Hindustan unilever ltd.


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Sales and Distribution Channel of HUL (Special focus on Indore Region)

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Hindustan unilever ltd.

  1. 1. CH INSTITUTE OF MANAGEMENT & COMMUNICATION Post Graduate Diploma in Management CORPORATE INTERNSHIP REPORT OF THE PROJECT TITLED AS Sales and Distribution Channel of HUL HINDUSTAN UNILEVER LTD.Submitted To: Submitted By: Prof. Girish Bhatia Pranay Rajas
  2. 2. PREFACEThere is a famous saying “The theory without practical is lame andpractical without theory is blind.” This modern era is era ofconsumers. Consumers satisfy themselves according to their needsand desires, so they choose that commodity from where theyextract maximum satisfaction. It has been identified in thebeginning of 21st century the market was observed a drasticchange. The successful brand presents itself in such a way thatbuyers buy them in special values which match their needs.Marketing is an important part of any marketing. Summer trainingis an integral part of the PGDM and student of management have toundergo training session in a business organization for 8 weeks togain some practical knowledge in their specialization and to gainsome working experience. Our institution has come forward with theopportunity to bridge the gap by imparting modern scientificmanagement principle underlying the concept of the futureprospective managers. To the emphasis on practical aspect ofmanagement education on practical aspect of managementeducation on the faculty of Cerebral Heights Institute ofManagement and Communication, Indore has with a modern systemof practical training of repute and following management techniqueto the student as integral part of PGDM in accordance with theabove obligation undergoing project in “Hindustan Unilever Ltd.”.The title of my project is “Study of Sales and DistributionChannel of HUL”Certainly this analysis explores my abilities and strength to itsfullest extent for the achievement of organization as well as mypersonal goals.
  3. 3. ACKNOWLEDGEMENT It is my pleasure to be indebted to various people, whodirectly or indirectly contributed in the development of this workand who influenced my thinking, behavior, and acts during thecourse of study. I express my sincere gratitude to Dr. Mayank Saxena,Director, CH Institute of Management and Communication,for providing me an opportunity to undergo training at HindustanUnilever Ltd.I take immense pleasure in thanking Mr. Sairam Subrahmanium,Area Sales Manager, Hindustan Unilever Ltd. for havingpermitted me to carry out this Internship. I am thankful to Mr. Imran Khan, Territory Sales Officer,Hindustan Unilever Ltd. for his support, cooperation, andmotivation provided to me during the training for constantinspiration, presence and blessings. I also extend my sincere appreciation to Prof. Girish Bhatia,Training Mentor, who provided his valuable suggestions andprecious time in accomplishing my project report. Lastly, I would like to thank the almighty and my parents fortheir moral support and my friends with whom I shared my day-to-day experience and received lots of suggestions that improved myquality of work. (Pranay Rajas)
  4. 4. DECLARATION I, Pranay Rajas, student of Post Graduate Diploma inManagement, studying at CH Institute of Management andCommunication, Indore, hereby declare that the training report on“Sales and Distribution Channel of Hindustan Unilever Ltd.”submitted to CH Institute of Management and Communication,Indore, in partial fulfillment of Post Graduate Diploma inManagement, is the original work conducted by me. The information and data given in the report is authentic tothe best of my knowledge. This training report is not being submitted to any otherUniversity/Institution for award of any other Degree, Diploma andFellowship. (Pranay Rajas)
  5. 5. CERTIFICATE This is to certify that the Industrial project entitled “Study ofSales and Distribution Channel” carried out by Pranay Rajas,student of Post Graduate Diploma in Management (PGDM) ofCerebral Heights Institute of Management and Communication, ishereby accepted and approved as a credible work. It is submitted inthe partial fulfillment for the requirement of Post Graduate Diplomain Management (PGDM) from Cerebral Heights Institute ofManagement and Communication; it‟s a bona–fide record of thework done by him under my supervision during his stay as a projecttrainee at Hindustan Unilever Ltd. from 09th August 2011 to 08thOctober 2011.
  6. 6. CONTENTChapter-1 Introduction to the Study  Scope of the Study 7  Significance of the Study 8  Objective of the Study 9Chapter-2 Company Profile  Introduction 11  History 12  Financial Highlights 17  SWOT Analysis 21  Distribution Network of HUL 24Chapter-3 Research Methodology 47Chapter-4 Data Analysis 51Chapter-5 Interpretations and Findings 69Chapter-6 Recommendations and Suggestions 71 Questionnaire Bibliography
  7. 7. CHAPTER-1 SCOPE OF THE STUDY The main scope of this study is to ascertain the effectivenessof channel of distribution and various methods to increase the sales
  8. 8. volume of the concern. The methods include regular information tothe buyers creating a brand position in the market and takingmeasures to make the brand remain in its position. One of theimportant aspects of this study is also to increase the marketsegment for the product. SIGNIFICANCE OF THE STUDY This study of Sales and Distribution Channel of HindustanUnilever Ltd. will help HUL in intervening the efficiency andeffectiveness of its distribution channel.
  9. 9. A marketing channel system is the particular set of marketingchannels employed by a firm. Decisions about the marketingchannel system are among the most critical facing management.Marketing channels also represent a substantial opportunity cost.One of the chief roles of marketing channels is to convert potentialbuyers into profitable orders. Marketing channels must not justserve markets, they must also make markets. The study helps streamlining its operations and designing anew Sales and Distribution Channel and thereby increasing theoverall value being provided to the consumer and therebyincreasing the revenues and the profits for the company. OBJECTIVE OF THE STUDYManagement is a course which teaches the student to get the workdone properly from different available sources viz. man, machine,material, money etc. So there can be a satisfaction from the
  10. 10. organization side and the workers side who play a significant role inachieving success. So far the fulfillment or the management course,it gives emphasis to project work and students learn how to plan inpractical terms rather in terms of theory only. Student tends todevelop analytical and problem solving skill. We necessary becomemotivated and competitive, in fact all the learning that goes on forthe two year term become a well around personality. The followingare the objective and purpose of the study for:i) To study the Sales and Distribution network of HindustanUnilever Ltd. in Indore Region.ii) To analyze the issues creating problems in Sales andDistribution Channel.iii) To recommend the solutions to issues concerning the Salesand Distribution department.
