A

PROJECT REPORT
ON
“COMPETITIVE ANALYSIS”
OF
“HINDUSTAN UNILEVER LIMITED”
Project Submitted In Partial
Fulfilment Of The
BACHELOR OF BUSINESS ADMINISTRATION

SHOBHIT UNIVERSITY, MEERUT-250110

SESSION:2017-2020
UNDER THE GUIDANCE: SUBMITTED BY:
DR. ABHISHEK DABAS HIMANSHU SHARMA
BBA, 5TH semester
MRT17UGBBA004

1
FORWARDING LETTER

Forwarded herewith is the summer

project report titled “COMPETITIVE
ANALYSIS OF HINDUSTAN UNILEVER
LIMITED” by HIMANSHU SHARMA,
student of BBA, 5TH SEMESTER, submitted
as a partial fulfilment for the award of
BBA degree of Shobhit University For the
academic year 2017-2020.

2
To whomsoever it may
concern

This is to certify that HIMANSHU SHARMA

of BBA, 5TH SEMESTER SHOBHIT
UNIVERSITY has submitted a project
report on “COMPETITIVE ANALYSIS OF
HINDUSTAN UNILEVER LIMITED”.

3
CERTIFICATE

This is to certify that the project report

on “COMPETITIVE ANALYSIS OF
HINDUSTAN UNILEVER LIMITED” by
HIMANSHU SHARMA, student Of BBA (5TH
SEMESTER, Batch 2017-2020) in the
fulfilment of the requirement for the
award of “Bachelor of Business
Administration” under the guidance of
the undersigned.

DR. ABHISHEK DABAS

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ACKNOWLEDGEMENT

I would like to express my special

thanks of gratitude to Dr. POONAM
DEVDUTT (Director), Dr. VISHAL BISHNOI
(Dean) and DR. ABHISHEK DABAS, School
of Business Studies who gave me the
golden opportunity to do this wonderful
project on the topic “COMPETITIVE
ANALYSIS OF HINDUSTAN UNILEVER
LIMITED” which also helped me in doing
a lot of research and knowing about so
many new things for which I am really
thankful to them. Secondly, I would also
like to thank my family and friends who
helped me a lot in finalizing this project
within the limited time frame.

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 TABLE OF CONTENTS

Sr. No. Contents Page No.

1. EXECUTIVE SUMMARY 8
 PROBLEM STATEMENT 9
 OBJECTIVES OF THE 9
RESEARCH
 OUTCOME & BENEFITS OF 10
THE STUDY
 SCOPE OF THE STUDY 10
2. FMCG INDUSTRY IN INDIA 11
 SUPPLY CHAIN 12
 THE CHALLENGE INVOLVED 13
 THE ECONOMICS 15
 EMERGING TRENDS IN FMCG 16
BUSINESS
 GROWTH IN SALES OF FMCG 17
COMPANIES
3. RETAILING AND RURAL 20
MARKET
 VISUAL MERCHANDISING IN 21
RETAILING
 RURAL CONSUMER INSIGHTS 21
 STRATEGIES FOLLOWED 22
4. INTRODUCTION OF THE 25
COMPANY

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  ABOUT HINDUSTAN 26
UNILEVER LIMITED
 PRESENT STRUCTURE 34
 MANAGEMENT STRUCTURE 37
 PRODUCTS OF HUL 41
 HUL's INITIATIVE IN RURAL 46
DEVELOPMENT
 KEY LEARNINGS ON RURAL 47
DEVELOPEMENT
5. HUL DISTRIBUTION 49
NETWORK
 THE CHALLENGE OF THE 54
RURAL MARKETS
 DISTRIBUTION CHANNEL 57
6. FINDINGS 58
7. SUGGESTIONS 60
8. CONCLUSION 62
9. BIBLIOGRAPHY 63

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EXECUTIVE SUMMARY
Hindustan Unilever Limited or Hindustan
Lever limited (HLL) is India's largest Fast Moving
Consumer Goods Company, touching the lives of two
out of three Indians. HUL’s or HLL’s mission is to
“add vitality to life” through its presence in over 20
distinct categories in Home & Personal Care
Products and Foods & Beverages. The company
meets everyday needs for nutrition, hygiene, and
personal care, with brands that help people feel
good, look good and get more out of life.

The project assigned to me was to study the

Competitive analysis of HUL or HLL products. This
project taken up by me is a part of academic
assignment to find out the attributes that affect the
awareness level of retailers and suggestions to the
distributor for improving quality of service.

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PROBLEM STATEMENT
“To Study the Competitive Analysis HUL products”

OBJECTIVES OF THE RESEARCH

1. To study market Practices of HUL.

2. To study the Performance of the chosen brands of

HUL with the retailers in the given study area.

3. Studying & Evaluating the Trade Promotional

Strategies of HUL.

4. Analyzing Competition Brand –Wise.

5. Opinion of the Retailers towards the company

Note: - Competitive analysis: in marketing and strategic

management is an assessment of the strengths and
weaknesses of current and potential competitors CIDC
(Common In Direct Coverage).

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OUTCOME & BENEFITS OF THE
STUDY
1. This study would bring into light on what is the
current market.

2. It will help distributor to know what is the

competition prevailing in given study area.

3. To know the strategy of the competitors in the

given area for the study.

