels in order to improve its

capabilities at the front-end by developing skills for stockists' sales force. Under
'Project Dronacharya', the FMCG major continuously imparted training to over
10,000 stockist salesmen.
pg. 35
Launching of several promotional schemes for existing wholesalers and

distributors. For instance, it has started the Vijeta - Rishta Jeet Ka scheme last
year to provide a platform for the wholesaler and HUL to grow the business by
earning points and rdeeming them.
pg. 36
FIELD FORCE MANAGEMENT
pg. 37
5. Field Force Management
The working cycle of a typical HUL field force member is from 21st of every month to
the 20th of the next month. During this period he is given various targets that helps to
achieve company objectives and gives him a chance to prove his peformance relative to
other.
To start with the field force member is given a particular area and his responsibility is
to cater to all the retailers in thatarea. While deciding the area for each member of the
field force, the company makes sure that the operating area of each field member
doesn't overlap with his other colleagues. There are various methods used by the
company to incentivize the field force - Monetary and Non Monetary.
In HUL, the field force is evaluated using QOC (Quality of Contribution). It consists of
4 components -
1. Secondary Sale (Max points = 2.5)
2. Eco (Max points = 0.5)
3. Focus (Max points = 0.5)
4. FCS (Max Points = 0.5)
pg. 38
Secondary Sale -
Based on the operating area, each member is given a specific target in terms
of value (e.g., Rs. 15 lacs) for the operating month (21st 20th of next month). If he
achieves 100% of the target he gets 2.5 points, if he achieves 95% target he gets 1.5
points. These points are used to add to the total QOC score as well as linked to
monetary incentive.
ECO / Width pack Target

This is used for the penetration/reach of certain products in the existing
market. The following is a typical ECO target assigned to a field force agent:
Lux International 105 outlets x 1 SKU

Pears Soap - 135 outlets x 1 SKU
Rin - 104 outlets x 1SKU
Breeze Soap - 100 outlets x 1 SKU
The outlets mentioned are within the operating area of the person and 1 SKU = Rs.
27/-. Based on this the Field person calculates number of packs he should sell to the
pg. 39
retailers. The concerned agent receives this target around 25th of each month and has
to complete this target within the 5th day of next onth. Upon completion he gets
additional 0.5 points added to his QOC score along with monetary incentive associated
with it. However if this is not met within 5th, he looses the opportunity.
Focus / Depth Pack target

This is mainly used to increase the sales volume of certain products. A
typical Focus target is given below:
Lux International Rs 20,640 /- @ Rs 6/- per unit
Life Buoy - Rs 70,220 /- @ Rs 10/- per unit
Wheel - Rs 99,000 /- @ Rs 10/- per unit
Breeze Soap - Rs 27,000 /- @ Rs 10 /- per unit
This target needs to be achieved within 20th of next month. Upon achieving the
target the field person is awarded 0.5 points which is then added to his overall QOC
score.
Field Capability Score (FCS) In this component, the field force persons are required
to ensure that the scheduled visit/outlet billing is such that at least 15 items are
demanded per order. If this is achieved the retailer gets a discount of 1% on the billed
amount and on the other hand the field person gets an additional score of 0.5 which
is added to his QOC score. Each scheduled visit per outlet is one per week. For
example if there are 100 outlets within the operating area of a field person then the
pg. 40
number of visit per week is 100 and otal number of visit per month = 100x4 = 400.
18
pg. 41
The sales person is required to achieve 90% success rate to get 0.5 points for his QOC
score and at least 65% for a satisfactory performance.
Non Monetary Methods
The other purpose of the QOC scores is to highlight the performance of the field
person among his peers. Based on the QOC various awards are distributed to the field
persons at the end of every month. These awards are also known as MOC Star
awards. MOC stands for Monthly operating Cycle.
If QOC score > 4.5 The person is eligible for 7 star award
If QOC score > 4 The person is eligible for 5 star award
If QOC score > 3.5 The person is eligible for 3 star award
In the event of exceptional performance, management representatives from the regional