  12. 12. HUL was formed in 1933 as Lever Brothers India Limited and cameinto being in 1956 as Hindustan Lever Limited through a merger ofLever Brothers, Hindustan Vanaspati Mfg. Co. Ltd. and UnitedTraders Ltd.It is headquartered in Mumbai, India and has employee strength ofover 15,000 employees and contributes to indirect employment ofover 52,000 people. The company was renamed in June 2007 as“Hindustan Unilever Limited”. The Anglo-Dutch company Unileverowns a 52% majority stake in Hindustan Unilever Limited.Hindustan Unilevers distribution covers over 1 million retail outletsacross India directly and its products are available in over 6.3million outlets in the country, nearly 80% of all retail outlets inIndia. It estimates that two out of three Indians use its many homeand personal care products, food and beverages.Hindustan Unilever was recently rated among the top fourcompanies globally in the list of “Global Top Companies for Leaders”by a study sponsored by Hewitt Associates, in partnership withFortune magazine and the RBL Group. The company was rankednumber one in the Asia-Pacific region and in India. ("Present stature", official website)The Brand Equity rankings in 2010 are ruled by FMCG products withHindustan Lever accounting for as many as 6 out of Top 10 mosttrusted Indian Brands. (Brand Equity Survey, 2010) HISTORY–CHRONOLOGY
  13. 13. In 1931, Unilever set up its first Indian subsidiary, HindustanVanaspati Manufacturing Company, followed by Lever BrothersIndia Limited (1933) and United Traders Limited (1935). Thesethree companies merged to form HUL in November 1956; HULoffered 10% of its equity to the Indian public, being the first amongthe foreign subsidiaries to do so. Unilever now holds 52.10% equityin the company. The rest of the shareholding is distributed amongabout 360,675 individual shareholders and financial institutions.The erstwhile Brooke Bonds 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 Bondjoined the Unilever fold in 1984 through an international acquisition.The erstwhile Liptons links with India were forged in 1898. Unileveracquired Lipton in 1972 and in 1977 Lipton Tea (India) Limited wasincorporated.Ponds (India) Limited had been present in India since 1947. Itjoined the Unilever fold through an international acquisition ofChesebrough Ponds USA in 1986.Since the very early years, HUL has vigorously responded to thestimulus of economic growth. The growth process has beenaccompanied by judicious diversification, always in line with Indianopinions and aspirations.The liberalization of the Indian economy, started in 1991, clearlymarked an inflexion in HULs and the Groups growth curve.Removal of the regulatory framework allowed the company toexplore every single product and opportunity segment, without anyconstraints on production capacity.Simultaneously, deregulation permitted alliances, acquisitions andmergers. In one of the most visible and talked about events ofIndias corporate history, the erstwhile Tata Oil Mills Company(TOMCO) merged with HUL, effective from April 1, 1993. In 1996,HUL and yet another Tata company, Lakme Limited, formed a 50:50joint venture, Lakme Unilever Limited, to market Lakmes market-leading cosmetics and other appropriate products of both thecompanies. Subsequently in 1998, Lakme Limited sold its brands toHUL and divested its 50% stake in the joint venture to thecompany.HUL formed a 50:50 joint venture with the US-based Kimberly ClarkCorporation in 1994, Kimberly-Clark Lever Ltd, which marketsHuggies Diapers and Kotex Sanitary Pads. HUL has also set up asubsidiary in Nepal, Unilever Nepal Limited (UNL), and its factory
  14. 14. represents the largest manufacturing investment in the Himalayankingdom. The UNL factory manufactures HULs products like Soaps,Detergents and Personal Products both for the domestic market andexports to India.The 1990s also witnessed a string of crucial mergers, acquisitionsand alliances on the Foods and Beverages front. In 1992, theerstwhile Brooke Bond acquired Kothari General Foods, withsignificant interests in Instant Coffee. In 1993, it acquired theKissan business from the UB Group and the Dollops Ice-creambusiness from Cadbury India.As a measure of backward integration, Tea Estates and DoomDooma, two plantation companies of Unilever, were merged withBrooke Bond. Then in 1994, Brooke Bond India and Lipton Indiamerged to form Brooke Bond Lipton India Limited (BBLIL), enablinggreater focus and ensuring synergy in the traditional Beveragesbusiness. 1994 witnessed BBLIL launching the Walls range ofFrozen Desserts. By the end of the year, the company entered intoa strategic alliance with the Kwality Ice-cream Group families and in1995 the Milk food 100% Ice-cream marketing and distributionrights too were acquired.Finally, BBLIL merged with HUL, 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 hadsignificant overlaps in Personal Products, Specialty Chemicals andExports businesses, besides a common distribution system since1993 for Personal Products. The two also had a commonmanagement pool and a technology base. The amalgamation wasdone to ensure for the Group, benefits from scale economies both indomestic and export markets and enable it to fund investmentsrequired for aggressively building new categories.In January 2000, in a historic step, the government decided toaward 74 per cent equity in Modern Foods to HUL, therebybeginning the divestment of government equity in public sectorundertakings (PSU) to private sector partners. HULs entry intoBread is a strategic extension of the companys wheat business. In2002, HUL acquired the governments remaining stake in ModernFoods.In 2003, HUL acquired the Cooked Shrimp and PasteurizedCrabmeat business of the Amalgam Group of Companies, a leader invalue added Marine Products exports.HUL launched a slew of new business initiatives in the early part of2000‟s. Project Shakti was started in 2001. It is a rural initiative
  15. 15. that targets small villages populated by less than 5000 individuals.It is a unique win-win initiative that catalyses rural affluence evenas it benefits business. Currently, there are over 45,000 Shaktientrepreneurs covering over 100,000 villages across 15 states andreaching to over 3 million homes.In 2002, HUL made its foray into Ayurvedic health & beauty centrecategory with the Ayush product range and Ayush Therapy Centers.Hindustan Unilever Network, Direct to home business was launchedin 2003 and this was followed by the launch of „Pureit‟ water purifierin 2004.In 2007, the Company name was formally changed to HindustanUnilever Limited after receiving the approval of share holders duringthe 74th AGM on 18 May 2007. Brooke Bond and Surf Excelbreached the Rs 1,000 crore sales mark the same year followed byWheel which crossed the Rs.2, 000 crores sales milestone in 2008.On 17th October 2008, HUL completed 75 years of corporateexistence in India. (Official website of Hindustan Unilever Limited) MISSION
  16. 16. 1. To add Vitality to life. We meet everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life. 2. To help people feel good, look good and get more out of life (Scribd 2010) VISIONUnilever products touch the lives of over 2 billion people every day– whether thats through feeling great because theyve got shinyhair and a brilliant smile, keeping their homes fresh and clean, or byenjoying a great cup of tea, satisfying meal or healthy snack.A clear directionThe four pillars of our vision set out the long term direction for thecompany–where we want to go and how we are going to get there: We work to create a better future every day We help people feel good, look good and get more out of life with brands and services that are good for them and good for others. We will inspire people to take small everyday actions that can add up to a big difference for the world. We will develop new ways of doing business with the aim of doubling the size of our company while reducing our environmental impact.The company has always believed in the power of their brands toimprove the quality of people‟s lives and in doing the right thing. Asthe business grows, so do companies responsibilities. HUL recognizethat global challenges such as climate change concern us all.Considering the wider impact of company‟s actions is embedded inits values and is a fundamental part of who they are. (Companies official website)Instilling valuesOur corporate purpose states that to succeed requires "the higheststandards of corporate behavior towards everyone we work with,the communities we touch, and the environment on which we havean impact." Standard of Conduct
  17. 17. We conduct our operations with honesty, integrity and openness,and with respect for the human rights and interests of ouremployees. We shall similarly respect the legitimate interests ofthose with whom we have relationships. Obeying the LawUnilever companies and our employees are required to comply withthe laws and regulations of the countries in which we operate. EmployeesUnilever is committed to diversity in a working environment wherethere is mutual trust and respect and where everyone feelsresponsible. We will recruit, employ and promote employees on thesole basis of the qualifications and abilities needed for the work tobe performed. We are committed to safe and healthy workingconditions for all employees. We will not use any form of forced,compulsory or child labor. ConsumersUnilever is committed to providing branded products and serviceswhich consistently offer value in terms of price and quality, andwhich are safe for their intended use. Products and services will beaccurately and properly labeled, advertised and communicated. ShareholdersUnilever will conduct its operations in accordance withinternationally accepted principles of good corporate governance.We will provide timely, regular and reliable information on ouractivities, structure, financial situation and performance to allshareholders. Business PartnersUnilever is committed to establishing mutually beneficial relationswith our suppliers, customers and business partners. In ourbusiness dealings we expect our business partners to adhere tobusiness principles consistent with our own. (Scribd 2010) PRODUCTS
  18. 18. FOOD BRANDS  Brooke Bond 3 Roses  Annpurna  Brooke Bond Red Lebel  Brooke Bond Taaza  Brooke Bond TajMahal  Bru  Kissan  Knorr  Kwality Wall‟s  Lipton  Modern  Brooke Bond SehatmandHOME CARE BRANDS  Active Wheel  Cif  Comfort  Domex  Rin  Sunlight  Surf Excel  VimPERSONAL CARE BRANDS  Aviance  Axe  LEVER Ayush Therapy  Breeze  Clear  Clinic Plus
  19. 19.  Closeup  Dove  Fair & Lovely  Hamam  Lakme  Lifebuoy  Liril 2000  Lux  Pond‟s  Rexona  Sunsilk  VaselineWATER  Hindustan Unilever-Pure it FINANCIAL HIGHLIGHTS
  21. 21. Hindustan Unilever Limited is Indias largest Fast Moving ConsumerGoods (FMCG) Company. It is present in Home & Personal Care andFoods & Beverages categories.The fundamental principle determining the organization structure isto infuse speed and flexibility in decision-making andimplementation, with empowered managers across the company‟snationwide operations. Board of Directors Management Committee The Board of Directors as The day-to-day management repositories of the corporate of affairs of the Company is powers act as a guardian to the vested with the Management Company as also the protectors Committee which is subjected of shareholder‟s interest to the overall superintendence and control of the Board. Mr. Harish Manwani - Mr. Nitin Paranjpe - Chairman CEO and Managing Director Mr. Nitin Paranjpe - CEO Mr. Sridhar and Managing Director Ramamuthy-Chief Mr. Sridhar Financial Officer Ramamuthy-Chief Mr. Shreejit Mishra - Financial Officer Executive Director, Mr. Gopal Vittal - Foods Executive Director, Mr. Gopal Vittal - Executive Director, Home & Personal Care Home & Personal Mr. Pradeep Banerjee - Care Executive Director, Mr. Hemant Bakshi - Supply Chain Executive Director Mr. D. S. Parekh - Mr. Pradeep Banerjee Independent Director - Executive Director, Supply Chain Mr. A. Narayan - Ms. Leena Nair - Independent Director Executive Director, Mr. S. Ramadorai - HR Independent Director Mr. Dev Bajpai – Dr. R. A. Mashelkar - Executive Director, Independent Director CS (Companies official website)
