Project Report

(Submitted for the Degree of B.Com. Honours in Accounting & Finance under
the University of Calcutta)

Title of the Project

MARKETING STRATEGIES OF FMCG COMPANIES- HUL VS ITC

Submitted by:
Name: Sana Aarbi
Registration no :- 235-1211-0455-20
C.U. Roll no.-201235-11-0087
College Roll no.:- 122
Name of the college- T.H.K Jain College

Supervised by:
Name of the Supervisor: Puja Gupta
Name of the college-T.H.K Jain college

1
ANNEXURE – I
Supervisor's Certificate

This is to certify that Miss Sana Aarbi , a student of B.Com. Honours in Accounting & Finance
of T.H.K Jain College under the University of Calcutta has worked under my supervision and
guidance for his Project Work and prepared a Project Report with the title “MARKETING
STRATEGIES OF FMCG COMPANIES- HUL VS ITC”

The project report,which he is submitting, is his genuine and original work to the best of my
knowledge.

ANNEXURE - II
2
 Student's Declaration

I hereby declare that the Project Work with the title “MARKETING STRATEGIES OF FMCG
COMPANIES- HUL VS ITC” submitted by me for the partial fulfilment of the degree of
B.Com. Honours in Accounting & Finance under the University of Calcutta is my original work
and has not been submitted earlier to any other University /Institution for the fulfilment of the
requirement for any course of study.

I also declare that no chapter of this manuscript in whole or in part has been incorporated in this
report from any earlier work done by others or by me. However, extracts of any literature which
has been used for this report has been duly acknowledged providing details of such literature in
the references.

Place- Signature-

Date- Name- Sana Aarbi

Mobile no- 6290870588

Roll no - 201235-11-0087

College Roll no.: 122

Registration no - 235-1211-0455-20

Acknowledgement

3
I would like to express my special thanks to Prof. Dr. Mousumi Singh (Sengupta) (principle of
our college) for giving me an opportunity for pursuing the project.

My special words to of appreciation go to my supervisors Puja Gupta who provided me

continuous support and guidance for completing this project successfully and making each class
more meaningful. I felt deeply honoured and excited to get Miss Puja Gupta as my supervisor.
She has source of inspiration and encouragement.

Last but not least, I would like to thanks my family member’s friends and all those people who
helped me for the completion and understanding of the concept of project work.

Working on this project has proved to be an enlightening experience for me.

INDEX

4
SERIAL NO TOPIC PAGE NO

1 ANNEXURE – 1 - SUPERVISOR DECLARATION 1

2 ANNEXURE – 2 - STUDENT DECLARATION 1

3 ACKNOWLEDGMENT 1

4 INDEX 1

INTRODUCTION 1
NEED OR JUSTIFICATION OF THE STUDY 1
BACKGROUND 1
LITERATURE VIEW 1-2
5
OBJECTIVE 1
METHOLOGY 1-2
LIMITATION OF THE STUDY 1
CHAPTER PLANNING 1

6 CHAPTER – 2 1-6

7 CHAPTER – 3 1-17

8 CHAPTER – 4 1

10 BIBLOGRAPHY 1

5
 CHAPTER 1: INTRODUCTION

1.2 BACKGROUND:
India is a consumer driven market, with consumer spending in the country projected to more than
double by 2025. These days, the Indian consumer segment, broadly categorized into urban and
rural markets, is attracting marketers from across the globe.

Global corporations see India as a key market for the future. The growth in the country's
consumer market is largely driven by a young demographic and rising disposable income. If
India sustains its current pace of growth for the foreseeable future, average household incomes
will likely triple over the next twenty years and the country will become the world's fifth largest
consumer economy by 2025, as per a study by the McKinsey Global Institute (MGI).

The Government of India has also played a significant role in the growth of the Indian consumer
segment. It has brought about policies which have attracted foreign direct investment (FDI) and
consequently boosted economic growth.

India has the potential to become the world's largest middle class consumer market with an
aggregated consumer spend of nearly US$ 13 trillion by 2030, as per a report by Deloitte titled
India matters: Winning in growth markets'.

Driven by growing incomes and increasing affordability, the consumer durables market is
projected to expand at a compound annual growth rate (CAGR) of 14.8 per cent, from US$ 7.3
billion in FY15 to US$ 12.5 billion in FY17.

Online retailing, both direct and via marketplaces, will grow threefold to become Rs 50,000
crore (US$ 8.26 billion) industry by 2016, driven by a 50-55 per cent per year growth over the
next three years, as per rating agency Crisil. The growth of internet retail is also expected to
boost offline retail stores.

6
1.3 NEED OR JUSTICATION OF THE STUDY:

1. This attempt will bring the marketing strategy of various FMCG companies.

2. The study will be of utmost importance to marketing literature as it will present the in-
depth examination of the marketing strategies of FMCG companies. It will help in
studying the impact of their respective performances.

3. The contribution of this study shall consist of profound understanding of roles and
practices of marketing in various FMCG manufacturing enterprises and, thus, of the
development of the marketing theory with reference to this context. This will help FMCG
manufacturing enterprises of various categories in framing differentiated marketing
strategies, sustain product access, drive market creation and strengthen sales and
marketing capabilities

4. The completion of this will help us understanding in the concepts presented so as to

generate data and information that every organization could use in order to come up
withdifferent plans and designs that will strategically position them in the highly
competitive, diverse and complex business environment that is experienced in the
present.