office come to the zonal office to distribute the awards. The photograph of the award
winners is displayed in the office as a source of inspiration for other sales person.
Target Setting Mechanism and monitoring
The regional office monitors the performance of various zones. A thorough analysis is
done at the end of each month and based on that the weak products are identified or
those for which thedemand has weakened. This is the basis of setting ECO and FOCUS
targets for the field persons. Each field person is given a palmtop wherein he can feed
the entries on the spot where the transaction is done. This solves basically the two
purposes -
pg. 42
a) The field person is freed from the tedious task of maintaining cumbersome records
and can then concentrate on the job (thus IT is replacing some of the field force or
other channel members),
b) The sold item is immediately updated in the company information system.
ANALYTICAL
FRAMEWORK
pg. 43
6. ANALYTICAL FRAMEWORK
We tried to analyze HULs distribution network in the light of 20 most significant

variables that affect the distribution part f channel management for any organization in
the business of marketing & selling of goods. The variables, their explanations and
their impact on the HULs distribution network are given below
1. Number of Consumers
In retail business dominated by traditional stores like Kirana Stores etc (Indian retail
business falls in this category), higher the no. of consumers, higher will be the no. of
channel intermediaries. The implication of this is that there will be many layers in the
channel in such a situation and managing such a complex distribution network by
keeping tabs on every player will be a huge task. Moreover, Transport & Logistics
(T&L) support provided by the organization needs to be well organized.
Implication for HUL
HULs key strength lies in managing its distribution network in India. HUL is Indias
largest FMCG company with unmatched distribution network, which is built over a
century focusing on traditional retail. HUL's distribution network comprises about 4,000
redistribution stockists, covering about 6.3 million retail outlets reaching the entire
urban population, and about 250 million rural consumers in India. Its said that HUL is
able to touch the lives of about 2 out of every 3 Indian consumers. This achievement
is due to the sheer strength of its distribution network (products should be good as
always, otherwise they will find no buyers in the long run). For a comparison, P&G,
worlds largest FMCG major, does not find its name in the list of top 5 FMCG majors in
India as its strength lies in managing modern retail (biggest example, Wal-Mart), but
not traditional retail.
pg. 44
2. Geographic Dispersion of Consumers

Again, this is closely related with the previous variable, more so in a large,
geographically diverse country like in India. With the increase in this dispersion level,
more intermediaries and more layers are required in the distribution network so as to
effectively reach the length & breadth of the country. Obviously the T&L management
for such an organization would be critical to accomplish this.
Implication for HUL
For a country as geographically diverse as India, pan-Indian presence & market