  22. 22. AWARDS & RECOGNISITIONS Year Achievement HUL won two prestigious awards at the World HRD2010 Congress 2010: The Most Admired & Best HR Team Award and our Executive Director-HR, Leena Nair was awarded the HR Super Achiever of the Year award HUL won Customer and Brand Loyalty Award in the consumer non durables sector. HUL ranked fourth in the „Top Companies for Leaders, 2009‟ for the Asia Pacific region and2009 bagged the 10th place in the global rankings. HUL was awarded the CNBC AWAAZ Consumer Awards 2009 in three categories: Most Preferred Personal Care Company, Most Preferred Home Care Company and Value for Money Brand of the Year. HUL‟s Project Shakti won the Silver Trophy of the EMPI-Indian Express Indian Innovation Awards. Ad club Emvies: Hindustan Unilever has bagged 7 Awards (2 Gold, 2 Silver and 3 Bronze) across categories, the only company with maximum wins.2008 HUL won the Bombay Chamber Civic Award 2007 in the category of Sustainable Environmental Initiatives, for its water conservation and harvesting project at Karchond village, Silvassa, Dadra and Nagar Haveli. HUL won the UK Trade & Investment India Business Award in the Innovation category for Pureit.2007 In 2007, Hindustan Unilever was rated as the most respected company in India for the past 25 years by Business world, one of India‟s leading business magazines.2006 Mr.D.S.Parekh –HUL in depend director received for services to financial services and banking industry in India and „Best Non-Executive Director 2006‟ by the Asian Centre for Corporate Governance. (Companies official website)
  23. 23. CORPORATE SOCIAL RESPONSIBILITYThe water usage per tonne has been reduced by more than32% in its own manufacturing operations against a baseline of2004.More than 50% of our own manufacturing units have a rainwater harvesting facility. As on date, five Company unitsreturn more water to ground than being consumed by them.The energy consumption and CO per unit of production since2004 has also come down by 38% and 28% respectively.Company has initiated works in the area of sustainableagriculture sourcing for Tea, Fruits & Vegetables and Palm oil.The Company has started developing Indian producers forTomato paste. We are working closely with key producers andthe initiatives include water conservation, use of authorizedpesticides, land conservation and improvement of farmerincome.The Brand partnered with the Government of Tamil Nadu andorganized a massive event on Global Hand Washing Day (15thOctober, 2009) wherein out of 47,000 children that washedtheir hands on that day, 15,000 washed their hands in perfectharmony to stake claim to the Guinness record for the mostpeople washing their hands simultaneously.In the area of Health and Hygiene, during the Swine Fluepidemic, Lifebuoy undertook rallies in key effected cities,where the message of the importance of hand washing wasemphasized, in preventing Swine Flu.The vast majority of HUL‟s products reach the consumerswithout being tested on animals.Your Company started the Sankalp initiative of employeevolunteering in the 75th year of its existence in India. In 2008our employees undertook volunteering and community servicetotaling more than 48,000 hours against a target of 27,375hours. In 2009 we have achieved more than 1, 15,000 hoursof volunteering.(Annual Report 2010, p.38 & Sustainability Report 2010, p.10)
  24. 24. SWOT ANALYSISStrengths Uniliver Group: Hul is a subsidiary of Unilever, which sells Foods, home and Personal Care brands in about 100 countries worldwide. Hul gain lots of advantages from the parent company in terms of knowledge sharing, fully leveraging benefits of scale and synergy through Unilevers global buying network. Largest market share: HUL is India‟s largest consumer products company by sales. Strong Product Portfolio : HUL, unlike international and local competitors such as Nestle India Ltd or Godrej Consumer Products Ltd that are focused on one or two categories, HUL straddles several sectors right from food to personal care products. Strong Distribution Network: Hindustan Unilevers distribution network is recognised as one of its key strengths. Its focus is not only to enable easy access to our brands, but also to touch consumers with a three-way convergence - of product availability, brand communication, and higher levels of brand experience. HULs products, manufactured across the country, are distributed through a network of about 7,000 redistribution stockiest covering about one million retail outlets HULs distribution network in rural India already directly covers about 50,000 villages, reaching about 250 million consumers, through about 6000 sub-stockists. Strong R&D: HUL has build on its R&D by further strengthening the R&D Units in Bangalore and Mumbai with stronger integration with Unilever Global. R&D technology centers in India have over 200 highly qualified scientists and technologists. With the strong support from Unilever R&D as well as the brand development capabilities, the company is well placed to meet the challenges arising from the increased competition intensity. Highly Skilled human resource: The ability to attract the best talent in the market & to retain it has become one of the key factors of HUL‟s success. Currently HUL have an efficient manpower of 15000 employees over 13000 mangers. (Scribd 2010) (Annual Report 2010, p.38)
  25. 25. Weakness High Competition: HUL is facing high competition from companies like ITC,P&G,Dabur etc. P&G and HUL have entered into a price-war, as P&G is giving tough competition to HUL soaps and detergents brands. The 2010 price war, though lower in quantum, has just started and is likely to significantly impact HULs Earnings Losing Market share: Hul is steady losing its market share in segments including soaps, hair, oral & skincare. (Economic times) High Advertising Costs: HUL is incurring high advertisement costs in current fiscal year. There is 66% increase in the advertising budget. Changing Consumption Patterns: Demand for high-end products is dropping. Indian consumers are still buying; its just that theyre avoiding the most expensive brands. Thats why HUL will need to become more sensitive to price by offering price reductions on some of the existing products and introducing more new innovative products at low price points. (Businessweek.com)Opportunities Large domestic market: There is huge market development opportunity in countries like India with population of over a billion, as consumption is still one-third that in Indonesia and one-seventh that in China. Changing Lifestyles: Per capita income of Indian customer is increasing and FMCG products are relatively elastic in nature hence the expected sale should increase. Diversification: HUL can enter into the new brand segments like confectionery, medicines etc. Opportunity in Food Sector: The advent of modern trade has opened up greater opportunities for HUL to diversify its brand and strength its food division. It could look at introducing products from its parents stable like margarines and could also look at expanding its Knorr range of products. Moreover consumer expenditure in food sector rose by 13%. Untapped rural Market: With the presence of 12.2% of the world population in the villages of India, the Indian rural FMCG market is something of high importance for HUL. (Authourstream.com)
  26. 26. Threats Increasing costs of raw material: input costs have been on a rise. Prices of palm oil and copra--key components in products like hair oils and toilet soaps--have surged. Copra prices have gone up 4% in the last month and in this financial; rates are expected to advance around 10% from a year ago. Palm oil prices have seen a sharper rise of around 14%. "Every 10% change in palm oil prices affects Hindustan Unilevers operating profit margin by 60 basis points.” (NDTV.com) ITC Entry: ITC has reduced its dependence on the cigarettes business. TC has extended its presence into areas like foods, retailing, hotels, greetings, agri, paper, etc. With ITC gaining momentum in each of these businesses, it is turning into a consumer monolith, and hence, the greatest threat to HULs Business. Segment threat: Laundry is important business for HUL and we have strong share position.HUL faces competition not only from rival multinational company, Procter & Gamble, but also from a slew of new price-warrior brands that have emerged in the mass segment. There is an extraordinary situation in the laundry market, over 500 new brands of laundry and over 200 washing powders are posing a new threat to Hul. (Times of India 2010) Tax & Regulatory Structure: Some FMCG products such as shampoos, processed food, soft drinks and toiletries containing alcohol attract high rates of excise duty and sales tax. Such high tax incidence hampers growth of these product categories. (www.slideshare.net)
  27. 27. DISTRIBUTION NETWORK OF HULEvolution over time:The HUL‟s distribution network has evolved with time. The firstphase of the HUL distribution network had wholesalers placing bulkorders directly with the company. Large retailers also placed directorders, which comprised almost 30 per cent of the total orderscollected. The company salesman grouped all these orders andplaced intent with the Head Office. Goods were sent to thesemarkets, with the company salesman as the consignee. Thesalesman then collected and distributed the products to therespective wholesalers, against cash payment, and the money wasremitted to the company.The focus of the second phase, which spanned the decades of the40s, was to provide desired products and quality service to thecompanys customers. In order to achieve this, one wholesaler ineach market was appointed as a "Registered Wholesaler," a stockpoint for the companys products in that market. The companysalesman still covered the market, canvassing for orders from therest of the trade. He then distributed stocks from the RegisteredWholesaler through distribution units maintained by the company.The Registered Wholesaler system, therefore, increased thedistribution reach of the company to a larger number of customers.The highlight of the third phase was the concept of "RedistributionStockist" (RS) who replaced the RWs. The RS was required toprovide the distribution units to the company salesman. The secondcharacteristic of this period was the establishment of the "CompanyDepots" system. This system helped in transshipment, bulkbreaking, and as a stock point to minimize stock‐outs at the RSlevel. In the recent past, a significant change has been thereplacement of the Company Depot by a system of third partyCarrying and Forwarding Agents (C&FAs). The C&FAs act as bufferstock‐points to ensure that stock‐outs did not take place. The C&FAsystem has also resulted in cost savings in terms of directtransportation and reduced time lag in delivery. The most importantbenefit has been improved customer service to the RS.The role performed by the Redistribution Stockists includes:Financing stocks, providing warehousing facilities, providingmanpower, providing service to retailers, implementing promotionalactivities, extending indirect coverage, reporting sales and stockdata, demand simulation and screening for transit damages.