4. Finally, it will help me understand HUL

distribution as whole and thus enriching my
knowledge.

SCOPE OF THE STUDY

The whole study and analysis is done to measure
the Competition that is prevailing and, also to know
strategy of the competitors in the given area of
study.

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 FMCG INDUSTRY IN
INDIA
FMCG stands for Fast-Moving Consumer Goods. As
the name suggests, products of daily usage under the
heads of personal care, fabric care, household care,
packaged foods, beverages and tobacco characterize
the sector. These are part of the monthly purchase
basket. Such products generally have a noncyclical
consumer demand, low unit value, are mostly
branded products, involve high marketing
expenditure and have to be widely distributed. This
sector has observed a 2% decline in the past 4-year
period. FMCG pundits attribute this to various
theories like FMCG commanding lower share of the
wallet, what with several other newer expenditures
in mobiles, computers, automobile etc. Other reasons
to the decline may be down trading in brands or
lower rural off takes. The Industry has a lot of
potential since the product penetration and the per
capita use is still low in India. As a matter of fact,
TV, which is the major screw of information, reaches
out to 80% of urban and 46% of the rural population.
The key entry barriers into this section are the
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Brand, Supply Chain Management and the
complexity involved in managing SKUs (Stock
Keeping Units). Also an Indian FMCG Company
faces strong competition from the existing MNC-
owned brands.

SUPPLY CHAIN
The primary objective of supply chain
management is to fulfill customer demands through
the most efficient use of resources. A supply chain,
logistics network, or supply network is a coordinated
system of entities, activities, information and
resources involved in moving a product or service
from the supplier to the customer.

A BASIC SUPPLY CHAIN

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There are several stages through which the money
circulates. The distribution intermediaries make the
whole system of supply chain economically viable.
Each “layer of intermediaries” implies fewer
transaction complexities for all the “layers”,
augmenting the reach. The experience,
specialization and knowledge of local conditions,
contacts and scale through such a network help
achieve Operational Efficiency.

Without having to focus upon distribution, the

brand managers can concentrate on their core
activity of product development, sourcing and
marketing. The companies get a cost advantage
since most intermediaries are family owned
businesses with low overhead and operational costs.
The brand owners get a better return on capital
employed as intermediaries hold the inventories.

THE CHALLENGE INVOLVED

India has around 7.3 million retail outlets of which
3.0 million are in the 3768 towns and 4.3 are in the
627,000 villages. This fact is significant since the

13
biggest challenge is to reach out to every nook of
such a huge and diverse nation as India.

For a typical mid-size FMCG company, the numbers

would be as…

 C&FA (Carrying & Forwarding Agent) 30

 Distributors & Super-stockiest 1,200
 Sub-stockiest 1,000
 Retailers directly covered 500,000
 Retailers via wholesalers 1,000,000
 TOTAL 1,500,000
 Consumers 10,000,000

The 7.3 million outlet strong retailing industry

provides direct employment to more than 18 million
people which roughly means one in every 25 families
in India is engaged in the business of retailing.

The rural markets are emerging to be the growth

drivers of the future. The industry seeks to cater to a
large rural population of the order of 700 million
people. Of the 7.3 million retailers 58% are in rural
areas. In most categories penetration is low and
innovative packaging such as sachets and promotion
is required. Achieving cost effectiveness to make the
products reach rural outlets is essential.

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THE ECONOMICS
For an FMCG company, the direct customer is the
distributor. The several intermediaries between the
company and the actual consumers ( C&FA,
Distributors, Super-stockiest, Sub-stockiest,
Wholesalers, and Retailers ) need compensation for
the costs incurred, namely the inventory holding
costs, manpower costs, credit provided to the next
intermediary, transportation costs, overheads, and
entrepreneur’s risks and efforts. The renumeration
is provided as a combination of gross margin (mark-
up) on sales, commission on sales, and
reimbursements.

Typical Margins in such Supply Chain are:-

 Distributor – 5%
 Retailer – 7-15%
 Wholesaler – 1-1.5%
 Super-stockiest – 2%
 Sub-stockiest – 5%

A distributor’s investment consists of inventory,

accounts receivable and accounts payable. He draws
his income from gross margin or commission on
sales. The expenses include discount expense,
distribution expense and overheads. Typically an
FMCG distributor expects a 25% ROI.

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EMERGING TRENDS IN FMCG
BUSINESS
The industry has lately observed a rise of regional
stalwarts such as Ghadi detergent, Baagh Bakri Tea
etc. who are very strong in their respective
geographical areas. Another emerging trend has
been the rush to design products for the mass market
in villages.

The market is moving really fast as constant

innovations are required in product, packaging and
distribution. With the growth of information
technology, the retailer has transformed from the
old “gala owner” to a much better informed
businessman. Direct Selling (e.g. Amway) as a
parallel way of marketing is picking up. Increasing
role of influencers has also emerged. There has been
an influx of imports and ever increasing presence of
multinational companies in this sector.

The retailing business is also becoming more

organized. Organized retailing comprises
professionally managed single or chain of self-service
stores. This has implications such as shorter supply-
chain, move from inventory build-up method to
collaborative planning, forecasting, and
replenishment system, greater dependence on few
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“sophisticated” buyers, customer management
strategy etc.

