summary of CEO factory

1. Author:- Sudhir Sitapati
[A CEO of Hindustan Unilever (HUL)]
Summary by :- Madhav yadav
1.

2. CONTENT
2.
From where it all began Why HUL is unique? Marketing lessons
3 P’s of marketing
Sales don’t determine revenue
Respect for money
HUL regime of recruitment
3-4 5-6 7
8-13
14-15
16-17
18

3. From where it began
3.
• In 1958, HUL freshly got listed, and with a PAT of 1crore rupees and was already one of the largest companies in country.
• Since than Indian economy grew 1400x and HULs profits grew 6000x.
HUL products
Personal care
Other
Food and
refreshment
Home care
British
lever
brothers
Dutch
margarine
union
Hindustan
unilever
Founders of
Sunlight soap
and transformers
of advertising.
Developers of
vegetable oil
based soaps
and innovators
An organization
with
characteristics
of both the
origins

4. Surviving in a highly
regulated
environment 1960-
1980
Competing in a
open economy
From 1990 onwards
Market development
phase till-1960’s
4.
1.
2.
3.
• William lever of lever brother transformed advertisement from brand
recognition to message conveying activity.
• HUL uses ‘ization’ policy for delegating power to the ends of the company.
• T.Thomas in 2nd phase said “It is better to bat through difficult overs than
to give in” when they compelled to dilute majority stake of HUL by the
government.
From where it began

5. What makes HUL unique ?
5.
A middle class
soul
A meritocratic
culture
Adaptable
managers
Unchanging
value system
Ability to
transform
employees
into
entrepreneurs
• Idiosyncrasies is
promoted via
room division
through carpet
and a tea bearer
who serves only
2C managers
and ignores rest
in the room.
• Promotion based
on previous years
performance
record.
• Till Level 3
promotion batch
and above then
on your merit.
• All entry level
employees are
sent to villages
for training.
• Also same
employees when
become
managers are
sent to attend
meetings
abroad.
• Looking out for
their own at all
times.
• Donations.
• Taking on
inconvenience
for others.
• Closing rather
than
compromising on
values.
• Considering
employee
initiatives.
• Survival of BRU
coffee due to
creation of
production
technique by
BRU team, which
at low capex has
high
productivity.

6. Case study
6.
In 1979, when HUL faced issue due to poor milk yields in its factory Etha, Uttar Pradesh(UP) , they sent all their newly recruited
MBA graduates of IIM’s, on a 8 week campaign to do artificial insemination of Cow’s with high yielding varieties and among them
were the author and his friend who were IIM-A graduates. There appointed host was a poor farmers family in Bakrai village close
to their HQ. There they had to stay in a mud house perform all their chores just like other villagers and eat quick meal of potato
and roti. After becoming brand manager for HUL in few years, he was given the task to accompany Aart Weijburg their director,
for hi annual presentation in Singapore, there he experienced the “High Life” of HUL, when he stayed at a hotel costing $ a night,
travelled in business class and ate expensive cuisine.
This incident in authors life shows how and why HUL managers are adaptable in all situations whether its “Lakhimpur” or
“London”
Adaptable
managers

7. Marketing lessons
7.
What works and what doesn’t
Problem statement
Jobs-to-be-done
Research
Understanding customer
wants, developing a cool
product and letting
people know Is essence
of marketing
• Segmenting
• Targeting
• Positioning
• Product segmentation
• Quantitative research
• Syndicated research
• Using insights
• Get who to do what
• Make target based
on difficulties and
size of prize.
• Its easy to grow a
category than to
grow a brand
• Problem structuring
• Framing it into a crisp
sentence
• Finding a suitable
solution.
• Changing POV to look
at problem

8. 8. 3 P’s of marketing
Product
Price
Promotion

9. Promotion
2.
Knowing your
brand
Measure
“SPONT”
Building Salient
advertisement
Goosebumps
Test
Media Planning
Case Study
Lets take and example of tea brand “Taj” so here knowing
your brand accounts for knowing what is its purpose it
serves in users life. SPONT can be measured by conducting
among 100 people and see which brand they think when
they think of tea if say 50 say Taj then your baseline is 50
and with additional advertisement this should increase.
Salient advertisement consist of 2 features enjoyment and
branding, creating an Advertisement which Is enjoyable and
which includes branding example Taj when made and add
with Zakir husssain playing table and singing and after
tasting tea saying “Waah Taj Waah” and if this
advertisement while in production gives you Goosebumps
or a sensation making you feel that it is scenic and pleasant
to the eye it’s a go for the advertisement in production.
Also customer has place in his mind for a single association
with the product and once that product has built and
association it cannot be changed.
9.

10. Product
10.
Components
Understanding consumer
needs
Inhabiting innovation
culture
Testing phase
Persist patiently
Obsess over quality
delivered
Using consumer insight
Analyzing same data in various ways to generate product
idea
Except R&D get your whole organization to obsess over
the product
Conducting a blind test with your and competitors
product and than there should be a difference of at least
2 points on a scale of 10.
Ground breaking product innovation happen slower
than it is perceived.
Quality of a product in factory and lab is different from
what is delivered.