  28. 28. Detail Overview:The distribution network of HUL is one of the key strengths thathelp it to supply most products to almost any place in the countryfrom Srinagar to Kanyakumari. This includes, maintaining favorabletrade relations, providing innovative incentives to retailers andorganizing demand generation activities among a host of otherthings. Each business of HUL portfolio has customized the networkto meet its objectives. The most obvious function of providing thelogistics support is to get the company‟s product to the endcustomer.Distribution System of HUL:HULs products are distributed through a network of 4,000redistribution stockists, covering 6.3 million retail outlets reachingthe entire urban population, and about 250 million rural consumers.There are 35 C&FAs in the country who feed these redistributionstockists regularly. The general trade comprises grocery stores,chemists, wholesale, kiosks and general stores. Hindustan Unileverprovides tailor made services to each of its channel partners. It hasdeveloped customer management and supply chain capabilities forpartnering emerging self‐service stores and supermarkets. Around2,000 suppliers and associates serve HUL‟s 40 manufacturing plantswhich are decentralized across 2 million square miles of territory. HUL C & F Agents Redistribution Stockists Wholesalers Rural Retailers Urban Retailers Consumers
  29. 29. Distribution at the villages:The company has brought all markets with populations of below50,000 under one rural sales organisation. The team comprises anexclusive sales force and exclusive redistribution stockists. Theteam focuses on building superior availability of products. In ruralIndia, the network directly covers about 50,000 villages, reaching250 million consumers, through 6000 sub‐stockists.HUL approached the rural market with two criteria‐ the accessibilityand viability. To service this segment, HUL appointed aRedistribution stockist who was responsible for all outlets and allbusiness within his particular town. In the 25% of the accessiblemarkets with low business potential, HUL assigned a substockist who was responsible to access all the villages at least oncein a fortnight and send stocks to those markets. This sub‐stockistdistributes the companys products to outlets in adjacent smallervillages using transportation suitable to interconnecting roads, likecycles, scooters or the age‐old bullock cart. Thus, HindustanUnilever is trying to circumvent the barrier of motor able roads. Thecompany simultaneously uses the wholesale channel, suitablyincentivising them to distribute company products. The mostcommon form of trading remains the grassroots buy‐and‐sell mode.This enables HUL to influence the retailers stocks and quantitiessold through credit extension and trade discounts. HUL launchedthis Indirect Coverage (IDC) in 1960s.Under the Indirect Coverage(IDC) method, company vans were replaced by vans belonging to
  30. 30. Redistribution Stockists, which serviced a select group ofneighboring markets.Distribution at the Urban Centres:Distribution of goods from the manufacturing site to C & F agentstake place through either the trucks or rail road‟s depending on thetime factor for delivery and cost of transportation. Generally themanufacturing site is located such that it covers a biggergeographical segment of India. From the C & F agents, the goodsare transported to RS‟s by means of trucks and the products finallymake the last mile‟ based on the local popular and cheap mode oftransport.NEW DISTRIBUTION CHANNELProject Shakti:This model creates a symbiotic partnership between HUL and itsconsumers. Started in the late 2000, Project Shakti had enabledHindustan Lever to access 80,000 of Indias 638,000 villages. HULspartnership with Self Help Groups (SHGs) of rural women isbecoming an extended arm of the companys operation in ruralhinterlands. Project Shakti has already been extended to about 12states‐ Andhra Pradesh, Karnataka, Gujarat, Madhya Pradesh, TamilNadu, Chhattisgarh, Uttar Pradesh, Orissa, Punjab, Rajasthan,Maharashtra and West Bengal. The respective state governmentsand several NGOs are actively involved in the initiative. The SHGshave chosen to partner with HUL as a business venture, armed withtraining from HUL and support from government agenciesconcerned and NGOs. Armed with micro‐credit, women from SHGsbecome direct‐to‐home distributors in rural markets.The model consists of groups of (15‐20) villagers below the povertyline (Rs.750 per month) taking micro‐credit from banks, and usingthat to buy our products, which they will then directly sell toconsumers. In general, a member from a SHG selected as a Shaktientrepreneur, commonly referred as Shakti Amma receives stocksfrom the HUL rural distributor. After being trained by the company,the Shakti entrepreneur then sells those goods directly toconsumers and retailers in the village. Each Shakti entrepreneurusually service 6‐10 villages in the population strata of 1,000‐2,000.The Shakti entrepreneurs are given HUL products on a `cash andcarry basis.
  31. 31. Channel DesignHindustan Lever Limited (HUL) has two types of channel selling i. Regular (traditional) retail channel, ii. Direct Selling Channel in the name of Hindustan Lever Network (HLN).HUL has a well entrenched high distribution model which comprisesof C&FAs, Redistribution Stockists, wholesalers and retailers (asshown earlier). Hindustan Unilevers distribution network isrecognized as one of its key strengths. Its focuses on Productavailability, Brand communication, and higher levels of brandexperience.Channel Structure (Special Focus is on Indore Rural Area)Typically, the goods produced in each of the HULs 40 factories aresent to a depot with the help of a carrying and forwarding agent(C&FA). The company has its depot in every state of the country.The C&FA is a third party and gets servicing fee for stock anddelivery of the products. In each town, there is at least aredistribution stockist (RS) who takes the goods from the C&FA andsells them to retail outlets. In Madhya Pradesh the C&FA is inIndore and Jabalpur. Indore C&F is serviced by 2 RedistributionStockists at M/s Riddhi-Siddhi Sales and M/s Agrawal Sales.Redistribution Stockists:Total number of RS in Indore=2  Sales Margin: 5.31% which includes cash discount, unloading expenses from depot, distribution expenses to retailers, incentive schemes & other incidental expenses.  Modes of transport used: Rickshaw, tempo.  Incentive schemes: Before 2000 holiday packages and tours but after 2000 no non‐ monetary incentive for RS.  Areas of Operations: Marked for each of the RS.  Selling Operations: RSs sells the goods to ‐ o Wholesaler (gets 1.5 % max. discount from RS) o Retailers (gets 1.0% max. discount from RS)
  32. 32. Wholesaler:Gets cash discounts and other schemes promoted by HUL (getspoints under Vijeta Scheme).Retailers:  Total retailer base in Indore: Approximately 1135.  Sales Margin: Depends on the product o Soap, detergents-8% on MRP o Cosmetics-10% on MRP o Food items-8% on MRPIncentive schemes:Company programs (Scheme Discounts + Cash Discounts)TPR schemes based on Sales (1 % to 4 %)Vijeta scheme is not for retailers.Field Sales Force:To meet the everchanging needs of the consumer, HUL has set up adistribution network that ensures availability of all their products, inall outlets, at all times. This includes, maintaining favourable traderelations, providing innovative incentives to retailers and organizingdemand generation activities among a host of other things.The important activities that HUL field sales force does are (i) targetchasing and (ii) reporting on a daily basis. Account information ismaintained on palmtops given by HUL.