leadership can only be possible when products reach even the remotest parts of the
country. HUL is very successful in achieving and maintaining this reach due to its
distribution network.
3. Frequency of Purchase
If the frequency of purchase is high, then transport intensity in the last mile (i.e.,
from distributor to retailers) increases manifold. For FMCG products, as a thumb rule
we can take that the mean time between two purchases is ~ 90 days. With the
introduction of smaller form factor packaging for FMCG goods (Re.1 /- shampoo sachets
being a very good example), the transport intensity increased further.
Implication for HUL
HUL has about 4000 redistribution stockists, who supply to approx. 6.3 million outlets
across India. Since manufacturing is done at 40 plants around the country, rationalizing
the logistics and planning is a huge task. An innovative step in that regard has been
the formation of the Mother Depot and Just in Time System (MD-JIT). Certain C&FAs
were selected across the country to act as mother depots. Each of them has a
pg. 45
minimum number of JIT depots attached for stock requirements. All brands and packs
required for the set of markets which the MD and JITs service in a given area are sent
to the mother depo by all manufacturing units. The JITs draw their requirements from
the MD on a weekly or bi-weekly basis and supply to stockists in that area, who, in
turn, supply to retailers.
4. Tendency to Postpone Purchase
If the tendency to postpone purchase is lesser, then the product will be easier to
distribute. For example, products/services like Fire Extinguishers, Life Insurance etc. are
such that though these are needed, the overall tendency for the consumers is to
postpone the purchases these products/services can be termed as necessary evil.
For this kind of products, regular reinforcement in the minds of consumers becomes
necessary, sales field force becomes critical and use of expert field force is
commonplace.
Implication for HUL
Since FMCG products are used regularly and these products are not necessary evils,
distribution network of HUL does not require any expert field force to sell its products.
Only the recent diversification of HUL into Home Water Purification business (Pure It
brand) needs dedicated field sales force.
5. Level of Familiarity/Knowledge (of consumer) about the Product
If the level of familiarity of consumer with the product is higher, lower will be the
importance of field sales force and higher will be the importance of channel.
Implication for HUL
pg. 46
Since FMCG goods are very much familiar to consumers, channel and its different
members are very much important to HUL and field sales forces function is mostly
limited to channelmanagement and ensuring availability of products.
6. Degree of Brand Loyalty
If the consumers are more brand loyal, then less push will be required from the
channel members to sell the products as there will be sufficient pull or demand from
the consumers. This implies that for products with loyal customer base, efforts from
the channel members can be much lesser for final off-take to happen which in turn
leads to lesser margins to the channel members for those products. For faster moving
products (mostly due to brand pull), retailers may not be averse to slightly lesser
margins as rotation of the products is high and thus his/her ROI is protected.
Retailers ROI = InvestmentRotationinMarg
For a FMCG player with a non-established brand, margins to channel members and
point of sale (POS) advertising are both important.
Implication for HUL
As HUL enjoys leadership position in many FMCG segments like Soaps, Detergents,
Personal Care products etc with strong brands with continuous pull, HUL has less to
worry about margins to channel members or POS advertising. But this situation can
change considerably in the face of rise of a significant competitor having almost the
same reach as HULhas (e.g., ITC as its eating into HULs market share continuously
since it entered FMCG segment).
7. Purchased on Impulse
The impulse purchase products like chocolates, toffees, colas, ice creams etc. follow
Says Law which states that Supply Creates Demand, implying availability of these
pg. 47
products are the most critical aspect for these to be sold and consumed. This stresses
on the fact that T&L for these products becomes very important.
Implication for HUL
HUL has only one product in this impulse purchase category - Kwality Walls (ice
cream). HUL is #2 after Amul in this FMCG segment. To increase this brands sale &
market share, availability, visibility and consumer mind share has to be increased and
improved as well.
8. Level of Involvement (LOI)
Level of involvement (i.e., time & effort spent by the consumer) generally depends on
the product cost. If LOI is higher, lower is the importance of availability and more
critical is the supply of information as consumer decision process depends more on
elaborate information search.
Implication for HUL
As FMCG products are generally Low Involvement Products, HUL has to bother more on
ensuring availability of the products, rather than supply of information.
9. Purchased as a Basket of Goods
The products which are generally bought together by consumers as a basket of goods
(e.g., Rice, Flour powder, Cooking oil etc at the beginning of the month) are to be
made available together for final off-take.
Implication for HUL
pg. 48
This aspect partly applies to HULs products as some products like shampoos, soaps,
detergents may fall in a basket. Efficient distribution network of HUL ensures
availability of all such products at each selling point (individual retailer).
10. Speed & Complexity of Decision Making Process
If the speed is low, then the complexity of the decision making process is higher and
greater is the importance of field sales force and the salesprsons skill, knowledge and
quality.
Implication for HUL
For FMCG products, complexity of decision making process is not there and so, speed of
decision making is high. This means that for HUL, field sales force is of limited
functional usage.
11. Present of Expert Influencer in the Decision Making Process
Roles of sales field force vary depending upon whether expert influencer (e.g., doctors)
is present in the process or not. If present, then consumer buying behavior may
become subcontracted and the expert influencer becomes another customer of the
network, apart from the end-user. In that situation two groups of sales force are
needed to cater to both the segments.
Implication for HUL
For FMCG goods, role of expert influencer is limited. But companies try to associate
brands with regulatory bodies/authorities and show advertising with experts
pg. 49
commenting upon superior virtues of a product in an attempt to make the buying