1.4 LITERATURE REVIEW:

A literature review is a text written by someone to consider the critical points of current
knowledge including substantive findings as well as theoretical and methodological contributions
to a particular topic .Few of them are:

Rana J. (2017) studied that, the Indian market is quite attractive and challenging. Although the
marketers are taking effective steps to capture this market. Still there is a large scope. It has
tremendous opportunities. As far as premium F.M.C.G. brands are concerned, only a few
consumers are there form this market. The companies should decide their target market for
premium brands and approach them. Youth can be a great 94 help in this direction. The
marketers have to come up with innovative proposals through which the target market (for
premium brands) should be convinced.

7
Venukumar G., (2017) in his study conclude that, it is certain that F.M.C.G. companies will have
to really gain inroads in the rural markets in order to achieve double digit growth targets in
future. There is huge potential and definitely there is lot of money in rural India. The companies
entering rural market must do so, for strategic reasons and not for tactical gains as rural
consumer is still a closed book and it is only through unwavering commitment that the
companies can make a dent in the market. Ultimately the winner would be the one with the
required resources like time and money and also with the much needed innovative ideas to tap
the rural market.

Rahman M., et al (2017) found in his study that, in India the market share of hair care segment
contributes a considerable amount i.e. 9% of F.M.C.G. sector which is continuously increasing
from 6230.8 crores of rupees to 8417.79 crores of rupees in the commercial years of 2014-15 to
2016-17. The shampoo market is dominated by Hindustan Unilever Ltd. with a market share of
46% followed by Procter and Gamble with 24%. The top shampoo brands Sunsilk, Clinic Plus,
Pantene and Head & Shoulders which are placed in the ‘Stars’ cell of BCG matrix of shampoo
brands of India.

Kavitha T., (2017) studied that, the new phase of rural consumption appears to provide a great
opportunity for the F.M.C.G. sectors. Marketers will need to evolve new strategies to connect
and communicate with a more aware and unreserved consumer than ever before, the study found.
With this, product and brand development cycles will need to undergo a dramatic change.
Today’s rural consumer is not just indulgent, but ‘smart’ too: she wants products that carry the
best of traditional wisdom and modern science, providing her convenience and individualism in
one go. This means product and brand strategies that respond to these demands are more likely to
succeed.

Sarangapani A. and Mamtha T. (2017) concluded in their study that, marketing of F.M.C.G.s
(Fast Moving Consumer Goods) plays a pivotal role in the growth and development of a country
irrespective of the size, population and the concepts which are so interlinked that, in the absence
of one, the other virtually cannot survive. It is a fact that the development of F.M.C.G. marketing
has always kept pace with the economic growth of the country. Both have experienced
evolutionary changes rather than revolutionary changes.

The objective of modern marketing is to make profits by delighting the consumers by satisfying
their needs and wants. Hence, the marketers of F.M.C.G.s have to understand the real needs,
wants, beliefs and attitudes of the consumers towards their products and services.

8
 Today, network marketing is a multibillion dollar business. A number of companies have
adopted this business model. It is one of the main driving forces of the 21st century economy.
This article highlights the characteristics of rural respondents in terms of demographic, political,
economic and 108 socio-cultural background. Finally, before concluding, it also analyzes the
consumption patterns, brand usage and brand shifting of different F.M.C.G.S.

1.5 OBJECTIVES:

1. To understand the points of similarity and differences in the marketing strategies adopted
by ITC and HUL.
2. The study offers a comparative view of the strategies adopted by ITC and HUL in light
of the current market scenario.
3. With incorporation of newer technologies, the study also tries to understand how these
have impacted their strategies.
4. The study also objectifies the challenges adopted by both the companies- HUL and ITC
in its survival in the market.

1.6 METHODOLOGY:

The objective of the project is to investigate the current strategy employed by HUL and ITC and
why it works for them. Fundamentally HUL and ITC are different business models as HUL is a
pure play FMCG Company whereas ITC is a conglomerate where FMCG happens to be one
small portion of the entire business.

Research comprises defining the problem statement, formulating hypothesis, probable solutions,
collecting, organizing and evaluating solutions and assessing the impact of the solutions
proposed.

9
HUL and ITC are two major players in FMCG industry. HUL happens to be a pure play FMCG
whereas ITC is a conglomerate. The objective of this report is to analyze and compare the overall
performance of these two companies. This performance comparison further boils down to
analyze their financial performance, market performance and supply chain performance. These
three sub angles together will fulfill and make the research comprehensive enough.

Sources of Data

As highlighted above most of the analysis would primarily be based on data points or facts
gathered through secondary research. The approach for each of the sub analysis is as follows:

1. Financial performance – Since both the company happens to be a public listed company, we
have good set of information available through some of the major financial websites. The
challenge is more in terms of refining the data and brining them on the same ground for
comparison. Also since they are public listed company there websites have their past annual
reports which can be mined to get firsthand information about the company financials.