To sum up all

A “World-Class” FMCG Sales & Distribution system.

 Ensures product availability

 At the right place
 In the right quantity
 Ensures product replenishment
 Ensures “profit” for all intermediaries
 At a minimal cost

GROWTH IN SALES OF FMCG

COMPANIES
All top 10 categories record growth, the only
exception being packaged tea. Spurred by high rural
demand and retail sales, the fast-moving consumer
goods (FMCG) sector posted 10.6 per cent growth
year on year in February, the highest in the past
five years, according to data provided by market
research agency AC Nielsen.

The rise does not come on a low base since the sales
growth in February 2005 was 8.1 per cent year on
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year. And what is more, the growth has been broad-
based with all the top 10 categories growing, the only
exception being packaged tea.

Besides, five of these categories have posted double-

digit growth. And for the first time in four years, all
the companies tracked by AC Nielsen have posted a
growth in sales.

The revival in the sector has been evident for some

time now and the December quarter saw strong top
line growth.

For example, Dabur saw its revenue grow 26 per

cent year on year, while Colgate’s sales grew 21 per
cent. Besides, most companies now have far more
pricing power than they did a year ago, which is
reflected in the better operating margins last
quarter.

Colgate’s margin, for instance, was up 10 percentage

points at 23 per cent, while that of Godrej consumer
Products was up 270 basis points at 23.8 per cent.

According to analysts, Hindustan Lever in

February experienced the highest growth in five
years while others such as Tata Tea and Dabur saw
sales grow at a much faster pace compared with the
December quarter. Tata Tea’s sales rise, for

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instance, is the highest since June 2005 while
Britannia’s is the highest in 27 months.

Analysts believe that the pick-up in the larger

categories such as biscuits, washing powder,
detergent cakes, shampoos and tea indicates a rise in
demand for such categories in rural areas.

This, they point out, is the main driving force

behind the performance of companies such as
Hindustan Lever, which recorded double-digit top
line growth last quarter, the first time in six years.
Very few segments in the FMCG space were now
seeing a declaration in growth and the momentum
was expected to continue, analysts added.

Even as the sector continues its strong run, the BSE

FMCG index hit an all-time high of 2,103.5 on Friday
with three of its components, ITC, Nestle and
McDowell hitting all time highs.

ITC, incidentally, has the highest weight of 48 per

cent in the index. The FMCG index has
outperformed the Sensex for the better part of 2005
and has been a big out performer so far in 2006.

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RETAILING AND
RURAL MARKET
Retailing is very diverse and sometimes the edges
start to blur with other type of business. The word
retail comes from the Old French retaille “to cut off”.
So a wholesaler or manufacturer sells bulk lots while
the retailer is willing to sell off smaller or individual
pieces. Of course this definition only takes us so far
because many wholesalers also sell retail and many
retailers also sell wholesale in larger lots. Further,
the common usage of retail is based more on whether
the business deals directly with the public. A local
physical location is not even necessary for the
definition of retail anymore now that retailing and
eBay selling can be retail businesses into themselves.
The best definition of retail might be any business
whose product or service is made for, and targeted
to, the consuming public.

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VISUAL MERCHANDISING IN
RETAILING
Selling goods using visual stimuli is an old age
practice, but with increasing growth of retail
industry, the art or arguably the science of visual
merchandising has come to occupy a newfound
fancy. Marketers especially retailers, consider it as
an inspirable part of their overall branding effort.
But even as it continues to grow, like all other
branding efforts, the understanding of its impact
and effectiveness is still in its infancy.

RURAL CONSUMER INSIGHTS

 Rural India buys….
 Products more often (mostly weekly).
 Buys small packs, low unit price more
important than economy.
 In rural India, brands rarely fight with
each other; they just have to be present at
the right place.
 Many brands are building strong rural
base without much advertising support.
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  Fewer brand choices in rural: number of
FMCG brand in rural is half that of urban.
 Buy value for money, not cheap products

STRATEGIES FOLLOWED
 Marketing Strategy:

Marketers need to understand the psyche of the

rural consumers and then act accordingly. Rural
marketing involves more intensive personal selling
efforts compared to urban marketing. Firms should
refrain from designing goods for the urban markets
and subsequently pushing them in the rural areas.
To effectively tap the rural market a brand must
associate it with the same things the rural folks.

It can be done by utilizing the various rural folk

media to reach them in their own language and in
large numbers so that the brand can be associated
with the myriad rituals, celebrations, festivals,
“melas” and other activities where they assemble.

 Distribution Strategy:

One of the ways could be using company delivery

vans, which can serve two purposes- it can take the

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products to the customers in every nook and corner
of the market and it also enables the firm to
establish direct contact with them and thereby
facilitate sales promotion. However, only the
bigwigs can adopt this channel. The companies with
relatively fewer resources can go in for syndicated
distribution where a tie-up between non-competitive
marketers can be established to facilitate
distribution. Annual “melas” organized are quite
popular and provide a very good platform for
distribution because people visit them to make
several purchases. According to the India n Market
Research Bureau, around 8000 such melas are held
in rural India every year. Rural markets have the
practice of fixing specific days in a week as Market
Days (often called “Haats”) when exchange of goods
and services are carried out. This is another
potential low cost distribution channel available to
the marketers. Also, every region consisting of
several villages is generally served by one satellite
town (termed as “Mandis” or Agri-markets) where
people prefer to go to buy their durable commodities.
If marketing managers use these feeder towns they
will easily be able to cover a large section of the
rural population.