  33. 33. Initiatives taken to improve the Distribution Channel:HUL has taken the following initiatives to improve its distributionnetwork: Setting up of a full‐scale sale organisation comprising key account management and activation to impact, fully engage and service modern retailers as they emerge. Servicing Channel partners and customers with continuous daily replenishment. Leveraging scale and building expertise to service Modern Trade and Rural Markets. Delay ring of sales force to improve response times and service levels. Revamping of its sales organisation in the rural markets to fully meet the emerging needs and increased purchasing power of the rural population. HUL‟s distribution network in rural India already directly covers about 50,000 villages, reaching about 250 million consumers through about 6,000 sub stockists. Implementation of supply chain system that connects stockists across the country, and also includes a back‐end system connecting suppliers, all company sites and stretching right up to stockists. IT tools have been deployed for connectivity across the extended supply chains. Backend processes have been combined into a common Shared Service infrastructure. Launching of Project Shakti through which the company is able to extend its operations in villages. HUL has also included several NGOs and state governments as the initiative helps rural women to improve their financial position. Launching of HUL Network to leverage the channel of direct selling by presenting customized offerings in 11 home and personal care and food categories. Started in 2003, it already has a base of 300,000 consultants across the country. Starting of franchised Lakme Beauty Salons and Ayush Therapy centres to offer standardized services, in line with the strategy to leverage the equity of its brands through relevant services. Finding out Innovative ways to reach out to its consumers, particularly in rural areas by leveraging non‐conventional media like wall paintings, cinema vans, weekly markets (haats), fairs and festivals. Launching the Unicare scheme with up market pharmacies and retailers to sale its premium brands.
  34. 34. Undertaking several initiatives for traditional channels in orderto improve its capabilities at the front‐end by developing skillsfor stockists sales force. Under Project Dronacharya, theFMCG major continuously imparted training to over 10,000stockist salesmen.Launching of several promotional schemes for existingwholesalers and distributors. For instance, it has started the„Vijeta‐ Rishta Jeet Ka‟ scheme to provide a platform for thewholesaler and HUL to grow the business by earning pointsand redeeming them.
  35. 35. Field Force ManagementThe working cycle of a typical HUL field force member is from 21stof every month to the 20th of the next month. During this period heis given various targets that helps to achieve company objectivesand gives him a chance to prove his performance relative to other.To start with the field force member is given a particular area andhis responsibility is to cater to all the retailers in that area. Whiledeciding the area for each member of the field force, the companymakes sure that the operating area of each field member doesntoverlap with his other colleagues. There are various methods usedby the company to incentivize the field force Monetary and NonMonetary.In HUL, the field force is evaluated using QOC (Quality ofContribution). It consists of 4 components:1. Secondary Sale (Max points = 2.5)2. Eco (Max points = 0.5)3. Focus (Max points = 0.5)4. FCS (Max Points = 0.5) SECONDARY ECO QOC FOCUS FCS
  36. 36. Secondary Sale-Based on the operating area, each member isgiven a specific target in terms of value (e.g., Rs. 15 lacs) for the st thoperating month (21 – 20 of next month). If he achieves 100% ofthe target he gets 2.5 points, if he achieves 95% target he gets 1.5points. These points are used to add to the total QOC score as wellas linked to monetary incentive.ECO/Width pack Target – This is used for the penetration/reachof certain products in the existing market. The following is a typicalECO target assigned to a field force agent:Lux International – 105 outlets x 1 SKUPears Soap-135 outlets x 1 SKURin-104 outlets x 1SKUBreeze Soap-100 outlets x 1 SKUThe outlets mentioned are within the operating area of the personand 1 SKU=Rs. 27/-. Based on this the Field person calculatesnumber of packs he should sell to the retailers. The concerned thagent receives this target around 25 of each month and has to thcomplete this target within the 5 day of next month. Uponcompletion he gets additional 0.5 points added to his QOC scorealong with monetary incentive associated with it. However if this is thnot met within 5 , he looses the opportunity.Focus / Depth Pack target – This is mainly used to increase thesales volume of certain products. A typical „Focus‟ target is givenbelow:Lux International-Rs 20,640/- @ Rs 6/- per unitLife Buoy-Rs 70,220/- @ Rs 10/- per unitWheel-Rs 99,000/- @ Rs 10/- per unitBreeze Soap-Rs 27,000/- @ Rs 10/- per unit thThis target needs to be achieved within 20 of next month. Uponachieving the target the field person is awarded 0.5 points which isthen added to his overall QOC score.Field Capability Score (FCS) In this component, the field forcepersons are required to ensure that the scheduled visit/outlet billingis such that at least 15 items are demanded per order. If this isachieved the retailer gets a discount of 1% on the billed amountand on the other hand the field person gets an additional score of0.5 which is added to his QOC score. Each scheduled visit per outletis one per week. For example if there are 100 outlets within the
  37. 37. operating area of a field person then the number of visit per week is100 and total number of visit per month = 100x4 = 400.The sales person is required to achieve 90% success rate to get 0.5points for his QOC score and at least 65% for a satisfactoryperformance.Non Monetary MethodsThe other purpose of the QOC scores is to highlight the performanceof the field person among his peers. Based on the QOC variousawards are distributed to the field persons at the end of everymonth. These awards are also known as „MOC Star‟ awards. MOCstands for Monthly operating Cycle.  If QOC score > 4.5 – The person is eligible for 7 star award  If QOC score > 4 – The person is eligible for 5 star award  If QOC score > 3.5 – The person is eligible for 3 star awardIn the event of exceptional performance, managementrepresentatives from the regional office come to the zonal office todistribute the awards. The photograph of the award winners isdisplayed in the office as a source of inspiration for other salesperson.Target Setting Mechanism and MonitoringThe regional office monitors the performance of various zones. Athorough analysis is done at the end of each month and based onthat the weak products are identified or those for which the demandhas weakened. This is the basis of setting ECO and FOCUS targetsfor the field persons. Each field person is given a palmtop whereinhe can feed the entries on the spot where the transaction is done.This solves basically the two purposes.a) The field person is freed from the tedious task of maintainingcumbersome records and can then concentrate on the job (thus ITis replacing some of the field force or other channel members)b) The sold item is immediately updated in the company informationsystem.
  38. 38. ANALYTICAL FRAMEWORKI tried to analyze HUL‟s distribution network in the light of somemost significant variables that affect the distribution part of channelmanagement for any organization in the business of marketing &selling of goods. The variables, their explanations and their impacton the HUL‟s distribution network are given below –1. Number of ConsumersIn retail business dominated by traditional stores like Kirana Storesetc (Indian retail business falls in this category), higher the no. ofconsumers, higher will be the no. of channel intermediaries. Theimplication of this is that there will be many layers in the channel insuch a situation and managing such a complex distribution networkby keeping tabs on every player will be a huge task. Moreover,Transport & Logistics (“T&L”) support provided by the organizationneeds to be well organized.Implication for HULHUL‟s key strength lies in managing its distribution network inIndia. HUL is India‟s largest FMCG Company with unmatcheddistribution network, which is built over a century focusing ontraditional retail. HULs distribution network comprises about 4,000redistribution stockists, covering about 6.3million retail outletsreaching the entire urban population, and about 250million ruralconsumers in India. It‟s said that HUL is able to touch the lives ofabout 2 out of every 3 Indian consumers. This achievement is dueto the sheer strength of its distribution network (products should begood as always, otherwise they will find no buyers in the longrun).For a comparison, P&G, world‟s largest FMCG major, does notfind its name in the list of top 5 FMCG majors in India as itsstrength lies in managing modern retail (biggest example,Wal‐Mart), but not traditional retail.2. Geographic Dispersion of ConsumersAgain, this is closely related with the previous variable, more so in alarge, geographically diverse country like in India. With the increasein this dispersion level, more intermediaries and more layers arerequired in the distribution network so as to effectively reach thelength & breadth of the country. Obviously the T&L management forsuch an organization would be critical to accomplish this.