2. Strategy performance – This analysis is more has to do with overall strategy analysis which
calls for a analyzing the company vision analysis, growth mindset, and overall Risk which these
companies have complied with to support their respective business models. Again this analysis is
primarily on secondary research which involves their official websites, news websites, financial
databases and discussion forums. I have also gone ahead and contacted few officials from these
two companies to get first hand perception about the company as such.

3. Market performance – The set of analysis was more to understand the positioning of these two
players in the market. Also how does consumer related to HUL and ITC Company as a whole.
This indirectly determines the lingering psyche of consumers about each of the products of these
companies. The main source of information for this taken through secondary research which was
done across set of 50 consumers picked up in general.

4. Supply chain performance – This was again primarily on the basis of secondary research
performed to understand the supply chain configuration of each of these companies and how do
they differ from each other.

10
1.7 LIMITATIONS OF STUDY:

While doing this project I faced some limitations. The limitations which I found are as
follows:
1. The project period was only for 60 days which was notenough for me to do the
project.
2. Lack of information was one of the limitation while doing this project
3. I could not get proper questionnaires regarding this topic.
4. Lack of communication was one of the barriers while completing this project.
5. Many despondence were not participative in this and they were not interested in
sharing their views.

11
1.8 CHAPTER PLANNING:

Chapter-1 Introduction.

Chapter-2 Conceptual framework.

Chapter-3 Presentatio & Analysis.

Chapter-4 Conclusion & Recommendation.

Limitation of the study.

CHAPTER=2: CONCEPTUAL FRAMEWORk.

12
1.2 NATIONAL SCENARIO:

 Hindustan Unilever Limited :

Hindustan Unilever Ltd was incorporated in the year 1933 as Lever Brothers India Ltd. In
1956, Hindustan Vanaspati Mfg. Co. Ltd. and United Traders Ltd merged with the company
and the name was changed from Lever Brothers Ltd to Hindustan Lever Ltd. The company
acquired Lipton in 1972, and in 1977 Lipton Tea (India) Ltd was incorporated. Brooke Bond
joined the Unilever fold in 1984 through an international acquisition. Ponds (India) Ltd joined
the Unilever fold through an international acquisition of Chesebrough Ponds USA in 1986.
The liberalization of the Indian economy, started in 1991, clearly marked an inflexion in the
company’s and the Groups growth curve. The removal of the regulatory framework allowed
the company to explore every single product and opportunity segment, without any
constraints on production capacity. Simultaneously, deregulation permitted alliances,
acquisitions and mergers.
The erstwhile Tata Oil Mills Company (TOMCO) merged with the company with effect from
April 1, 1993. In the year 1996, the company and Lakme Ltd formed a 50:50 joint venture
company namely, Lakme Unilever Ltd, to market Lakmes market-leading cosmetics and other
appropriate products of both the companies. Subsequently in 1998, Lakme Ltd sold its brands
to the company and divested its 50% stake in the joint venture to the company.
In the year 1994, the company and US-based Kimberly Clark Corporation formed a 50:50
joint venture company namely, Kimberly-Clark Lever Ltd, which markets Huggies Diapers
and Kotex Sanitary Pads. The company also set up a subsidiary in Nepal, Unilever Nepal
Limited (UNL), and its factory represents the largest manufacturing investment in the
Himalayan kingdom.
In the year 1992, the erstwhile Brooke Bond acquired Kothari General Foods, with
significant interests in Instant Coffee. In the year 1993, it acquired the Kissan business from
the UB Group and the Dollops Ice cream business from Cadbury India. As a measure of
backward integration, Tea Estates and Doom Dooma, two plantation companies of Unilever,
were merged with Brooke Bond. Then in the year 1994, Brooke Bond India and Lipton India
merged to form Brooke Bond Lipton India Ltd (BBLIL), enabling greater focus and ensuring
synergy in the traditional Beverages business. Finally, BBLIL merged with the company with
effect from January 1, 1996.
The internal restructuring culminated in the merger of Ponds (India) Limited (PIL) with HUL
in 1998. The two companies had significant overlaps in Personal Products, Specialty
Chemicals and Exports businesses, besides a common distribution system since 1993 for
Personal Products. The two also had a common management pool and a technology base.

In January 2000, the government decided to award 74 per cent equity in Modern Foods to the
company, thereby beginning the divestment of government equity in public sector