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  Promotional Strategy:

Firms must be very careful in choosing the vehicle

to be used for communication. Only 16% of the rural
population has access to a vernacular newspaper.
So, the audiovisuals must be planned to convey a
right message to the rural folk. The rich, traditional
media forms like folk dances, puppet shows, etc with
which the rural consumers are familiar and
comfortable, can be used for high impact product
campaigns.

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INTRODUCTION OF
THE COMPANY

Mumbai, June 25, 2007: Hindustan Lever Limited

today announced that it has obtained approval from
the Government for the change of the company
name to Hindustan Unilever Limited.

With this the company’s new corporate identity

represented by a new logo and the new name
Hindustan Unilever Limited comes into effect. The
shareholders of the company had earlier approved
the proposal for change of name at the Company’s
74th Annual General Meeting on May 18, 2007.

The Company believes that the new name

provides the optimum balance between maintaining
the heritage of the Company and the synergies of
global alignment with the corporate name of
Unilever. Most importantly the name retains
“Hindustan” as the first word in its name to reflect
the Company’s continued commitment to local
economy, consumers, partners and employees. The
new logo is symbolic of the company’s mission of
“Adding Vitality to life”. It comprises of 25 different
25
icons representing the organization, its brands and
the idea of Vitality.

ABOUT HINDUSTAN UNILEVER

LIMITED

HUL is India's largest Fast Moving Consumer

Goods Company, touching the lives of two out of
three Indians. HUL’s mission is to “add vitality to
life” through its presence in over 20 distinct
categories in Home & Personal Care Products and
Foods & Beverages. The company meets everyday
needs for nutrition, hygiene, and personal care, with
brands that help people feel good, look good and get
more out of life. Hindustan Lever Limited (HLL) and
its constituent companies have been in India since
1931. Over these decades, while HLL has benefited
26
from the developments in the country, it has
contributed equally to these developments.

Their deep roots in local cultures and markets

around the world give us their strong relationship
with consumers and are the foundation for their
future growth.

Their long-term success requires a total

commitment to exceptional standards of
performance and productivity, to working together
effectively, and to a willingness to embrace new
ideas and learn continuously.

To succeed also requires, the highest standards of

corporate behaviour towards everyone we work
with, the communities we touch, and the
environment on which we have an impact.

This is their road to sustainable, profitable growth,

creating long-term value for their shareholders,
their people, and their business partners.

In the summer of 1888, visitors to the Kolkata

harbour noticed crates full of Sunlight soap bars,
embossed with the words "Made in England by Lever
Brothers". With it began an era of marketing
branded Fast Moving Consumer Goods (FMCG).Soon
after followed Lifebuoy in 1895 and other famous
brands like Pears, Lux and Vim. Vanaspati was

27
launched in 1918 and the famous Dalda brand came
to the market in 1937. In 1931, Unilever set up its
first Indian subsidiary, Hindustan Vanaspati
Manufacturing Company, followed by Lever
Brothers India Limited (1933) and United Traders
Limited (1935). These three companies merged to
form HLL in November 1956; HLL offered 10% of its
equity to the Indian public, being the first among
the foreign subsidiaries to do so. Unilever now holds
51.55% equity in the company. The rest of the
shareholding is distributed among about 380,000
individual shareholders and financial institutions.

The erstwhile Brooke Bond's presence in India dates

back to 1900. By 1903, the company had launched
Red Label tea in the country. In 1912, Brooke Bond &
Co. India Limited was formed. Brooke Bond joined
the Unilever fold in 1984 through an international
acquisition. The erstwhile Lipton's links with India
were forged in 1898. Unilever acquired Lipton in
1972 and in 1977 Lipton Tea (India) Limited was
incorporated. Pond's (India) Limited had been
present in India since 1947. It joined the Unilever
fold through an international acquisition of
Chesebrough Pond's USA in 1986. Since the very
early years, HLL has vigorously responded to the
stimulus of economic growth. The growth process has

28
been accompanied by judicious diversification,
always in line with Indian opinions and aspirations.

The liberalization of the Indian economy, started in

1991, clearly marked an inflexion in HLL's and the
Group's growth curve. 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. In one of the most visible
and talked about events of India's corporate history,
the erstwhile Tata Oil Mills Company (TOMCO)
merged with HLL, effective from April 1, 1993. In
1995, HLL and yet another Tata company, Lakme
Limited, formed a 50:50 joint venture, Lakme Lever
Limited, to market Lakme's market-leading
cosmetics and other appropriate products of both the
companies. Subsequently in 1998, Lakme Limited sold
its brands to HLL and divested its 50% stake in the
joint venture to the company.