  39. 39. Implication for HULFor a country as geographically diverse as India, pan‐Indianpresence & market leadership can only be possible when productsreach even the remotest parts of the country. HUL is verysuccessful in achieving and maintaining this reach due to itsdistribution network.3. Frequency of PurchaseIf the frequency of purchase is high, then transport intensity in “thelast mile” (i.e., from distributor to retailers) increases manifold. ForFMCG products, as a thumb rule we can take that the mean timebetween two purchases is ~ 90 days. With the introduction ofsmaller form factor packaging for FMCG goods (Re.1 /‐ shampoosachets being a very good example), the transport intensityincreased further.Implication for HULHUL has about 4000 redistribution stockists, who supply to approx.6.3 million outlets across India. Since manufacturing is done at 40plants around the country, rationalizing the logistics and planning isa huge task. An innovative step in that regard has been theformation of the Mother Depot and Just in Time System (MD‐JIT).Certain C&FAs were selected across the country to act as motherdepots. Each of them has a minimum number of JIT depotsattached for stock requirements. All brands and packs required forthe set of markets which the MD and JITs service in a given areaare sent to the mother depot by all manufacturing units. The JITsdraw their requirements from the MD on a weekly or bi‐weekly basisand supply to stockists in that area, who, in turn, supply toretailers.4. Tendency to Postpone PurchaseIf the tendency to postpone purchase is lesser, then the product willbe easier to distribute. For example, products/services like FireExtinguishers, Life Insurance etc. are such that though these areneeded, the overall tendency for the consumers is to postpone thepurchases – these products/services can be termed as “necessaryevil”. For this kind of products, regular reinforcement in the mindsof consumers becomes necessary, sales field force becomes criticaland use of “expert” field force is commonplace.
  40. 40. Implication for HULSince FMCG products are used regularly and these products are not“necessary evils”, distribution network of HUL does not require anyexpert field force to sell its products. Only the recent diversificationof HUL into Home Water Purification business (“Pure It” brand)needs dedicated field sales force.5. Level of Familiarity/Knowledge (of consumer) about theProductIf the level of familiarity of consumer with the product is higher,lower will be the importance of field sales force and higher will bethe importance of channel.Implication for HULSince FMCG goods are very much familiar to consumers, channeland its different members are very much important to HUL and fieldsales force‟s function is mostly limited to channel management andensuring availability of products.6. Degree of Brand LoyaltyIf the consumers are more brand loyal, then less “push” will berequired from the channel members to sell the products as therewill be sufficient “pull” or demand from the consumers. This impliesthat for products with loyal customer base, efforts from the channelmembers can be much lesser for final off‐take to happen which inturn leads to lesser margins to the channel members for thoseproducts. For faster moving products (mostly due to brand pull),retailers may not be averse to slightly lesser margins as rotation ofthe products is high and thus his/her ROI is protected. Retailer‟s ROI = Margins x Rotation InvestmentFor a FMCG player with a non‐established brand, margins to channelmembers and point of sale (POS) advertising are both important.Implication for HULAs HUL enjoys leadership position in many FMCG segments likeSoaps, Detergents, Personal Care products etc. with strong brandswith continuous “pull”, HUL has less to worry about margins tochannel members or POS advertising. But this situation can changeconsiderably in the face of rise of a significant competitor having
  41. 41. almost the same reach as HUL has (e.g., ITC as it‟s eating intoHUL‟s market share continuously since it entered FMCG segment).7. Purchased on ImpulseThe impulse purchase products like chocolates, toffees, colas, icecreams etc. follow Say‟s Law which states that “Supply CreatesDemand”, implying availability of these products are the mostcritical aspect for these to be sold and consumed. This stresses onthe fact that T&L for these products becomes very important.Implication for HULHUL has only one product in this impulse purchase category‐ KwalityWalls (ice cream). HUL is#2 after Amul in this FMCG segment. Toincrease this brand‟s sale & market share, availability, visibility andconsumer mind share has to be increased and improved as well.8. Level of Involvement (LOI)Level of involvement (i.e., time & effort spent by the consumer)generally depends on the product cost. If LOI is higher, lower is theimportance of availability and more critical is the supply ofinformation as consumer decision process depends more onelaborate information search.Implication for HULAs FMCG products are generally Low Involvement Products, HULhas to bother more on ensuring availability of the products, ratherthan supply of information.9. Purchased as a Basket of GoodsThe products which are generally bought together by consumers asa basket of goods (e.g., Rice, Flour powder, Cooking oil etc at thebeginning of the month) are to be made available together for finaloff‐take.Implication for HULThis aspect partly applies to HUL‟s products as some products likeshampoos, soaps; detergents may fall in a basket. Efficientdistribution network of HUL ensures availability of all such productsat each selling point (individual retailer).
  42. 42. 10. Speed & Complexity of Decision Making ProcessIf the speed is low, then the complexity of the decision makingprocess is higher and greater is the importance of field sales forceand the salespersons‟ skill, knowledge and quality.Implication for HULFor FMCG products, complexity of decision making process is notthere and so, speed of decision making is high. This means that forHUL, field sales force is of limited functional usage.11. Present of Expert Influencer in the Decision MakingProcessRoles of sales field force vary depending upon whether expertinfluencer (e.g., doctors) is present in the process or not. If present,then consumer buying behavior may become subcontracted and theexpert influencer becomes another customer of the network, apartfrom the end‐user. In that situation two groups of sales force areneeded to cater to both the segments.Implication for HULFor FMCG goods, role of expert influencer is limited. But companiestry to associate brands with regulatory bodies/authorities and showadvertising with experts commenting upon superior virtues of aproduct in an attempt to make the buying behaviour shift frompicking/variety‐seeking to subcontracted and make consumers moreloyal to the brand. These are true for HUL also (e.g., Pond‟sInstitute).12. Element of Crisis Purchase ExistsIf element of crisis purchase exists in the buying decision of aproduct (for example, bulbs & tubes), then its availability becomescritical.Implication for HULNone of the products of HUL fall under this category. Nevertheless,availability of products of HUL is necessary for other reasons.13. Element of Risk Aversion ExistsIf the level of involvement of the consumer in buying decisionprocess is higher, risk taking tendency of the consumer will be
  43. 43. lower or consumer will be more risk averse. In such a situation,channel members can “unsell” a brand by giving explicit or implicitsuggestions. This implies that in such a case, selling depends onmany cases how the company is taking care of channel members(“keeping them happy”) such that they are not lured by othercompetitors or directed by grievances so as to unsell the brand. Thissituation is prevalent mostly in Consumer Durables (like TV,Refrigerators etc.). In FMCG goods, the situation does not exist perse.Implication for HULHUL is not affected for its FMCG products by this variable. For waterpurifier “Pure It”, this can have considerable impact if its sale startsto happen through channel members rather than by field sales forceas is happening now.14. Perishability of the ProductIf the product is perishable (having small shelf life; examples–newspaper, milk, fruits etc), then the dimension of “speed” inreaching the end consumers becomes critical & T&L assumes greatsignificance for the company.Implication for HULThe FMCG products that HUL sells are not perishable by nature, buthave limited life. So this aspect is not critical for HUL.15. Time Band Associated with the Purchase of the ProductIf there is seasonality/cyclicity for the demand or purchase of theproduct (examples–newspaper, milk are most on demand in the1st three hours of the day; cooking oil, rice etc grocery items aremost on demand in the 1st week of the month), then high T&L andinfrastructural requirements are needed for the “last mile” for thetime band when demand is maximum. It is possible to have idlecapacity in the areas mentioned above outside the peak requiredtime band.Implication for HULFor some of the products of HUL, the above stated variable issignificant. For example, in Food Segment, Branded Atta–„Annapurna‟; in segments like Laundry Detergents, Shampoo & HairOil etc. This element of demand time band exists to a certainextent. This underscores the importance of T&L for HUL as the
  44. 44. transport intensity between distributors and retailers increases inthe 1st & 4 th week of a month for the products mentioned above.This is over and above the regular replenishment of stocks atretailers done by distributors. Festivals like Holi etc. may alsoincrease the demand for personal care items like soaps, shampoosetc for a short period and distribution network should be geared upnot to miss any such opportunity.16. Degree of Customization PossibleDegree of customization directly affects economies of scale; higherthe customization, lesser the economies of scale. Also, criticality ofsales field force increases with customization levels of the offering.Implication for HULFor FMCG products of HUL, which are mass produced, suchcustomizations are not possible and thus with higher economies ofscale, lower criticality of field forces from the standpoint ofcustomization of product offerings, costs are lower in these respectswith HUL.17. Negative or Positive Reinforcing ProductNegative reinforcing products are those which are bought toavoid/reduce the problem (ex. –insurance, washing machine, carbattery etc). Positive reinforcing products are those which gratifythe senses (ex. – Perfumes, Chocolates, and Vacation etc).Shopping experience becomes a critical aspect for positivereinforcing products to reaffirm the positive feelings.Implication for HUL“Axe” & “Rexona” deodorants are distinctly positive reinforcingproducts from HUL, including others like Lux, Lakme etc. So theseare seen in most shopping malls etc. with high visibility displays toreaffirm the feelings. Consumers are willing to pay higher for thesebrands.18. Value/Volume Ratio (Value Density) of the ProductThis ratio is very important for both the company and the retailerfor its two critical aspects –T&L cost and retailer ROI/sq. cm(retailers are actually in real estate business in true sense). Higherthe ratio, better it is for both company and the retailer as higherratio signifies lesser T&L cost per unit volume transported for thecompany and greater ROI per unit of shelf space for the retailer.