13
undertakings (PSU) to private sector partners. The company’s entry into bread is a strategic
extension of the company’s wheat business. In 2002, the company acquired the governments
remaining stake in Modern Foods.
In the year 2002, the company made its foray into Ayurveda health & beauty Centre category
with the Ayush product range and Ayush Therapy Centre’s. In the year 2003, the company
acquired the Cooked Shrimp and Pasteurized Crabmeat business of the Amalgam Group of
Companies, a leader in value added Marine Products exports. Also, the company launched
Hindustan Unilever Network, Direct to home business. In the year 2004, the company
launched Pure it water purifier.
In the year 2005, Lever India Exports Ltd, Lipton India Exports Ltd, Merry weather Food
Products Ltd, Toc Disinfectants Ltd and International Fisheries Ltd were amalgamated with
the company. In February 2006, Vasishti Detergents Ltd (VDL) merged with the company. In
September 2006, Modern Foods Industries (India) Ltd and Modern Foods & Nutrition
Industries Ltd was merged with itself. In October 2006, the company divested its 51%
controlling stake in Unilever India Shared Services Ltd, now known as Cap Gemini Business
Services (India) Limited (CGSL) to Cap Gemini SA.
In March 2007, Sangam Direct, a non-store home delivery retail business, operated by
Unilever India Exports Ltd (UIEL), a fully owned subsidiary was transferred to Wadhavan
Foods Retail Pvt Ltd (WFRPL) on a slump sale business. Also, the company carried out
demerger of its operational facilities in Shamnagar, Jamnagar and Janmam and formed three
independent companies, namely Shamnagar Estates Pvt. Ltd, Jamnagar Properties Pvt Ltd
and Hindustan Kwality Walls Foods Pvt Ltd. In June 2007, the company changed its name
from Hindustan Lever Ltd to Hindustan Unilever Ltd.
In the year 2008, the company announced its collaboration with the Indian Dental
Association (IDA) in conjunction with World Dental Federation (FDI) through its Pepsodent,
leading oral care brand to help improve the oral health and hygiene standards in India. In
April 2008, the company demergered and transferred certain immoveable properties to
Brooke Bond Real Estates Pvt Ltd. In January 2010, the company inaugurated the new
corporate office of the company.
In April 2010, the company approved the scheme of amalgamation of Bon Ltd, a wholly
owned subsidiary of Hindustan Unilever Ltd., with the company. The appointed date for the
abovementioned scheme was April 01, 2009 and the scheme shall be effective from April 28,
2010. Consequent to the amalgamation, Bon Ltd ceased to be a subsidiary of the company.
During the year 2010-11, Kissan forayed into new market segment in three big categories. It
launched Kissan Fruit & Soya, a delicious blend fruit juice and soya milk, which enjoys a
differentiated proposition in this market. The brand also entered into the Indian (non-sweet)
spreads market with the launch of Kissan Creamy Spread across key towns.
During the year, the company divested 43.31% stake in Hindustan Field Services Pvt Ltd in
favor of Smollan Group (the JV partner). Thus, Hindustan Field Services Pvt. Ltd. ceased to
be a subsidiary company. Lakme Lever Pvt Ltd, a wholly owned subsidiary of HUL,
expanded the network of Lakme Beauty Salons during the year with the opening of 11
company owned and managed salons, along with 18 franchisee salons.

14
  ITC Limited:

ITC a huge rural distribution infrastructure, significantly enhancing the Company's marketing
reach.

ITC's wholly owned Information Technology subsidiary, ITC InfoTech India Ltd, provides IT
services and solutions to leading global customers. ITC InfoTech has carved a niche for itself by
addressing customer challenges through innovative IT solutions. ITC is one of India's foremost
private sector companies with a market capitalization of nearly US $ 14 billion and a turnover of
over $ 5 billion. ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the
World's Most Reputable Companies by Forbes magazine, among India's Most Respected
Companies by Business World and among India's Most Valuable Companies by Business Today.
ITC ranks among India's `10 Most Valuable (Company) Brands', in a study conducted by Brand
Finance and published by the Economic Times. ITC also ranks among Asia's 50 best performing
companies compiled by Business Week.

ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging,
Agri–Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel,
Personal Care, Stationery, Safety Matches and other FMCG products. While ITC is an
outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards,
Packaging and Agri–Exports, it is rapidly gaining market share even in its nascent businesses of
Packaged Foods & Confectionery, Branded Apparel, Personal Care and Stationery. As one of
India's most valuable and respected corporations, ITC is widely perceived to be dedicatedly
nation–oriented.

ITC's Agri–Business is one of India's largest exporters of agricultural products. ITC is one of the
country's biggest foreign exchange earners ($ 3.2 billion in the last decade). The Company's 'e–
Choupal' initiative is enabling Indian agriculture significantly enhance its competitiveness by
empowering Indian farmers through the power of the Internet. This transformational strategy,
which has already become the subject matter of a case study at Harvard Business School, is
expected to progressively create.

Its beginnings were humble. A leased office on Radha Bazar Lane, Kolkata, was the center of the
Company's existence. The Company celebrated its 16th birthday on August 24, 1926, by
purchasing the plot of land situated at 37, Chowringhee, (now renamed J.L. Nehru Road)
Kolkata, for the sum of Rs 310,000. This decision of the Company was historic in more ways
than one. It was to mark the beginning of a long and eventful journey into India's future. The
Company's headquarter building, 'Virginia House', which came up on that plot of land two years
later, would go on to become one of Kolkata's most venerated landmarks. The Company's
ownership progressively Indianite, and the name of the Company was changed to I.T.C. Limited
in 1974. In recognition of the Company's multi–business portfolio encompassing a wide range of
businesses – Cigarettes & Tobacco, Hotels, Information Technology, Packaging, Paperboards &

15
Specialty Papers, Agri–Exports, Foods, Lifestyle Retailing and Greeting Gifting & Stationery –
the full stops in the Company's name were removed effective September 18, 2001. The Company
now stands rechristened 'ITC Limited'.