beaviour shift from picking/variety
seeking to subcontracted and make consumers more loyal to the brand. These are true
for HUL also (e.g., Ponds Intitute).
12. Element of Crisis Purchase Exists
If element of crisis purchase exists in the buying decision of a product (for example,
bulbs & tubes), then its availability becomes critical.
Implication for HUL
None of the products of HUL fall under this category. Nevertheless, availability of
products of HUL is necessary for other reasons.
13. Element of Risk Aversion Exists
If the level of involvement of the consumer in buying decision process is higher, risk
taking tendency of the consumer will be lower or consumer will be more risk averse.
In such a situation, channel members can unsell a brand by giving explicit or implicit
suggestions. This implies that in such a case, selling depends on many cases how the
company is taking care of channel members (keeping them happy) such that they are
not lured by other competitors or directed by grievances so as to unsell the brand.
This situation is prevalent mostly in Consumer Durables (like TV, Refrigerators etc.). In
FMCG goods, the situation does not exist per se.
Implication for HUL
HUL is not affected for its FMCG products by this variable. For water purifier Pure It,
this can have considerable impact if its sale starts to happen through channel members
rather than by field sales force as is appening now.
pg. 50
14. Perishability of the Product
If the product is perishable (having small shelf life; examples newspaper, milk, fruits
etc), then the dimension of speed in reaching the end consumers becomes critical &
T&L assumes great significance for the company.
Implication for HUL
The FMCG products that HUL sells are not perishable by nature, but have limited life.
So this aspect is not critical for HUL.
15. Time Band Associated with the Purchase of the Product
If there is seasonality/cyclicity for the demand or purchase of the product (examples

newspaper, milk are most on demand in the 1st three hours of the day; cooking oil,
rice etc grocery items are most on demand in the 1st week of the month), then high
T&L and infrastructural requirements are needed for the last mile for the time band
when demand is maximum. It is possible to have idle capacity in the areas mentioned
above outside the peak required time band.
Implication for HUL
For some of the products of HUL, the above stated variable is significant. For example,
in Food segment, Branded Atta Annapurna; in segments like Laundry Detergents,
Shampoo & Hair Oil etc. this element of demand time band exist to a certain extent.
This underscores the importance of T&L for HUL as the transport intensity between
distributors and retailers increases in the 1st & 4th week of a month for the products
mentioned above. This is over and above the regular replenishment of stocks at
retailers done by distributors. Festivals like Holi etc. may also increase the demand for
pg. 51
personal care items like soaps, shampoos etc for a short period and distribution
network should be geared up not to miss any such opportunity.
16. Fungibility
Fungibility is the property of a good or a commodity whose individual units are

capable of mutual substitution. Examples of highly fungible commodities are crude oil,
wheat, orange juice, precious metals, and currencies. Fungibility has nothing to do with
the ability to exchange one commodity for another different commodity. It refers only
to the ease of substitution of one unit of a commodity with another unit of the same
commodity for all intents nd purposes.
Fungibility is different from liquidity. A good is liquid and tradable if it can be easily
exchanged for money or for another different good. A good is fungible if one unit of
the good is substantially equivalent to another unit of the same good of the same
quality atthe same time and place. It is said that commodities are fungible, goods
tangible, services intangible, experiences memorable & transformations are
effectual1.
As an example, one Rs. 100/- bank note is interchangeable with another. Cash is
fungible. A barrel of West Texas Intermediate crude oil is fungible (direct exchange)
with another barrel of the same crude oil. Oil (of the same type) is fungible.
Fungibility does not imply liquidity, and liquidity does not imply fungibility. Jewels can
be readily bought and sold (the trade is liquid), but individual diamonds, being unique,
are not interchangeable (diamonds are not fungible). Indian rupee bank notes are
interchangeable in London (they are fungible there), but they are not easily traded
there (they are not liquid in London). In contrast to diamonds, gold coins are fungible.
They are also liquid, especially under a gold standard. The combination of fungibility
and liquidity is one of the reasons why gold has successfully served as money for
thousands of ears.
Further, a fungible thing can become non-fungible under some circumstances. For
example, an old coin or a currency note may assume a value which is way above its
pg. 52
face value due to historical reasons or due to some defects in it which makes it
unique from others from a viewpoint which see it differently than its intended purpose.
The outcome of product fungibility is that the more fungible a product becomes, higher
is the chance that parts of the distribution channel it can be replaced by IT. A good
example of this is dematerialization (Demat) route for share trading now where there is
no physical existence of shares.
Implication for HUL
As branded FMCG goods are not fungible per se (branding is done to decommoditize
& differentiate the product), the importance of channel members will continue.
17. Degree of Customization Possible
Degree of customization directly affects economies of scale; higher the customization,