  45. 45. Implication for HULIn general for FMCG goods and for HUL as well, value density isrelatively lower. In addition to this fact, increasing trend towardsusing smaller pack sizes increases the packaging density (increasedpackaging density increase cost to some extent, but favoursmechanized handling greatly, reducing handling costs). Since valuedensity is less, transportation costs will be higher and thus it is ofeconomic sense to have manufacturing plants located closure tomajor markets. This is the reason HUL has various manufacturingplants (40 plants) located across India. This is a pointer to the factmost of the major FMCG players (including HUL) use contractedmanufacturing dispersed across the geographic spread so as tolower transportation cost component.
  46. 46. ORGANIZATIONAL STRUCTURE (Rural) General Manager Regional Sales and Customer Manager Area Sales and Customer Manager Field Sales and Customer Executive Territory Sales Manager
  48. 48. “Marketing Research is the systematic designing, collection, analysis, andreporting of data and finding relevant to a specific marketing situationfacing the company. ”T h e p r e s e n t s t u d y o f d i s t r i b u t i o n c h a n n e lb a s e d o n s u r v e y methods. In this sample survey methods Ihave taken only a small part of the whole and data collected from thesmall part are made applicable to the whole. Within the time limit, Itried my best to select the sample representative of the wholegroup. RESEARCH DESIGN
  49. 49. Our research is based on the Exploratory Study.Research is exploratory when you use no earlier model as a basis ofyour study. The most usual reason for using this approach is thatyou have no other choice. Normally you would like to take an earliertheory as a support, but there perhaps is none, or all availablemodels come from wrong contexts.Exploratory research means that hardly anything is known aboutthe matter at the outset of the project. You then have to begin witha rather vague impression of what you should study, and it is alsoimpossible to make a detailed work plan in advance.The gradual process of accumulating intelligence about the object ofstudy means also that it will be impossible to start by defining theconcepts of study. You have to start with a preliminary notion ofyour object of study, and of its context. During the exploratoryresearch project, these provisional concepts then gradually gainprecision.We have collected our data by drafting a questionnaire and therebyinterpreted or analyzed or result by using the Microsoft excel. DATA COLLECTION
  50. 50. After understanding the aforesaid mentioned distribution networkand, I decided to visit six markets and collect a sample data of 60.Data (both qualitative as well as quantitative) was collected with thehelp of questionnaire and observations in the market. Some of thequantitative data have been collected with the help of questionnaire/interview with the retailers.I spoke to the retailers and wholesalers to know their viewsregarding HUL‟s supply chain.In each of the visits, I have collected information related to: 1. Order Delivery Time 2. Order fulfilling 3. Sales Promotion Schemes, Discounts, Account Settlement and product variety. 4. Behavior, knowledge, etiquettes of Salesman. 5. Company Officers Visits
  51. 51. CHAPTER-4Q.1- Are the orders delivered to you on time:
  52. 52. 0% 29% Strongly Agree 45% Agree Disagree Strongly Disagree Cant Say 15% 11%45% retailers are Strongly Agree that there orders are delivered tothem on time.11% retailers are Agree that there orders are delivered to them ontime.15% retailers are Disagree that there orders are delivered to themon time.29% retailers are Strongly Disagree that there orders are deliveredto them on time.Q.2- Are your orders fulfilled properly:
  53. 53. 0% 22% Strongly Agree Agree 50% Disagree 15% Strongly Disagree Cant Say 13%22% retailers are Strongly Agree that there orders are fulfilledproperly.15% retailers are Agree that there orders are fulfilled properly.13% retailers are Disagree that there orders are fulfilled properly.50% retailers are Strongly Disagree that there orders are fulfilledproperly.Q.3- Do you get all the sales promotion schemes:
  54. 54. 0% 13% Strongly Agree 9% Agree Disagree 10% Strongly Disagree 68% Cant Say68% retailers are Strongly Agree that they get all the salespromotion schemes.10% retailers are Agree that they get all the sales promotionschemes.9% retailers are Disagree that they get all the sales promotionschemes.13% retailers are Strongly Disagree that they get all the salespromotion schemes.Q.4- Are discounts properly passed on to you:
  55. 55. 0% 3% 8% Strongly Agree 17% Agree Disagree Strongly Disagree Cant Say 72%72% retailers are Strongly Agree that discounts are properly passedon to them.17% retailers are Agree that discounts are properly passed on tothem.8% retailers are Disagree that discounts are properly passed on tothem.3% retailers are Strongly Disagree that discounts are properlypassed on to them.Q.5- Are accounts settled timely:
  56. 56. 7% 10% Strongly Agree 5% Agree Disagree 10% Strongly Disagree 68% Cant Say68% retailers are Strongly Agree that there accounts are settledtimely.10% retailers are Agree that there accounts are settled timely.5% retailers are Disagree that there accounts are settled timely.10% retailers are Strongly Disagree that there accounts are settledtimely.7% retailers are not is the position to say that there accounts aresettled timely.Q.6- Do you get the product variety:
  57. 57. 0% 3% 15% Strongly Agree 5% Agree Disagree Strongly Disagree Cant Say 77%77% retailers are Strongly Agree that they get the product variety.5% retailers are Agree that they get the product variety.15% retailers are Disagree that they get the product variety.3% retailers are Strongly Disagree that they get the productvariety.Q.7-Ever missed your order. If yes then what may be the reason:
  58. 58. 2% 0% 3% Wrong Order Sudden change in whether Change in schemes Less availability of stocks 95%2% retailers say that their orders are missed due to wrong ordergiven by them3% retailers say that their orders are missed due to sudden changein whether.95% retailers say that their orders are missed due to lessavailability of stock.Q.8- How frequently executives come to take orders:
  59. 59. 0% Daily After 1-2 days Once in a week 100%100% retailers are agree that executives visit them weekly.Q.9- Do the quality complaints solved properly:
  60. 60. 12% Strongly Agree 40% Agree 20% Disagree Strongly Disagree Cant Say 10% 18%40% retailers are Strongly Agree that there complaints are solvedproperly.18% retailers are Agree that there complaints are solved properly.10% retailers are Disagree that there complaints are solvedproperly.20% retailers are Strongly Disagree there complaints are solvedproperly.12% retailers are not in the position to say that their complaints aresolved properly or not.Q.10-Do the salesman have empathetic attitude towards yourproblems:
  61. 61. 0% 5% 5% 10% Strongly Agree Agree Disagree Strongly Disagree Cant Say 80%80% retailers are Strongly Agree that salesman have empatheticattitude towards their problems.10% retailers are Agree that salesman have empathetic attitudetowards their problems.5% retailers are Disagree that salesman have empathetic attitudetowards their problems.5% retailers are Strongly Disagree that salesman have empatheticattitude towards their problems.Q.11-Do the salesman try to solve your problems:
  62. 62. 2% 8% 7% 3% Strongly Agree Agree Disagree Strongly Disagree Cant Say 80%80% retailers are Strongly Agree that salesman try to solve theirproblems.3% retailers are Agree that salesman try to solve their problems.7% retailers are Disagree that salesman try to solve their problems.8% retailers are Strongly Disagree that salesman try to solve theirproblems.2% retailers are not in the position to say that salesman try to solvetheir problems or not.Q.12-Do the salesman have courtesy and etiquette in theirbehaviour:
  63. 63. 4% 0% 0% 3% Strongly Agree Agree Disagree Strongly Disagree Cant Say 93%93% retailers are Strongly Agree that salesman have courtesy andetiquette in their behavior.4% retailers are Agree that salesman have courtesy and etiquette intheir behavior.3% retailers are Strongly Disagree that salesman have courtesy andetiquette in their behavior.Q.13-Do the salesman have proper knowledge regarding products:
  64. 64. 0% %% 2 0%0 Strongly Agree Agree Disagree Strongly Disagree Cant Say 98%98% retailers are Strongly Agree that salesman have properknowledge regarding products.2% retailers are Strongly Disagree that salesman have properknowledge regarding products.