Though the first six decades of the Company's existence were primarily devoted to the growth
and consolidation of the Cigarettes and Leaf Tobacco businesses, the Seventies witnessed the
beginnings of a corporate transformation that would usher in momentous changes in the life of
the Company.

ITC's Packaging & Printing Business was set up in 1925 as a strategic backward integration for
ITC's Cigarettes business. It is today India's most sophisticated packaging house.
In 1975 the Company launched its Hotels business with the acquisition of a hotel in Chennai
which was rechristened 'ITC–Welcomgroup Hotel Chola'. The objective of ITC's entry into the
hotels business was rooted in the concept of creating value for the nation. ITC chose the hotels
business for its potential to earn high levels of foreign exchange, create tourism infrastructure
and generate large scale direct and indirect employment. Since then ITC's Hotels business has
grown to occupy a position of leadership, with over 100 owned and managed properties spread
across India.

In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards
Limited, which today has become the market leader in India. Bhadrachalam Paperboards
amalgamated with the Company effective March 13, 2002 and became a Division of the
Company, Bhadrachalam Paperboards Division. In November 2002, this division merged with
the Company's Tribeni Tissues Division to form the Paperboards & Specialty Papers Division.
ITC's paperboards' technology, productivity, quality and manufacturing processes are
comparable to the best in the world. It has also made an immense contribution to the
development of Sarapaka, an economically backward area in the state of Andhra Pradesh. It is
directly involved in education, environmental protection and community development. In 2004,
ITC acquired the paperboard manufacturing facility of BILT Industrial Packaging Co. Ltd
(BIPCO), near Coimbatore, Tamil Nadu. The Kovai Unit allows ITC to improve customer
service with reduced lead time and a wider product range. 

2.2 INTERNATIONAL SCENARIO:

 Hindustan Unilever limited:

16
In December 2011, the company demerged the FMCG exports business including specific
exports related manufacturing units of the company into its wholly owned subsidiary
Unilever India Exports Ltd (UIEL). The scheme became effective from January 1, 2012.
In 2012, the company enters into agreement with unilever to market Brylcreem in India.
During the year under review, the company and entities of Piramal Realty (Ajay Piramal
Group) have signed an agreement for assignment of HULs leasehold rights of the land and
building named Gulita situated at Worli Sea Face, Mumbai, for a transaction value of Rs.
452.5 Crores (Rupees Four Hundred and Fifty Two Crores and Fifty lakhs only).
In 2013, Unilever announces 50 million investment for Khamgaon plant. The company
announces launch of Domex Toilet Academy.
In 2014, Unilever announces a partnership with Internet.org, a Facebook-led alliance of
partners, to understand better how internet access can be increased to reach millions more
people across rural India. The company also launches Prabhat initiative for community
development in villages around its factories during the year under review. The company also
enters into partnership with MTV to endorse its brands during the year under review.
In 2015, the company launched The Unilever Foundry. The company also signed an
agreement with Mosons Group for acquisition of its flagship Indulekha brand. During the
year under review, the company was recognized as the most innovative marketer on mobile,
at the Mobile Marketing Association (MMA). The company also revives Ayush with e-
launch during the year. The company also won many awards during the year like the awarde
ads Client of the Year. The company also won five awards - one Gold, one Silver and three
Bronze awards. The company also launched Swachh Aadat, Swachh Bharat programme in
India during the year under review.

 ITC limited:

In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo–Nepal and British joint venture.
Since inception, its shares have been held by ITC, British American Tobacco and various
independent shareholders in Nepal. In August 2002, Surya Tobacco became a subsidiary of ITC
Limited and its name was changed to Surya Nepal Private Limited (Surya Nepal).
In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing company and a
major supplier of tissue paper to the cigarette industry. The merged entity was named the Tribeni
Tissues Division (TTD). To harness strategic and operational synergies, TTD was merged with
the Bhadrachalam Paperboards Division to form the Paperboards & Specialty Papers Division in
November 2002.

 Also in 1990, leveraging its agri–sourcing competency, ITC set up the Agri Business Division
for export of agri–commodities. The Division is today one of India's largest exporters. ITC's
unique and now widely acknowledged e–Choupal initiative began in 2000 with soya farmers in
Madhya Pradesh. Now it extends to 10 states covering over 4 million farmers. ITC's first rural

17
mall, christened 'Choupal Saagar' was inaugurated in August 2004 at Sehore. On the rural retail
front, 24 'Choupal Sangers' are now operational in the 3 states of Madhya Pradesh, Maharashtra
and Uttar Pradesh.

 In 2000, ITC forayed into the Greeting, Gifting and Stationery products business with the launch
of Expressions range of greeting cards. A line of premium range of notebooks under brand
“Paper Kraft” was launched in 2002. To augment its offering and to reach a wider student
population, the popular range of notebooks was launched under brand “Classmate” in 2003.
“Classmate” over the years has grown to become India’s largest notebook brand and has also
increased its portfolio to occupy a greater share of the school bag. Years 2007– 2009 saw the
launch of Children Books, Slam Books, Geometry Boxes, Pens and Pencils under the
“Classmate” brand. In 2008, ITC repositioned the business as the Education and Stationery
Products Business and launched India's first environment friendly premium business paper under
the “Paperkraft” Brand. “Paperkraft” offers a diverse portfolio in the premium executive
stationery and office consumables segment. Paperkraft entered new categories in the office
consumable segment with the launch of Textliners, Permanent Ink Markers and White Board
Markers in 2009.