HLL formed a 50:50 joint venture with the US-based

Kimberly Clark Corporation in 1994, Kimberly-Clark
Lever Ltd, which markets Huggies Diapers and
Kotex Sanitary Pads. HLL has also set up a
subsidiary in Nepal, Nepal Lever Limited (NLL),
and its factory represents the largest manufacturing
investment in the Himalayan kingdom. The NLL
29
factory manufactures HLL's products like Soaps,
Detergents and Personal Products both for the
domestic market and exports to India. The 1990s also
witnessed a string of crucial mergers, acquisitions
and alliances on the Foods and Beverages front. In
1992, the erstwhile Brooke Bond acquired Kothari
General Foods, with significant interests in Instant
Coffee. In 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
July 1993, Brooke Bond India and Lipton India
merged to form Brooke Bond Lipton India Limited
(BBLIL), enabling greater focus and ensuring
synergy in the traditional Beverages business. 1994
witnessed BBLIL launching the Wall's range of
Frozen Desserts. By the end of the year, the
company entered into a strategic alliance with the
Kwality Ice-cream Group families and in 1995 the
Milk food 100% Ice-cream marketing and
distribution rights too were acquired.

Finally, BBLIL merged with HLL, with effect from

January 1, 1996. The internal restructuring
culminated in the merger of Pond's (India) Limited
(PIL) with HLL in 1998. The two companies had
30
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. The amalgamation was done to
ensure for the group, benefits from scale of
economies both domestic and export market. In
January 2000, in a historic step, the government
decided to award 74 per cent equity in Modern
Foods to HLL, thereby beginning the divestment of
government equity in public sector undertakings
(PSU) to private sector partners. HLL's entry into
Bread is a strategic extension of the company's
wheat business. In 2002, HLL acquired the
government's remaining stake in Modern Foods.

In 2003, HLL acquired the Cooked Shrimp and

Pasteurized Crabmeat business of the Amalgam
Group of Companies, a leader in value added Marine
Products exports.

Hindustan Lever Limited, 51.6% subsidiary of

Unilever Plc, is the largest FMCG Company in the
country, with a turnover of Rs 118bn. The company’s
business sprawls from personal and household care
products to foods, beverages and speciality
chemicals. The company has a dominating market
share in most categories that it operates in such as
toilet soaps, detergents, skincare, hair care, color
31
cosmetics, etc. It is also the leading player in food
products such as packaged tea, coffee, ice cream and
other culinary products.

Brand equities are built over a period of time by

technological innovations, consistent high quality,
aggressive advertisement and marketing.
Availability near the consumer through a wide
distribution network is another crucial success
factor, as products are of small value, frequently
purchased, daily use items. HLL is strong on both
these fronts with leading brands, which are market
leaders in their respective categories, and a 1mn
strong direct retail reach.

HLL is the market leader in the detergent and toilet

soap industry with market share of 60% and 40%
respectively. Nirma is a close competitor in
detergents and has been slowly gaining ground in
toilet soaps too. The other significant competitor in
detergents is P&G. In oral care segment, HLL has
emerged as a strong No 2 player with 36% market
share. In the hair care segment, HLL dominates the
shampoo market with a 64.5% share and is the No 2
player in hair oils. HLL has a 54% market share in
skin creams. In the foods business, Tata Tea in
packet tea, Nestle in coffee and culinary products,
GCMMF (Amul) in ice creams, and Godrej Pillsbury
in staple food are the main competitors.
32
HLL grew at a fast pace in the mid -90s driven by
its aggressive acquisition spree. From Rs38 billion
turnover (contributed 70% by soaps, detergents and
personal products), HLL’s turnover has now grown
to Rs118 billion, with soaps and personal products
contributing 57% to turnover and beverages and
food products contributing to 29% of turnover.
Growth during the last few years has largely been
driven by the personal products business.

However the pace of growth has slackened

significantly in the last two years with several key
segments registering a growth in 2001 soaps business
(Rs21 billion) de-grew by 1% and detergent sales
(Rs20 billion) grew by 7%. Other personal products
(household care, oral acre, skin care, hair care, color
cosmetics) registered a 14% yo-yo growth to Rs24.6
billion. Expansion of the foods business, which has
been identified as a major growth area, has not been
as fast as anticipated. Beverage sales move largely
with commodity price trends, which have remained
on a downtrend. Branded tea business degree by 10%
in F12/01 to Rs16 billion, while the Rs3 billion coffee
business registered a 7% yo-yo growth. Ice cream
business has failed to take off registering a 3%
growth. The staple food business, once considered a
high potential growth area witnessed a decline of
10% yo-yo to Rs2.4 billion.

33
Profitable growth has been the new mantra of the
FMCG’s major Chairman, M S Banga, who took over
the reins from Keki Dadiseth 2 years ago. In
contrast to Dadiseth‟s strategy of expansion
through acquisition, Mr. Banga’s strategy revolves
around rationalization. A focus on 30 power brands,
which are major contributors to profitability,
seeking new avenues of expanding distribution
reach, improving profitability of foods businesses
have been the thrust areas. Non-FMCG businesses
are either being are hived off or are being
strengthened by partnerships with players who have
the technological expertise in those businesses. The
strategy has paid results with profits registering a
24% yo-yo growth in 2001, despite a flat top line
growth.

PRESENT STRUCTURE
Hindustan Unilever Limited (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. They have the

34
company with a scale of combined volumes of about
4 million tones and sales of Rs10,000 cores.