lesser the economies of scale. Also, criticality of sales field force increases with
customization levels of the offering.
Implication for HUL
For FMCG products of HUL, which are mass produced, such customizations are not
possible and thus with higher economies of scale, lower criticality of field forces from
the standpoint of customization of product offerings, costs are lower in these respects
with HUL.
18. Negative or Positive Reinforcing Product
Negative reinforcing products are those which are bought to avoid/reduce the problem
(ex. insurance, washing machine, car battery etc). Positive reinforcing products are
those which gratify the senses (ex. Perfumes, Chocolates, Vacation etc). Shopping
pg. 53
experience becomes a critical aspect for positive reinforcing products to reaffirm the
positive feelings.
Implication for HUL
Axe & Rexona deodorants are distinctly positive reinforcing products from HUL,
including others like Lux, Lakme etc. So these are seen in most shopping malls etc.
with high visibility displays to reaffirm the feelings. Consumers are willing to pay
higher for these brands.
18. Value/Volume Ratio (Value Density) of the Product
This ratio is very important for both the company and the retailer for its two critical
aspects T&L cost and retailer ROI/sq. cm (retailers are actually in real estate
business in true sense). Higher the ratio, better it is for both company and the retailer
as higher ratio signifies lesser T&L cost per unit volume transported for the company
and greater ROI per unit of shelf space for the retailer.
Implication for HUL
In general for FMCG goods and for HUL as well, value density is relatively lower. In
addition to this fact, increasing trend towards using smaller pack sizes increases the
packaging density (increased packaging density increase cost to some extent, but
favours mechanized handling greatly, reducing handling costs). Since value density is
less, transportation costs will be higher and thus it is of economic sense to have
manufacturing plants located closure to major marets. This is the reason HUL has
various manufacturing plants (40 in totality) located across India. This is a pointer to
the fact most of the major FMCG players (including HUL) use contracted manufacturing
dispersed across the geographic spread so as to lower transportation cost component.
pg. 54
pg. 55
FINANCIAL ANALYSIS
pg. 56
7. FINANCIAL ANALYSIS
We have taken data from CMIE database while analyzing the performance of marketing
& sales (including distribution) functions of HUL and comparable companies. By
comparable, we mean those companies whose main economic activity, as defined in the
CMIE database, is the same as HULs. For example, main economic activity of HUL as
defined in that database is - Cosmetics, toilet preparations, soap & washing prep.
Obviously, one major FMCG company in India, ITC, does not come under this purview
as its major economic activity is Tobacco business which is nearly 85% of its total
revenue. But for the sake of comparison, we have included ITC also as its non- tobacco
FMCG business revenue in FY 08 was Rs. 2511 Cr., nearly as high as Nirma, the
second largest player after HUL in HULs chosen category. But the figures for
advertising, marketing & distribution expenses of ITC as percentages to its total sales
may not be directly comparable to those figures of HUL as produt categories are
different and the impact of above mentioned variables on these two companys sales &
distribution function is dissimilar. Other major FMCG players not included in the
analysis are Nestle, Amul, Britannia & Tata Tea, which are mostly into the Food &
Beverages segment where HUL has relatively lesser presence (Processed Foods & Ice-
cream segments together constitute only approximately 5% of HULs total sales). In Tea,
HUL is present significantly, though.
In the following pages advertising, marketing & distribution expenses of major FMCG
goods (in HULs category mostly) are being shown.
It is to be understood here that marketing expenses here include
commissions, rebates, discounts, sales promotional, expenses on direct selling agents &
entertainment expenses whereas distribution expenses include outward freight.
pg. 57
pg. 58
Exhibit 1: Annual Spend in