ITC also entered the Lifestyle Retailing business with the Wills Sport range of international
quality relaxed wear for men and women in 2000. The Wills Lifestyle chain of exclusive stores
later expanded its range to include Wills Classic formal wear (2002) and Wills Clublife evening
wear (2003). ITC also initiated a foray into the popular segment with its men's wear brand, John
Players, in 2002. In 2006, Wills Lifestyle became title partner of the country's most premier
fashion event – Wills Lifestyle India Fashion Week – that has gained recognition from buyers
and retailers as the single largest B–2–B platform for the Fashion Design industry. To mark the
occasion, ITC launched a special 'Celebration Series', taking the event forward to consumers. In
2007, the Company introduced 'Miss Players'– a fashion brand in the popular segment for the
young woman.

In 2000, ITC spun off its information technology business into a wholly owned subsidiary, ITC
InfoTech India Limited, to more aggressively pursue emerging opportunities in this area. Today
ITC InfoTech is one of India’s fastest growing global IT and IT–enabled services companies and
has established itself as a key player in offshore outsourcing, providing outsourced IT solutions
and services to leading global customers across key focus verticals – Manufacturing, BFSI
(Banking, Financial Services & Insurance), CPG&R (Consumer Packaged Goods & Retail),
THT (Travel, Hospitality and Transportation) and Media & Entertainment.

In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the entire value
chain found yet another expression in the Safety Matches initiative. ITC now markets popular
safety matches brands like iKno, Mangaldeep, Aim, Aim Mega and Aim Metro.
ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the manifestation of
its partnership with the cottage sector.

CHAPTER 3: PRESENTATION & ANALYSIS

18
DATA ANALYSIS AND FINDINGS OF VARIOUS FMCG PRODUCTS

3.1. ANALYSIS AND FINDINGS:

A survey of 50 people was conducted regarding their use of FMCG products and their
findings are as follows:

1. Awareness of various FMCG companies:

COMPANIES HEARD OF

10% HUL
26% ITC
DABUR
22% P&G
NESTLE

19%

23%

According to the survey of various customers, it is found that the people have heard about
various FMCG companies of HUL and ITC in which HUL is the company which is most heard
by the people followed by dabur, ITC etc.

2. The brand of FMCG company were investement is most:

19
 Investments
50%
45%
40%
35%
30%
Axis Title

25%
20%
15%
10%
5%
0%
HUL ITC P&G L'OREAL DABUR
FMCG Companies

According to the data above it is found that people tend to spend more in HUL products which is
43% than any other products in FMCG products.

3. From where do you purchase your preferred brand of FMCG product:

20
 Sales

25%
A survey of
50 40% wholesaler customers
was retailer conducted
malls
regarding
the area of
purchase of
preferred
35% brand and it
is seen that
40% people
purchase it from the wholesaler, 35% of the people purchase from the retailers while the rest
purchase it from the shopping malls.

4. Sector where FMCG Company you have spent the most:

21
 MARKET SEGMENTATION

10%
From the above
FOOD AND BEVERAGES data a survey of 50
15% PERSONAL CARE
TOBACO
people were taken
HOUSING and it is concluded
53% that most of the
people (53%) have
20%
spent in food and
beverages sector
with respect to
other sectors which keeps on decreasing form 20% to 10%.

5. Market share of different FMCG companies in comparison to other FMCG companies:

22
 MARKET SHARE

4%
6%
It is observed
HUL
from the above
8% ITC

NESTLE
data that the
34%
BRITANIA market share of
DABUR HUL is the most
in compared to
other FMCG
29% companies like
ITC, Nestle, and
Britania etc.

6. FMCG company offering the best services:

23
 PERCENTAGE OF SERVICES OFFERED
BY DIFFERENT COMPANIES

27%
32% HUL
ITC
DABUR
BRITANIA
NESTLE

9%

10%

30%

A survey of 50 customers is done and it is found that HUL is the company which offers the best
services in terms of other companies. ITC is the second best after HUL in terms of rendering the
best services to its customers.

7. By what channel of distribution do you get your preferred brand?

24
 DISTRIBUTION CHANNEL
60%

50%

40%
Axis Title

30%

20%

10%

0%
DIRECT 1st level 2nd level 3rd level
Axis Title

HUL ITC

From the above data it can be seen the distribution channel by which people get their preferred
brand. It can be observed that the direct level distribution, and 1st level distribution of HUL is
more as compared to ITC limited whereas 2 nd level distribution is same in case of both the
companies and the 3rd level distribution of ITC is more than that of HUL.

8. Type of FMCG product used regularly:

25
 Usage of FMCG
products

27.50%
personal care
household care
all three

27.50%
90.00%

From the above data it can be seen a result of survey conducted from 50 people which states that
some of them use personal care products while some of them use household products more and
some of them use all the three products in their daily life.

9. Satisfaction with the services provided by the FMCG companies:

26
 Satisfactory level

40%
satisfied
neutral

60%

From the above graph represented we Can see that a survey was conducted in which people were
asked about the satisfactory level by the FMCG products and it can be figured that 60% of them
are satisfied while the remaining 40% of them are neutral about it.

