Distribution Strategies Of
• • • • Prashant Singh Anjan Roy Nazim Malik Wasim Feroze
it has been recognized as a Golden Super Star Trading House by the Govt. is India’s largest FMCG company. touching the lives of two out of three Indians with over 20 distinct categories in Home & Personal Care Products and Food & Beverages.Introduction
• Hindustan Unilever Limited (HUL). of India. • HUL is also one of the country’s largest exporters.
. formerly Hindustan Lever Limited (it was renamed in late June 2007 as HUL).
HUL shares its mission with parent company “UNILEVER” which holds 52. • HUL manufacture their products over 40 factories across India. The operation involve over 2000 suppliers and associates.10% of the equity. including over 1300 managers. The rest of the shareholding is distributed among 360. is to “add vitality to life”. • HUL meets everyday needs for nutrition. covering 6.675 individual shareholders and financial institutions. hygiene and personal care with brands that help people feel good.3 million retail outlets reaching the entire urban population and about 250 million rural consumers. look good and get more out of life.
• The mission that inspires HUL’s over 15.000 employees. HUL’s distribution network comprises about 4000 redistribution stockiest.
Tea Coffee Processed Food Ice Creams Water
Large retailers also place direct order which comprise almost 30% of the total orders collected. The focus of the second phase.Analysis of Distribution Network
The first phase of the HUL distribution management had wholesalers placing bulk orders directly with the company. which spanned the decades of the 40s. was to provide desired products and quality service to the company’s customers.
. In order to achieve this one wholesaler in each market was appointed as a Registered Wholesaler and therefore it increased the distribution reach of the company to a larger number of customer.
• The highlight of the third phase was the concept of “Redistribution Stockiest” (RS) who replaced the Registered Wholesaler (RWs). bulk breaking and as a stock point to minimize stock-outs at the RS level. • The RS was required to provide the distribution units to the company salesman. • In this phase “Company Depots” system established.CONTINUE.
. This system helped in transshipment.
. a significant change has been the replacement of the Company Depot by a system of third party Carrying and Forward Agents (C&FA).CONTINUE.
• In the recent past.
. • The most important benefit has been improved customer service to the RS. • The C&FA system has also resulted in cost savings in terms of direct transportation and reduced time lag in delivery.
• • • • • Innovative distribution strategy Largest market share Largest exporter of the country New division called HL NETWORK Growth more than the FMCG sector
oral.large number of distributors.Setting up of extensive distribution system with 7500 distributors and about million retail points requires huge cost. hair. Centralization Vs Decentralization
. and skin care economic growth slows and competition increases Huge Cost. Time Involved-Setting up of extensive distribution network with million retail points involves great amount of time.Weakness
• HUL is steadily losing its market share in segments including soaps. Extensive Hiring. thus resulting in a hit on their bottom lines.
) • Large Domestic market over a billion Population • Untapped rural market.Opportunity
• Expansion of horizon outside Asia • Diversify its brand ( it can switch to new brands in segments like confectionary.
. medicines etc.
one of the biggest threats Mimic of Brands Removal of import restrictions resulting in replacing of domestic brands. • Reliance Fresh Outlets • Local Brands
• • • • Loosing market share due to New Entrants ITC Ltd.
Hul’s strategy to strengthen distribution
• • • • • • • Super Value stores Project Shakti Lakme Beauty Solution Ayush Therapy Treatment Solution Beverage Vending Machine Hindustan Liver Network Program Vijeta
This leads to a huge nation-wide branding and helped to survive against organized retailers. • HUL observed that unorganized retailers commands the major share hence the unorganized stores need to differentiates themselves both by offering better services at low price and maintaining a good quality image. • This gives an edge to the small grocery shopkeepers.Super Value stores
• Through this strategy HUL dominated unorganized retailers after observing that organized retailers as a threat and have captured 2% market share in food & grocery segments. • This is where HUL steps in by coming forward to certify them as SVS. • HUL benefited by better display for its products and exclusive promotional offer for its customers and most robust distribution channel by building a synergetic relationship with the channel members
which support them with microcredit facilities • In rural the women are selected and given certain mass market products of HUL.00.Project Shakti has been successful in its operations in more than 50.00.Project Shakti
• It works for empowerment of rural woman with the help of self-help Groups. • Involvement of NGO’s make it more successful • Company plans to reach out to 600 million rural consumers in around 5. These women stock and sell them to rural consumer • Since its inception in 2001.000 villages in 12 states.000 villages by recruiting 1.000 Shakti Entrepreneur s
and thereby enhancing its image and indirectly promoting the sale of Lakme products • These salons are set up in 71 locations in 28 Indian cities. these means HUL has an exclusive distribution network in allover India
. • These salon provide the customers with a unique and differentiated experience of the brand Lakme.Lakme Beauty Solution
• It’s a new setup by HUL • The professionals in these salons are trained by the Lakme academy • Its offering regular beauty and personal care related services.
• Since its launch in 2002 more than 40 lakhs households are reported to have tried it and more than 50% of them are said to have become repeat customer • These centers provide personalized health advice and therapy and some other service • They even offer promotional schemes on Women’s Day.Ayush Therapy Treatment Solution
• HUL collaborated with Arya Vaidya Pharmacy. such as 50% discount on all treatment and services
. a leading name in ayurveda. to set up Arya Therapy Treatment Centers.
entertainment. leisure and travel segment
.Beverage Vending Machine
• It was one more option for distribution of certain products of HUL through vending machine • It introduced more than 15000 Tea and Coffee vending machine • And thus HUL become the largest player in the Indian hot beverages segment • This business is being further expanded in the education.
As a Privileged Consumer. As a HLN Consultant • Currently HLN is operating in 1500 towns with 3. companyowned distribution channel. HLN is HUL’s direct selling arm • It works on the concept of multi-level marketing.Hindustan Liver Network
• This is another attempt by HUL to reach out to its consumers through an independent. Started in 2003.5 lakhs consultants. or 2.
. • An individual can be a part in two ways 1.
. • This program is also used as a platform to interact closely with its channel partners and build long lasting relationships by the company. the wholesalers are given some points in exchange of the business that they bring to HUL. This points can be redeemed for gifts and awards and other benefit. this program is aimed at the strong network of wholesalers that HUL has built • The Co. Ltd. India’s leading direct and relationship marketing agency • Under this program. has tied up with Direm Marketing services Pvt.Program Vijeta
• HUL launched Program Vijeta in around 2002.
HUL observe its importance and made it an effective weapon to achieve a strong competitive edge in the market place.
A few companies have extended the importance that is ‘Place or distribution’ also known as the forth P of marketing mix.