HUL is also one of the country's largest exporters; it

has been recognized as a Golden Superstar Trading
House by the government of India. The mission that
inspires HUL's 36,000 employees, including over
1,350 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
HLL shares with its parent company, Unilever,
which holds 51.55% of the equity. The rest of the
shareholding is distributed among 380,000
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.
They are manufactured in close to 80 factories. The
operations involve over 2,000 suppliers and
associates. HUL's distribution network, comprising
about 7,000 redistribution stockiest, directly covers
the entire urban population, and HUL has
traditionally been a company, which incorporates
35
latest technology in all its operations. The
Hindustan Lever Research Center (HLRC) was set
up in 1958, and now has facilities in Mumbai and
Bangalore.

HLRC and the Global Technology Centers in India

have over 200 highly qualified scientists and
technologists, many with post-doctoral experience
acquired in the US and Europe. HUL believes that
an organization’s worth is also in the service it
renders to the community. HUL is focusing on
health & hygiene education, women empowerment,
and water management. It is also involved in
education and rehabilitation of special or
underprivileged children, care for the destitute and
HIV-positive, and rural development. HUL has also
responded in case of national calamities /
adversities and contributes through various welfare
measures, most recent being the village built by
HUL in earthquake affected Gujarat, and relief &
rehabilitation after the Tsunami caused devastation
in south India.

Over the last three years the company has embarked

on an ambitious program, Shakti. Through Shakti,
HUL is creating micro-enterprise opportunities for
rural women, thereby improving their livelihood
and the standard of living in rural communities.
Shakti also includes health and hygiene education
36
through the Shakti Vani Program, and creating
access to relevant information through the Shakti
community portal. The program now covers about
50,000 villages in 12 states. HUL's vision is to take
this program to 100,000 villages impacting the lives
of over 100 million rural Indians.

HUL is also running a rural health program –

Lifebuoy Swasthya Chetana. The program endeavors
to induce adoption of hygienic practices among
rural Indians and aims to bring down the incidence
of diarrhoea. It has already touched 70 million
people in approximately 15000 villages of 8 states.
The vision is to make a billion Indians feel safe and
secure. If Hindustan Lever straddles the Indian
corporate world, it is because of being single minded
in identifying itself with Indian aspirations and
needs in every walk of life.

MANAGEMENT STRUCTURE
HUL and Group companies have about 36,000
employees, including 1350 managers.

The fundamental principle determining the

organization structure is to infuse speed and

37
flexibility in decision-making and implementation,
with empowered managers across the company's
nationwide operations. For this, HUL is organized
into two self-sufficient divisions - Home & Personal
Care & Foods - supported by certain central
functions and resources to leverage economies of
scale wherever relevant.

 Board
 Divisions
 Central functions
 Businesses

 Board
o At the apex is the Board, headed by the
Chairman, and comprising 5 whole time
Directors and 5 independent non-
executive Directors.
o The day to day operations are supervised
by the National Management comprising
the Vice Chairman, Managing Director
(HPC), Managing Director (Foods) and the
Finance Director.

 Divisions

38
o Each division is self-sufficient with
dedicated resources and assets in sales,
marketing, commercial, and
manufacturing.
o The divisions are further reorganized into
categories. Typically, each category and
each function - Sales, Commercial,
Manufacturing - is headed by a Vice
President. They with their respective
Managing Director comprise that Division's
Management Committee.
o For managing sales operations, HUL
divides the country into four regions, with
regional branches in Delhi, Kolkata,
Chennai and Mumbai.
o Headed by a Regional Manager, they
comprise Regional Sales Managers and
Area Sales Managers, assisted by dedicated
field forces, comprising Sales Officers and
Territory Sales In charges.
o In Marketing, each category has a
Marketing Manager who heads a team of
Brand Managers dedicated to each or a
group of brands.
o The commercial team of a Division is
responsible for its supply chain
management.

39
 o There are teams dedicated to sourcing,
planning and logistics.
o Each Division has a nationwide
manufacturing base, with each factory
peopled by teams of Production,
Engineering, Quality Assurance,
Commercial and Personnel Managers.

 Central functions
o HUL's Central Functions are Finance,
Human Resources, Technology, Research,
Information Technology, Legal &
Secretarial, and Corporate Affairs. Their
services are shared across the company.
o But, wherever necessary, managerial
resources are dedicated exclusively to a
business. For example, each Division now
has dedicated HR managers.

 Businesses
o Home & Personal Care
 Personal Wash
 Fabric Wash
 Home Care
 Oral Care
 Skin Care

40
  Hair Care
 Deodorants & Talc
 Color Cosmetics
o Foods
 Tea
 Coffee
 Branded Staples
 Culinary Products
 Ice Creams
 Modern Foods ranges
o New Ventures
 Hindustan Lever Network
 Ayush ayurvedic products & services
 Saga
 Purest water purifiers
o Exports
 HPC
 Beverages
 Marine Products
 Rice
 Castor

PRODUCTS OF HUL
BRANDS OF HUL

41
 HOME AND PERSONAL CARE

LUX

BREEZE

LIRIL

DOVE

LIFEBUOY

PEARS

REXONA

 LAUNDRY

SURF EXCEL

RIN

WHEEL

 SKIN CARE

FAIR AND
LOVELY

PONDS

42
 HAIR AND CARE

SUN SILK
NATURAL

CLINIC PLUS

 ORAL CARE

PEPSODENT

CLOSE-UP

 DEODRANTS

AXE

REXONA

43
 COLOUR COSMETIC

LAKME

 AYURVEDIC PERSONAL AND HEALTH

CARE

AYUSH

 TEA

44
 BROOKE BOND

LIPTON

 COFFEE

BRU

 FOODS

KISSAN

KNORR
ANNAPURNA

 ICE CREAM

45
 KWALITY
WALL'S

HUL's INITIATIVE IN RURAL

DEVELOPEMENT
Hindustan Unilever Limited (HUL) and its
constituent companies have been in India since 1931.
Over these decades, while HUL has benefited from
the developments in the country, it has contributed
equally to these developments.