10. From how long are you using HUL products:

27
 No of yrs of using HUL products

8%

20%
1-2 yrs
2-4 yrs
60% 4-6 yrs
more than 6 yrs

45%

From the above data it can be seen that only 8% of people are using the HUL products from past
1-2 years, 20% people are using HUL products from past 4 years, 45% people are using HUL
products from past 6 years whereas 60% of them are using from more than 6 years.

28
 11. Availability of discounts in the FMCG products:

Availability of discount

35%
yes
no

65%

A survey of 50 customers were done regarding discounts in FMCG products and it is seen that
60% of the people agree that they get discounts while remaining 35% people disagree that they
get discounts on FMCG products.

12. Complaints regarding the FMCG products, if any solved by the retailers:

29
 Sales

10%

strongly agree
25% agree
disagree

65%

From the above data it is cleared that the result of a survey of 50 people is mentioned which
states that 65% of the people strongly agree that their complains are sorted while 25% people
agree that their problems are also sorted and it can be seen that 10% of them disagree with this.

30
 13. Packaging impact on buying behavior of FMCG product:

Packaging

yes
45% no

55%

A Survey of 50 customers were done regarding the impact of packaging on purchase of FMCG
products and it is found that 55% of people Said that packaging is a key factor for them in order
to purchase a product while 45% of them said that packaging did not influence their purchase.

31
 14. The mode of payment for purchase:

Mode of payment

15%

cash
card
cheque
25%
60%

A survey of 50 people were conducted regarding the mode of payment of their purchase and it
can be seen that 60% of them prefer to pay the amount by cash , 25% of them prefer to pay by
credit/debit card while 15% of them prefer to pay the amount by cheque.

32
3.2 GROWTH STRATEGY OF HUL VS ITC:
Five main competitive strategies are:

1. Overall low cost leadership strategy

2. Best cost provider's strategy
3. Broad differentiation strategy
4. Focused low cost strategy
5. Focused differentiation strategy
HUL & ITC are major companies in FMCG market in India. When we compare both companies
on the basis of their strategies i.e. their competitive strategies in the present market. When we
look at the present segment breakup for both of the companies then we came to know that their
different products vary too much in the market. Now let us take a comparative analysis of both
the companies under some heads:

1. Performance
After stagnating between 1999 and '04, the company is back on the growth track. In the past
three years, till 2014 HUL's net sales have witnessed a CAGR of 11%, while net profit has
posted a CAGR of 17%. Despite diversification, ITC's reliance on cigarettes is still huge. The
tobacco business contributes 40% to its revenues, and accounts for over 80% of its profit. This
cash-generating business has enabled it to take ambitious, but expensive bets in new segments
and deliver modest profit growth.

2. Overall Strategy
HUL always believes in customer friendly products with major emphasis on low cost overall
without compromising on the quality of the product. They are leveraging the capabilities and
scale of the parent company and focusing on the value of execution. The entire product portfolio
is also being tweaked to include premium offerings such as Pond's 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 advantage. Additionally, the company's e-choupal
model for direct. Procurement is well known under which ITC partners with over 100,00farmers
for spices and wheat procurement and an even larger number for oilseeds. This kind of rural
pedigree is hard to beat.

3. Growth Drivers
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 Unilever
group worldwide. Introduction of premium products and addition of new consumers via

33
market expansion will be HUL's growth drivers. 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 leverages the large distribution
network the company has developed by selling cigarettes over the years.

HUL has a high fixed asset turnover ratio because of its highly managed raw material
procurement system which implies its fixed asset utilization is effective. The fixed asset ratio
for ITC is significantly low. This can occur when there are bottlenecks in the company’s raw
material procurement chain .But there are no direct data available to support this argument.
Another reason for HUL’s high fixed asset turnover ratio can be the companies fixed assets
are old and are highly depreciated.

3.3 OVERALL STRATEGY COMPARISON:

CATEGORY HUL ITC

Overview
Hindustan Unilever (HUL)
is the largest pure-play
FMCG company in the
country and has one of the
widest portfolio of products
sold via a strong distribution
channel. It owns and
markets some of the most
popular brands in the
country across various
categories, including soaps,
detergents, shampoos, tea
and face creams.
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.

Performance
After stagnating between
1999 and ’04, the company
is back on the growth track.
In the past three years, till
2008 HUL’s net sales have
witnessed a CAGR of 11%,
while net profit has posted a
CAGR of 17%.
Despite diversification,
ITC’s reliance on cigarettes
is still huge. The tobacco
business contributes 40% to
its revenues, and accounts
for over 80% of its profit.
This cash-generating
business has enabled it to
take ambitious, but
expensive bets in new