Advertising, Marketing &
Distribution functions in FY
08
ANNUAL ANNUAL ANNUAL ANNUAL
RS.CRORE RS.CRORE RS.CRORE RS.CRORE
MAR-08 MAR.O8 MAR.08 MAR-08
SR. COMPANY SALES ADVERTISING ADVERT.EXP. MARKETIN MARKETING DISTRIBUTION DIST.
NO NAME EXPENSES AS% OF SALE G EXPENSES EXP. AS % OF EXPENSES EXP.AS
SALES % OF
SALE
1 HUL 14937.88 1422.9 9.53 6.07 0.04 731.41 4.90
2 NIRMA 2651.15 40.96 1.54 71.87 2.71 136.91 5.16

3 DABUR 2128.17 248.1 11.66 21.4 1.01 66.84 3.14
4 COLGATE 1597.3 256.51 16.06 0 0.00 35.36 2.21
PALMOLIVE
5 RECKITT 1334.76 207.85 15.57 9.34 0.70 55.88 4.19

BENCKISE
6 P&G HOME 1079.57 119.45 11.06 44.31 4.10 70.54 6.53
7 GODREJ 922.78 61.4 6.65 42.37 4.59 32.27 3.50

8 EMAMI 586.42 102.92 17.55 27.46 4.68 14.86 2.53
9 P&G 556.02 57.95 10.42 40.85 7.35 37.24 6.70
HYGIENE
AND
HEALTH
10 HENKEL 430.33 0 0.00 40.94 9.51 16.4 3.81
pg. 59
11 HENKEL 417.79 0 0.00 65.64 15.71 17.63 4.22