HUL has consciously woven India's imperatives

with the company's strategies and operations. The
company’s main contributions include developing
and using relevant technologies, stimulating
industrialization, boosting exports, adding value to
agriculture and generating productive employment
and income opportunities.

HLL has been proactively engaged in rural

development since 1976 with the initiation of the
46
Integrated Rural Development Program in the Etah
district of Uttar Pradesh, in tandem with the
company’s dairy operations. This Program now
covers 500 villages in the district. Subsequently, the
factories that HLL continued establishing in less-
developed regions of the country have been engaged
in similar program in adjacent villages.

These factory-centred activities mainly focus on

training farmers, animal husbandry, generating
alternative income, health & hygiene and
infrastructure development. The company has
acquired a wealth of experience and learning from
these activities.

KEY LEARNINGS ON RURAL

DEVELOPEMENT
The principal issue in rural development is to
create income-generating opportunities for the rural
population. Such initiatives are successful and
sustainable when linked with the company’s core
business and is mutually beneficial to both the
population for whom the program is intended and
for the company. Based on these insights, HUL
47
launched Project Shakti in the year 2001, in keeping
with the purpose of integrating business interests
with national interests.

48
HUL-DISTRIBUTION
NETWORK

 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.
o 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.
o 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.
o The company salesman still covered the
market, canvassing for orders from the rest
of the trade. He would then distribute stocks
from the Registered Wholesaler through

49
 distribution units maintained by the
company.
o 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 Stockiest" (RS) who replaced
the RWs.
o The RS was required to provide the
distribution units to the company salesman.
o The RS financed his stocks and provided
warehousing facilities to store them.
o The RS also undertook demand stimulation
activities on behalf of the company.
 The second characteristic of this period we
realized that the RS would be able to provide
customer service only if he was serviced well.
o This knowledge led to the establishment of
the "Company Depots" system. This system
helped in transshipment, bulk breaking, and
as a stock point to minimize stock-outs at
the RS level.
 In the recent, a significant change has been the
replacement of the Company Depot by a system
of third party Carrying and Forwarding Agents
(C&FAs).

50
 o The C&FAs act as buffer stock-points to
ensure that stock-outs did not take place.
o The C&FA system has also resulted in cost
savings in terms of direct transportation
and reduced time lag in delivery.
o The most important benefit has been
improved customer service to the RS.
 The role performed by the Redistribution
Stockiest has also undergone changes over the
years.
o Financing stocks, providing manpower,
providing service to retailers, implementing
promotional activities, extending indirect
coverage, reporting sales and stock data,
screening for transit damages are some of
the functions performed by the RS today.
 HUL has grown manifold over the years. In the
process, the number of factories and the number
of SKUs too have increased.
o In order to rationalize the logistics and
planning task, an innovative step has been
the formation of the Mother Depot and Just
in Time System (MD-JIT).
o 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.

51
 o 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 depot
by all manufacturing units. The JITs draw
their requirements from the MD on a
weekly or bi-weekly basis.
 At present, HUL's products, manufactured
across the country, are distributed through a
network of about 7,000 redistribution stockiest
covering about one million retail outlets.
 The distribution network directly covers the
entire urban population.
 In addition to the ongoing commitment to the
traditional grocery trade, HUL is building a
special relationship with the small but fast
emerging modern trade. Their scale enables
them to provide superior customer service
including daily servicing, improving their range
availability whilst reducing inventories.
 They are using the opportunity of interfacing
more directly with their consumers in this retail
environment through specially designed
communication and promotions. This is building
traffic into the stores while yielding high growth
for their business.

52
 An IT-powered system has been implemented to
supply stocks to redistribution stockiest on a
continuous replenishment basis.
 The objective is to catalyze HUL’s growth by
ensuring that the right product is available at
the right place in right quantities, in the most
cost-effective manner.
o For this, stockiest have been connected with
the company through an Internet-based
network, called RS Net, for online
interaction on orders, dispatches,
information sharing and monitoring.
o RS Net covers about 80% of the company's
turnover. Today, the sales system gets to
know every day what HUL stockiest have
sold to almost a million outlets across the
country.
o RS Net is part of Project Leap, HUL's end-
to-end supply chain, which also includes a
back-end system connecting suppliers, all
company sites and stretching right up to
stockiest.
o RS Net has come as a force multiplier for
HUL Way, the company's action-plan to
maximize the number of outlets reached
and to achieve leadership in every outlet,
by unshackling the field force to solely focus

53
 on secondary sales from the stockiest to
retailers and market activation.
o HUL Way has also led to implementing best
practices in customer management and
common norms and processes across the
company. Powered by the IT tools it has
further improved customer service, while
ensuring superior availability and impact
visibility at retail points.