34

Overall
HUL always believes in
customer friendly products
with major emphasis on low
Strategy cost overall
compromising on
without
the
quality of the product. They
are leveraging the
capabilities and scale of the
parent company and
focusing on the value of
execution. The entire
product portfolio is also
being tweaked to include
premium offerings such as
Pond’s Age Miracle and
dove shampoo in skin and
hair care.
Risk
Being an MNC operating in
India, HUL is more
conservative in its strategies
than its Indian counterparts.
Moreover, given increasing
competition, it faces the risk
of being overtaken by
domestic players in various
categories. Prolonged
inflation may lead to margin
contraction, in case HUL is
not able to 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.
35
segments and deliver
modest profit growth.
ITC is focusing on
delivering value at
competitive prices. Its
tremendous reach through
extensive distribution chain
has been a competitive
advantage. Additionally, the
company’s e-choupal model
for direct procurement is
well known under which
ITC partners with over
100,000 farmers for spices
and wheat procurement and
an even larger number for
oilseeds. This kind of rural
pedigree is hard to beat.
Increased regulatory clamps
on tobacco, along with
rising tax burden. So, it has
started an ambitious
diversification plan, which
has its own set of 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 brand-building.
Creating brand recall and
building market share in
new products are ITC’s key
challenges. Export ban
rising crop prices pose a
threat for its agri-business,
taxing its margins.
 CHAPTER 4 : CONCLUSION AND
RECOMMENDATIONS

4.1 CONCLUSION:

The overall comparison between ITC and HUL shows that HUL still remains to be the
largest FMCG Company in India. ITC has diversified businesses but is highly dependent on
its segment of cigarettes. The analysis also shows that ITC has managed to earn the most in
cash because of its cash-generative business of cigarettes in comparison to HUL. The
changes in ratios show that HUL has still been the same customer-friendly company as usual
but ITC has been competitive and managed to remove various debts in the past six years. ITC
has earned a lot of bonus in equity but still HUL has paid a good amount of dividend in
comparison to ITC. The inventory of HUL has rose sharply because of more and more new
brand launches while it remains stable for ITC because it focuses more on delivering the
farm products from the villages to its customers.

HUL has been witnessed a good competition from ITC and this shows that MNCs like HUL
are increasingly facing competition from domestic companies which have, in turn, shown an
increase in the global reach like ITC. But HUL seems to be handling the competition well.
ITC has shown sharp increases positively in most of the ratios and has shown growth. But
increasing clamps on tobacco and tax burden are big threats. HUL has very smoothly
managed its Corporate Social Responsibility (CSR) and has stable ratios and good growth in
equity and market. ITC has a bit difficulty in CSR because of its tobacco-dominated business
but in other businesses, it has tried its every technique to manage CSR like through
stationery, food items, etc. Both the companies are the true reflections of the overall growing
industry and economy in India.

36
 4.2 RECOMMENDATIONS:

Hindustan Unilever Limited

Overall HUL's strategy on focusing on mass category with well thought out brands seems to be
working at present. While this is a good strategy for a sustainable business, it needs to get its grip
better and firm in premium zed segment as that would help this company to improve its cash
flow also deal better with competition.

Recommended Actions
1. Grow portfolio in premium zed product category to improve gross profit margin at
company level
2. Improve footprint in Foods and Beverages category as current marketing campaigns
does not seem to be working good enough.

ITC LIMITED
ITC has a huge reliance on Tobacco business which makes it susceptible to any
future health related regulations which if came in effect might prove to be a big
hindrance on the sustainability of the company. Hence emphasis should be on
reducing dependency on Tobacco business and growing other businesses.

Recommended Actions
1. Reduce dependency on Tobacco business by growing other non-tobacco businesses.

2. Marketing campaign needs to be brought on par with other FMCG companies.

3. Supply chain efficiency needs to be improved so as to free up capital from inventory and
invest it in marketing and advertising campaign.

37
 BIBLIOGRAPHY

The sources from where I have taken the information about my project on “marketing strategies
of HUL VS ITC” are as follows:

1. www.hul.co.in
2. www.fmcg.com
3. www.itc.co.in
4. www.economictimes.com

 Books

1. Marketing management

38
 ANNEXURE
1. Are you aware of the FMCG companies?
a) Yes b) No
2. Which brand of FMCG company have you invested the most?

a) HUL b) ITC c) P&G

d) L’OREAL e) DABUR
3. From where do you purchase your preferred brand?
a) Wholesaler b) Retailer c) Shopping malls
4. In which FMCG sector you have invested the most?

a) Food and beverages b) Personal care c) Tobacco d) Housing

5. Which FMCG’S market share is the highest?

a) HUL b) ITC c) NESTLE d) BRITANIA
e) DABUR
6. Which FMCG company offers you the best services?

a) HUL b) ITC c) DABUR

d) BRITANIA e) NESTLE

7. By what channel of distribution do you get your preferred brand?

a) Direct b) 1st level c)2nd level d)3rd level

8. What type of FMCG products do you use regularly?

a) Personal care b) Household c) All three

9. Are you satisfied with the services provided by FMCG companies?

39
 a) Satisfied b) Neutral

10. For how long you are using FMCG products?

a) 1-2 years b) 2-4 years c) 4-6 years d) More than 6 years

11. Do you often get discounts on FMCG products?

a) Yes b) No

12. Does your complaints (if any) are solved by the retailers?

a) Yes b) No
13. Does packaging helps in buying behavior of your preferred brand?
a) Yes b) No
14. What is your mode of payment for buying FMCG product?
a) Cash b) Credit/debit card c) Cheque

40