MARKETING
12 ITC 21467.38 427.83 1.99 68.17 0.32 548.4 2.55
We can see here that Nirma, Godrej & Henkel (ITC also) have less
advertising expenses (as % to sales) than HUL. Importantly, Henkel has zero advertising
pg. 60
expenses in 2008, which may explain the fact that awareness level in consumers for
Henkel brands is low. HUL advertising is done mainly in case of soaps (for example
Dove; done mainly to reaffirm that its not a soap!), shampoos, deodorants (Axe),
laundry detergents (Surf Excel, Rin) etc. With the introduction of home water
purifier (Pure It), considerable advertising & promotional expenses have gone into it.
Of late, we see very little of Nirma advertisements. This is apparent from its advertising
expense as % to sales, which is very low (only 1.54%). ITC is altogether a different
story. Cigarettes & other tobacco related products which constitute approx. 85% of its
sales, all relate to intoxication or habitual consumption patterns having intensely
brand loyal consumers and thus almost no advertising (surrogate advertising is done) is
needed either to reaffirm the brands or introduce new consumers to the brands (there
is regulatory angle as well). Current consumers of these tobacco products are the
biggest advertising agents that ITC has and of course, they do it voluntarily and
without knowing what theyre doing. But while moving faster into non-tobacco FMCG
business riding high on its strength of distribution network matching or surpassing in
some cases that of HUL, ITC has started aggressive advertising campaigns (Fiama Di
Wills shampoo, Vivel soap, Sunfeast biscuits, Bingo snacks etc), directly focusing
on marquee brands of HUL like Sunsilk & Lux, increasing the heat on Britannia for
biscuits and taking on Kurkure & other snacks and chips from Pepsi, Coke and
others.
Advertising expenses as percentage to sales is highest for Emami, which owns brands
such as Navratna hair oil & talc, Boroplus cream & talc, Himani Fast Relief, Fair &
Handsome, Sona Chandi Chawanprash, Menthoplus etc, each of which is advertised
heavily in the mass media (e.g., TV) with famous & expensive celebrity endorsers like
Amitabh Bachchan, Kareena Kapoor, Govinda etc. On the other hand, we see regular
advertising streams for Colgate toothpastes and other oral care products, in which
category Colgate-Palmolive is the market leader. Reckitt-Benckiser advertises
considerably for its brands like Herpic, Mortein, Vanish, Clearasil, Dettol, Strepsils etc,
which is the reason for its high advertising cost as percentage of sales.
pg. 61
pg. 62
Marketing Expenses
Marketing expences are also very important issue which should be considered while planning
for product distribution. As stated earlier also, marketing expenses here include the
following
commissions
rebates
discounts
sales promotional
expenses on direct selling agents
entertainment expenses etc
all the above mentioned expences should be paid keen interest while planning for the
product as well as promotional strategy of the company.since Hindustan iniliver is an
fast moving consumer goods company it should consider the .marketing expences.the
following chart shows the marketing expences of different companies as compared to
other competitors.
pg. 63
Exhibit 3: Marketing Expenses as percentage of Sales
pg. 64
Another revelation is that Henkel, which has zero advertising expenditure, has the
highest marketing expenses among all others. But this strategy to push the products
through the channel partners may not be a good one for Henkel as it might be losing
out for the lack of visiility and thus consumer mind share and brands such as Margo,
Fa, Neem toothpaste etc are losing out in the market. Further, it is also a pointer to
the fact that Henkels largest business share is in industrial chemicals (adhesives,
sealants e.g., popular brand Loctite; this segment constitute ~44% of worldwide
sales of Henkel) and for B2B, advertising per se is not that much important. For B2B ,
important is direct-selling approach, which generally requires negotiations, volume
discounts etc, which are reflected in highest marketing expenses (as percentage to
sales) compared to others.
P&G is in between the extremes and with considerable advertising expenses also, it is
unable to create sufficient pull for its products in India (as evidenced by the fact that
marketing expenses are also relatively higher) or its getting stuck for the lack of
sufficient distribution muscle a la HUL in traditional retail in India and suffers from
ack of reach and availability at the end consumer level.
As mentioned earlier, both Colgate-Palmolive and Reckitt-Benckiser both enjoys very
good brand loyalties and market leadership for their key brands like Colgate
toothpastes and Dettol #1 in antiseptics), Herpic, Mortein etc. This is corroborated by
the fact that these companies have some of the lowest marketing expenses (as
percentage to sales) in the group, as shown in the chart.
pg. 65
Distribution Expenses
Distribution expenses include the outward freight cost to the company.
Exhibit 4: Distribution Expenses as percentage of Sales
pg. 66
We have seen that T&L plays a very important role for HUL & others who have pan-
Indian presence in FMCG business. Colgate-Palmolive, Emami & ITC has some of the
lowest distribution expenses (as % to sales figures) & P&G has the highest. HUL is
lower in this respect than Nirma & P&G, but higher than Henkel. This can be explained
somewhat from the impact of the variable, Time Band of purchase, on the increased
transport intensity for HUL in the last mile for some of the products like household
personal care, laundry detergent, branded atta etc in the first & last week of the moth.
ITC (tobacco), Henkel (largely B2B) are mostly protected from this implication of the
variable.
Another important thing to remember that value density of FMCG goods is relatively
lower, causing share of transportation costs in the overall cost structure to be relatively
higher. This implies dispersed manufacturing, locating manufacturing plants nearer to
major markets. So one location manufacturing to get higher economies of scale and on
the other hand, trying to serve geographically diverse markets may not be economically
attractive for FMCG sector. Compared to HULs 40 manufacturing plants across India,
Nirma, the 2nd largest FMCG major in soaps and detergents category, has 6
manufacturing plants, all located in and around Gujarat. So, transportation cost of
Nirma, if it tries to cater to pan-Indian market will be higher. This is supported by the
fact that Nirmas higher distribution cost percentage than HUL. For P&G, the same
reasons significantly affect its distribution cost which is highest for the group analyzed.
pg. 67
Conclusion
It can be concluded that Hindustan uniliver has a wide range of coverage area both in the rural
and the urban area. Hindustan uniliver is one of the leading fast moving consumer good
company which operate in a systematic manner.
Hindustan uniliver manage there distribution network in an efficient manner.Hindustan

