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HLL ± Juggernaut- The dilemma of Growth
Question 1. What are the various factors affecting the marketing environment of the country? Answer 1. First I would like to tell a little about the marketing environment, it is the actors and forces outside marketing that affect marketing management¶s ability to build and maintain successful relationships with target customers. Factors affecting the marketing environment of a country. Demographic factorsPopulation :Huge population of a nation does not mean growing markets, but it shows that market has sufficient purchasing power and the companies that carefully analyse the markets of the country with high population can find major opportunities. A company has to study the human population in terms of density, size, location, age, race, gender, occupation, and literacy level and income distribution. The rise in employment and increase in national income is single most important demographic trend in India. Economic factorsthe available purchasing power in an economy completely depends on income levels, savings and expenditure trends. India economy ranks 4th in the world in terms of purchasing power parity (PPP). Talking about the FMCG sector in India we can say that it is the biggest market to explore with income levels of people rising has increased the disposable income of households in India. In 1995-1996 the no. of riches in India is around 7 million and it increased to 30 million. Social-Cultural FactorsSociety shapes the beliefs, values, and norms that largely consumer tastes and preferences. The sociocultural dimensions of the environment consist of customs, lifestyles, and values that define the society in which the firm operates. Socio-cultural factors influence the ability of the firm to obtain resources, make its goods and services, and function within the society. Sociocultural factors include anything within the context of society that has the potential to affect an organization. Population demographics, rising educational levels, norms and values, and attitudes toward social responsibility are examples of sociocultural variables. In advertising also companies focus on this factor for e.g. HLL changes the lux add specially for south India market keeping in mind the culture and values of the people there.
its production processes. Changing technology can affect the demand for a firm's products and services. On the other hand. There are also many restrictions on subliminal messages and monopolies. many of its competitors still have a long way to go in terms of distribution and reach. In price crunch situation natural environment plays a very important role for this HLL took many important steps. . government agencies. many of which have been patented. Nowadays most of the companies are investing huge amount in their R&D department to innovate their products to attract new customers as well as to retain old customers. the potential to achieve meaningful volumes in growth by expanding distribution. as most of the company¶s plants were historically located in high-cost areas such as Mumbai City.Natural Environment FactorsWhen a company starts a setup in any country it has to consider the inputs that are required and the ease of their availability. The research centre is India's largest in the private sector. or threaten the survival of a firm¶s product in the market. This was mainly a cost-cutting measure. Legal and political factorsThe political environment includes all laws. accounting for 72 percent of HLL¶s revenue. and groups that influence or limit other organizations and individuals within a society. It is important for marketers to be aware of these restrictions as they can be complex. cigarettes should not be marketed to younger children. is limited. and raw materials. Question 2. Technological factorsTechnology is one of the most important factor that a firm should consider in developing strategic plans. The focus on research gives HLL an edge over competitors by coming up with innovative products and processes. Some products are regulated by both state and federal laws. Issues faced by the HLL1.One of HLL's strengths that has greatly contributed to this success are the breakthroughs at the Hindustan Lever Research Centre. thereby making it easier for them to achieve growth in volumes by snatching away market share from HLL. HLL has already attained optimal distribution levels. After the setting of the whole factory the output has to be taken from one place to another. for example. Technology can also create new opportunities for the company. it focuses on third party production. This means that margins will be under pressure in the coming years. What are the issues faced by the organization? Answers 2. this is a very important aspect for a marketer to monitor. Therefore. Therefore. As laws and regulations change often. HLL growth products are moving to the mature category. further penetration is unlikely. There are even restrictions for some products as to who the target market may be. shifting from its privately-owned plants to external production in 2005.
3% 1 44.0% 23.4% 1 47.3% 39.6% 1 23.7% 14.0% 1 7 4 35.2% 1 2 1 6 35.5% 14.7% 62.0% 1 46.6% 4.5% 1.5% 2 3 3 25.6% 2.8% 1 .Subsector Share Rank Body wash/shower gel Bar soap Talcum powder Deodorant sprays Deodorant roll-ons Shampoo Conditioners Styling agents Facial makeup Eye make-up Lip products Nail products Men¶s shaving Men¶s toiletries Toothpaste Toothbrushes Manual toothbrushes Mass 66.0% 1 53.4% 1 1 50.
9 15.6 91.4 % Rural Deodorants Toothpaste Skin Cream Shampoo Utensil Cleaner Instant Coffee Washing Powder Detergent Bar Toilet Soap 0.6 22 38 28 6.6 37. packaging and freight 4.1 48.5 % Urban 5.8 31.2% 1 1 1 We can see from the table above that except conditioner¶s.penetration percentage Category All India 2. The business had to cope with the challenge of severe cost pressures on account of unprecedented increase in crude petroleum prices and steep escalations in vegetable oil costs.7 91. styling agents and Men¶s shaving in all other sectors HLL has huge amount of share.9 14.5 74.9 We can see from the above table that except detergents and soaps the penetration percentage in the rural market is very less in almost all categories.1 87. HLL has 110 brands that¶s a huge number when we talk about maintaining acceleration in the production of each brand. .4 88.6 2.1 88. Issue related to the rural market.6 86.fragrances Facial care Body care Sun protection 64.6 17. it ranks 1 or 2 in almost all sectors.4 97. 3. High crude prices impacted a range of input prices like chemicals. Lack of Proper Physical Communication Facilitiesits difficult to target this market. 2.5 52.0% 9.8 84. Out of these only 30 brands contribute to 75% of the revenue and rest 70 brands contribute only 25%.9 31. Managing the margins is a serious challenge.5% 52. But with some problems like Underdeveloped People and Underdeveloped Markets.5 90.1 59. this shows the lack of concentration on the rural markets by HLL.The rise in income of the rural population has increased demand for the consumer goods and this population present a huge business opportunity for FMCG sector.
sold. it is only eliminating brands. The rest caneither be dropped. HLL can keep such brands as purely regional brands and support them heavily in these limited geographic. y Small unit packing y New product designs y Sturdy products y Utility oriented products y Huge brand name y Free samples for use y Connecting with locals and their cultures 2. There was a slow but steady expansion in rural sales with the overall value share of rural sales rising from 28% in 2002 to 30% in 2007. From above table also we can see rural markets are still untapped. Growth was driven by rising income levels in rural areas. It is very important to capture the rural market at present because of the growth prospects it offers. Firms are increasingly tapping into the rural market using strategies such as smaller packs and special combination offers. migrated. I am not sayingto vacate any category it is present in. HLL has 110 brands so it becomes very difficult on more profitable brands for this it can do brand portfolio restructuring. and urban markets getting saturated. leading to an expanded mid-income group. How will you solve any two issues faced by the organization support your answer with information given in the case? Answer 3.Question 3. . Strategies that can be developed for rural markets. Solutions1. or continued as regional brands. Just to give you an example take Haman soap which a highly selling product in Tamil Nadu where it has more than 30 percent market share. The top 30 brands contribute more than 75 percent of the turnover. With this it will simplify the whole focusing on different brands.
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