THE CHALLENGE OF THE RURAL

MARKETS
70% of India's population resides in villages.
Penetrating the rural markets is, therefore, one of
the key challenges for any marketer. While rural
markets present a great opportunity to companies,
they also impose major challenges. At HUL, they
have been at the forefront of experimenting with
innovative methods to reach the rural consumer.

 Indirect coverage

Under the Indirect Coverage (IDC) method,

company vans were replaced by vans belonging to

54
Redistribution Stockiest, which serviced a selected
group of neighbouring markets.

 Operation Harvest

The reach of conventional media and, therefore,

awareness of different products in rural markets is
weak. It was also not always feasible for the
Redistribution Stockiest to cover all these markets
due to high costs involved. Yet, these markets are
important since growth opportunities are high.
Operation Harvest endeavoured to supplement the
role of conventional media in rural India and, in the
process, forge relationships and loyalty with rural
consumers. Operation Harvest also involved
conducting of product awareness programs on vans
which are typically funded by the Redistribution
Stockiest. Cinema Van Operations have films and
audio cassettes with song and dance sequences from
popular films, also comprising advertisements of
HUL products Single Distribution Channel For rural
India; HUL has established a single distribution
channel by consolidating categories. In a significant
move, with long-term benefits, HUL has mounted an
initiative, Project Streamline, to further increase its
rural reach with the help of rural sub-stockiest. It
has already appointed 6000 such sub-stockiest. As a
result, the distribution network directly covers

55
about 50,000 villages, reaching about 250 million
consumers.

Distribution will acquire a further edge with Project

Shakti, HUL's partnership with Self Help Groups of
rural women. The project, started in 2001, already
covers over 5000 villages in 52 districts of Andhra
Pradesh, Karnataka, Madhya Pradesh and Gujarat,
and is being progressively extended. The vision is to
reach over 100,000 villages. They’re by now
touching about 100 million consumers. The SHGs
have chosen to adopt distribution of HUL's products
as a business venture, armed with training from
HUL and support from government agencies
concerned and NGOs. A typical Shakti entrepreneur
conducts business of around Rs.15000 per month,
which gives her an income in excess of Rs.1000 per
month on a sustainable basis. As most of these
women are from below the poverty line, and live in
extremely small villages (less than 2000 population),
this earning is very significant, and is almost double
of their past household income. For HUL, the project
is bringing new villages under direct distribution
coverage. Plans are being drawn up to cover more
states, and provide products/services in agriculture,
health, insurance and education. This will both
catalyze holistic rural development and also help the
SHGs generate even more income. This model creates

56
a symbiotic partnership between HUL and it’s
consumers, some of whom will also draw on the
company for their livelihood, and helps build a self-
sustaining virtuous cycle of growth.

DISTRIBUTION CHANNEL

57
FINDINGS
Research has been made on the topic “competitive
analysis” to identify the competition between rural
retailers depending upon their sales turnover. The
findings are as follows

 It is found that most of the retailers place the

order every week and once in 15 days. It shows
that many of the retailers frequently place the
order.
 From the market research study it has been
observed that the schemes & offers should be
given to the outlets.
 About 70% of the retailers are aware of the RS
scheme if the billing is more than 10,000, 30%
are not aware.
 There is a positive feedback towards the sales
representative’s behaviour during the visit.
Some of the retailers rate that the behaviour of
the sales representative is courteous and good
while some of the customers of retailers rate
their behaviour is aggressive.
 Most of the retailers are satisfied with the sales
representative’s explanation during visit.

58
 Most of the retailers are not particular about
the dress code for the sales persons.
 The products such as Colgate, Red Label, Wheel,
Surf Excel , Nirma Tata Tea, Annapurna ,these
are the products which are moving well.
 Most of the retailers have a good opinion about
the Quality Price Availability, Brand status and
customer demand of the HUL products supplied
by the distributor. However, most of them have
a very low opinion about the amount of margin
given by the distributors.

59
SUGGESTIONS
 The distributor Should visit all the retailers.
 Many people in rural area recognize the
product not by its name but by its external
appearance. Merchandising activity should be
extended to all General retailers.
 Modernization and standardization of rural
retailers’ network must be carried out in order
to exchange ideas on successful selling strategies
and identifying areas of improvements.
 “Sales through Services” and a Retailer
Development Program must be carried out.
 The sales representative should give an
opportunity to retailers to put their point of
view during visit to check the competition that
is prevailing in the market and the area
covered. And to see what tools are applied by
other companies for getting more sales.
 Distributor must satisfy retailers in respect to
schemes, discounts, offers and margins which
attract bulk orders to distributor.
 Discount and company incentive should be
passed on to the retailer by the distributors and

60
distributor should periodically review the
performance of their retailer.

61
CONCLUSION
To conclude, it is very much limited time to clearly
understand the competition that is prevailing in the
market.

Apart from this we need to focus on the problem

that the distributors should supply goods to the
retailers carefully in regular time intervals
(periodically).

The sales representative should co-operate with

retailers at the time of visit.

Thus, the significance of retailers’ satisfaction

stretches from introducing more and more
promotional activities, good margin and better
services from distributor.

62
BIBLIOGRAPHY

BOOKS

 ICFAI Journal
 Marketing Management by Philip kotler
 Marketing Research by Parshu Raman

WEBSITES

 www.hll.com

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