  65. 65. Q.14-Do the salesman have proper knowledge regarding salespromotional schemes: 0% 3% 2% 5% Strongly Agree Agree Disagree Strongly Disagree Cant Say 90%90% retailers are Strongly Agree that salesman have properknowledge regarding sales promotional schemes.2% retailers are Agree that salesman have proper knowledgeregarding sales promotional schemes.3% retailers are Disagree that salesman have proper knowledgeregarding sales promotional schemes.5% retailers are Strongly Disagree that salesman have properknowledge regarding sales promotional schemes
  66. 66. Q.15-Do the company officers regularly visit you: 0% 3% 17% Strongly Agree Agree 7% Disagree Strongly Disagree Cant Say 73%3% retailers are Strongly Agree that company officers regularly visitthem.17% retailers are Agree that company officers regularly visit them.7% retailers are Disagree that company officers regularly visitthem.73% retailers are Strongly Disagree that s company officersregularly visit them.
  67. 67. Q.16-What is your perception towards HUL‟s distribution channel: 5% 5% 13% Excellent Good Bad Worse 77%5% retailers say that HUL‟s distribution channel is Excellent.77% retailers say that HUL‟s distribution channel is Good.13% retailers say that HUL‟s distribution channel is Bad.5% retailers say that HUL‟s distribution channel is Worse.
  68. 68. Q.17 Are you happy with the services provided by distributor/HUL: 21% Yes No 79%79% retailers say that they are happy with the services.21% retailers say that they are not happy with the services.
  69. 69. CHAPTER-5 INTERPRETATIONS AND FINDINGS Orders which are given by retailers are almost delivered to them on time. Orders are not fulfilled properly; means retailers always find something missing in their orders, they never get the full order on.
  70. 70.  Stock is not available in the depot to serve the retailers. It is found that the problem for shortage of order delivery is less availability of stocks. Seasonal products are also not available at outlets; i.e. winter season has started and the winter products are still out of shelf. New products are also unavailable at outlets, the products for that the T.V. ads are running regularly are also found out of stock. Company officials are also not visiting the outlets regularly. It is found that if the Company officers are visiting any area then they are only visiting the main and big outlets and avoid visiting small outlets. Company is also not conducting retailers and wholesalers meet. Banners, posters, boards etc. materials are also not delivered to outlets. Product display windows are also not created at retail stores. Necessary and high sale volume products are also not available at outlets. Distributor is also not visiting the market. Only salesman visit the markets collect the bills and take orders. Variety of products is not available in rural areas. Sometime it happen that salesman say that these products are not for rural area. It is found that retailers gets the products at cheaper rates from market compare to offer by the distributor.
  71. 71. CHAPTER-6 RECOMMENDATIONS AND SUGGESTIONThe following suggestions are given for improvement in the salesand distribution channel of Hindustan Unilever Ltd.:1. Frequent visit of company staff should be ensured so asencourage the retailers in their marketing activity.
  72. 72. 2. Every retailer must be aware of the schemes which areintroduced by the HUL from time to time.3. Prices of costly product should be reviewed in comparison toother company products and reduced the price if found necessary.4. Company should ensure timely delivery of consumer goods todifferent rural areas by its own arrangement and see that all thegoods are available with the retailers.5. The commitments of the company to be honest with customersabout problems and shortcomings.6. Clear, prompt and courteous communication that conveyconsistent details.7. Good behavior and dealings by the company staff with theWholesalers and Retailers so as to encourage them in the marketingactivity.8. Company should ensure timely delivery of products to reducereplacement of HUL products by products of other companies. Forexample unavailability of Wheel creates market for Ghari Detergent;Unavailability of LUX creates market for Vivel etc.9. Company should ensure proper production to satisfy marketneeds. It is found that there is a huge problem of product shortagein the market.Name : ………………………………………..Address: : ………………………………………..Contact No. : ………………………………………..1. : Are the orders delivered to you on time: (a) Strongly Agree (b) Agree (c) Disagree (d) Strongly Disagree
  73. 73. (e) Can’t Say2. : Are your orders fulfilled properly: (a) Strongly Agree (b) Agree (c) Disagree (d) Strongly Disagree (e) Can’t Say3. : Do you get all the sales promotion schemes: (a) Strongly Agree (b) Agree (c) Disagree (d) Strongly Disagree (e) Can’t Say4. : Are discounts properly passed on to you: (a) Strongly Agree (b) Agree (c) Disagree (d) Strongly Disagree (e) Can’t Say5. : Are accounts settled timely: (a) Strongly Agree (b) Agree (c) Disagree (d) Strongly Disagree (e) Can’t Say6. : Do you get the product variety: (a) Strongly Agree (b) Agree (c) Disagree (d) Strongly Disagree (e) Can’t Say7. : Ever missed your order. If yes then what may be the reason: (a) Wrong Order (b) Sudden change on whether (c) Change in Schemes (d) Less availability of stocks8. : How frequently executives come to take order (a) Daily (b) After 1-2 days (c) Once in a week9. : Do the quality complaints solved properly: (a) Strongly Agree (b) Agree (c) Disagree
  74. 74. (d) Strongly Disagree (e) Can’t Say10. : Do the salesman have empathetic attitude towards your problems: (a) Strongly Agree (b) Agree (c) Disagree (d) Strongly Disagree (e) Can’t Say11. : Do the salesman try to solve your problems: (a) Strongly Agree (b) Agree (c) Disagree (d) Strongly Disagree (e) Can’t Say12. : Do the salesman have courtesy and etiquette in their behavior: (a) Strongly Agree (b) Agree (c) Disagree (d) Strongly Disagree (e) Can’t Say13. : Do the salesman have proper knowledge regarding products: (a) Strongly Agree (b) Agree (c) Disagree (d) Strongly Disagree (e) Can’t Say14. : Do the salesman have proper knowledge regarding promotional schemes: (a) Strongly Agree (b) Agree (c) Disagree (d) Strongly Disagree (e) Can’t Say15. : Do the company officers regularly visit you: (a) Strongly Agree (b) Agree (c) Disagree (d) Strongly Disagree (e) Can’t Say16. : What is your perception towards HUL’s distribution channel: (a) Excellent (b) Good (c) Bad (d) Worse17. : Are you happy with the services provided by distributor/HUL: (a) Yes
  75. 75. (b) No REFERENCES Content Reference List Hindustan Unilever Limited. Archived from the original on 2008-08-Company Profile 02, Retrieved on 08-15-2010 from http://web.archive.org/web/20080802090951/http://hul.co.in/knowu s/present_stature.asp Retrieved on 26 September from
  76. 76. http://trak.in/tags/business/2010/09/01/top-50-most-trusted- brands-india/ History Retrieved on 26 September 2010 from http://www.hul.co.in/aboutus/ourhistory/ Archived on Scribd 2010. Retrieved on 12 September 2010 from Mission http://www.scribd.com/doc/37102748/hul (Companies official website) Vision Retrieved on 24-sep-2010 from http://www.hul.co.in/aboutus/ourvision/ Archived on Scribd.com n.d, Retrieved on Aug 31, 2010 from - Values http://www.scribd.com/doc36686641//hul Organizational Structure : Retrieved on 26-sep-2010 from http://www.hul.co.in/aboutus/companystructure/Management Awards & Recognitions : Retrieved on 27-Sep-2010 from http://www.hul.co.in/aboutus/sustanbilityreports/awards Corporate Social Responsibility : Retrieved on 27-sep-2010 from Annual Report 2010, „CSR‟ p.38 & Sustainability Report 2010, p.10 Strengths : Archived on scribd.com. Retreived on 27-sep-2010 fromhttp://www.hul.co.in/Images/AnnualReport0910_tcm114- 225889.pdf Weakness: Archived on Businessweek.com. Retrieved on 27-sep-SWOT Analysis 2010 from http://www.businessweek.com/globalbiz/content/jun2009/gb200906 12_706157.htmmainstream consumers Opportunities: Archived on authorstream.com. Retrieved on 27-sep- 2010 from http://www.authorstream.com/Presentation/vickyvishalshah-486442- hul/ Threats : i. http://profit.ndtv.com/news/show/hindustan-unilever-hikes-price- of-lifebuoy-soap-cuts-lux-pack-size-91476?cp ii. http://timesofindia.indiatimes.com/business/india-business/Price- war-HUL-reduces-tags-of-select-laundry- packs/articleshow/5529324.cms#ixzz10k2r6Mie iii. http://www.slideshare.net/hardikldrp/swot-analysis-of-fmcg- industry Google.com Slideshare.com Scribd.com HUL.com