Unilever is the market leader in majority of the categories. Though it was popular but its
advertising expenditure was also huge. It has increased its expenditure upto 26% in FY09. The
net sales was Rs 4,475 crore in this period. According to Senior executive Harish Manwani the
company was strengthening its competiveness through advertising and they see improved
turnover in the near future. The company have some future plans to improve its distribution
management .
Hindustan uniliver has efficiently managed there distribution network over the country
Thus it can stated that HUL is ready to improve its product awareness in order to capture the
majority of the market. Competitors beware the Big Bull is coming to crush you
pg. 68
REFERENCE
1. B. Joseph Pine, James H. Gilmore (1999), The Experience Economy:

Work is Theatre & Every Business a Stage, Published by Harvard
Business Press, 254 pages.
2. HUL Website (http://www.hul.co.in/)
3. Reckitt Benckiser Website

(http://www.reckittbenckiser.com/site/RKBR/Templates/Home.aspx?
pageid=1)
4. Colgate Palmolive Website

(http://www.colgate.co.in/app/Colgate/IN/HomePage.cvsp)
5. Emami Group (http://www.emamigroup.com/Brands)
6. Website CMIE
7. Wikipedia
8.Rural marketing book (TYbms 5th semester)
pg. 69

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DISTRIBUTION MANAGEMENT OF HUL

Hindustan Unilever Limited, 165/166, Backbay

Lovelock & Lewes, Chartered Accountants 252, Veer

Crawford Bayley & Co. State Bank Building N.G.N.

Karvy Computershare Private Limited Unit :

1. INTRODUCTION OF HINDUSTAN UNILEVER LIMITED

Hindustan Unilever Limited (HUL), formerly Hindustan Lever Limited (it

1. Evolution of HULs distribution network

2. Transportation & Logistics

4. Initiatives taken for channel member management.

5. Field force management

2.1. Evolution over Time

2.2. Detail Overview

Distribution System of HUL

HUL's products, are distributed through a network of 4,000 redistribution stockists,

(Fig. 1 Schematic of HULs Distribution Network)

Distribution at the Villages:

(Fig. 2 Rural Distribution Model of HUL)

Distribution at the Urban centres:

New distribution channels

Hindustan Lever Network (HLN)

In order to rationalise the logistics and planning task, an innovative

Leveraging Information technology

HUL customers are serviced on continuous replenishment. This is possible

The RS Net initiative, launched in 2001, aims at connecting Redistribution Stockists

Adexa iCollaboration suite

In 2000, HUL identified improved supply chain management as a critical business

(Fig. 3 HULs Turnover Compared with Competitors, 2006)

(Fig. 4 HULs Market Leadership across various FMCG Categories)

Hindustan Lever Limited (HUL) has two types of channel selling -

i. Regular (traditional) retail channel,

HULs Sales Breakup through different channels:

Channel Structure (Special Focus is on Jamshedpur)

Total number of RS in Jamshedpur = 3 (at Sakchi, Bistupur, Parsudih). This is going to

Modes of transport used: Rickshaw, tempo.

Areas of Operations: Marked for each of the RS.

Selling Operations: RSs sells the goods to -

Wholesaler (gets 1.5 % max. discount from RS)

Retailers (gets 1.0% max. discount from RS)

Total retailer base in Jamshedpur: Approximately 1070.

Sales Margin: Depends on the product

o Soap, detergents - 8% on MRP

o Cosmetics - 10% on MRP

o Food items - 8% on MRP

Field Sales Force:

THE DISTRIBUTION NETWORK

4. INITIATIVES TAKEN TO IMPROVE THE DISTRIBUTION NETWORK

Setting up of a full scale sales organisation comprising key account management

Servicing Channel partners and customers with continuous daily replenishment.

Delayering of sales force to improve response times and service levels.

Launching of HUL Network to leverage the channel of direct selling by presenting

Undertaking several initiatives for traditional channels in order to improve its

Launching of several promotional schemes for existing wholesalers and

FIELD FORCE MANAGEMENT

5. Field Force Management

2. Eco (Max points = 0.5)

3. Focus (Max points = 0.5)

4. FCS (Max Points = 0.5)

ECO / Width pack Target

Lux International 105 outlets x 1 SKU

Focus / Depth Pack target

Lux International Rs 20,640 /- @ Rs 6/- per unit

Life Buoy - Rs 70,220 /- @ Rs 10/- per unit