11. Case study
11.
Blockbuster Invention of Fair&lovely the most sold and famous product of
HUL was an invention which was intended to happen. Dr. Vibhav sanzgiri then
R&D director of HUL, the team was actually working on a solution to cure
vitamin B3 deficiency among children. The absence if niacinamide, a form of
vitamin B3, lack of it can cause dark patches on the skin. While looking for
solution in the foods, one of the scientists, asked if the dark patches could be
treated by topically applying niacinamide on the skin and hence they
experimented it on tadpoles and it was success the tail color of tadpoles tail
returned back to their birth color temporarily until they were returned to
water.
And hence the discovery of fair&lovely was done, by mixing niacinamide with
simple vanishing cream.

12. Pricing
12.
Why discounting fails in recruiting new
customers?
Price precisely.
Focus on accessibility .
Differential pricing.
Pricing in volatile market.
• A brand dies with a GPM with which its is born with.
• New users adopt a brand for 3 reasons :- access, awareness, availability.
• Users entering at lower price exit as the price rise.
• Pricing is a tool to maximize
shareholders wealth.
• Price like similar product
available.
• Don’t launch access to early.
• Distribution to rural areas
where daily wage is common
• Price per kg of smaller pack
should be more than the same
of larger pack
• If cost go spike up rapidly, do not pass on directly to customers.
• Absorb loss by cutting non essential cost’s.
• Don’t over stock a commodity.

13. Pricing strategy Case study
13.
2 Tools for competitive pricing:-
• SPI(strategic price index)
• RPI(relative Price index)
The next tool is RPI, where ‘weighted average
price’ of a entire category is taken and is assumed
to be the RPI at 100 and then RPI od each product
in that category is calculated based on weighted
average price (RPI). RPI is more fundamental than
SPI so HUL uses both for their products.
HUL’s sales team use 2 indicator for competitive
pricing. The SPI is an index for the key product/pack
combinations compared to a key competitor. E.g. If
brook bond 100 grams pack SPI is set at 100 and if
the competitor moves its price from say 58 to 60 so
the SPI would move accordingly indicating to hike
the price. Drawback it accounts for single
competitor.
SPI RPI

14. Sales doesn’t determine revenue
14.
Be available
but never in
too much
quantity
Focus on
the volume
not the
margin.
Monitor
input not
the output
of sales
system.
Code of
conduct.
Sales benefit by
increasing product
availability and
visibility.
Salesperson should
sell what is just
adequate till his next
visit.
Focus on reducing
working capital.
Invest in
infrastructure that
drives more
coverage and
volume
Reward sales team
for creating source
of revenue not for
bringing revenue.
Output of sales can
be manipulated. Like
no. of stores visited,
etc.
Salesperson should
two wallet rule
Use non-sales
metrics like number
of bills cut, to
increase your sales.

15. 2 wallet rule
15.
The two wallet rule simply states that anything spent
for the purpose of company has to be done through a
separate wallet and money for personal spending should
be kept separately . In those days employees used to
received cash advances, which would then settle with
the company by submitting an expense statement. The
second wallet at all times should contain the exact
amount of the advance less the amount submitted un
the expense statement. The company wallet would be
randomly checked and if the amount was less than what
it should be the person would be summarily dismissed.

16. Respect for money
16.
As long as cost exist,
savings are possible
Materials: design for
output and not input
A lean supply chain
Pay for media reach and
cut every other cost
Pay more = Save more
• Costs exist so margins can improve.
• Fix the profits and price and then determine cost .
• Use price to achieve economies of scale.
• Product formulation should be output focused.
• What customer wants is the best quality at cheapest
cost.
• It extracts more from fixed capital.
• Creatively reduces operating costs.
• Produce close to market.
• Produce one ad with lots of diligence.
• Run ads until the customers remember it and get
bored.
• Pay higher to get more work done.
• Stick to basics to cut employee cost.

17. Case study- Output centric production
17.
HUL in production of Soaps is not input centric but its output centric Soap uses oil as a
primary product, and with the variety of oil the texture and lather produced varies with
changing composition of oil. E.g. Coconut oil gives great lather but its soft, PFAD, a
fractionate of palm oil, is hard but doesn’t lather well. Palm kernel oil (PKO) does both
moderately. So HUL being output focused they formulate a soap made up of 30% pal
kernel and 50% PFDA.
If in any case coconut prices hike through the roof, the you can replace it with PKO and
reduce PFDA to compensate the reduced softness and lather, by constantly
experimenting with formulation you find best quality at cheapest possible cost.

18. HUL regime of recruitment
18.
Get them
early
Train them
well
Build careers
Encourage
diversity
Reward
performance
Instil values
Judgment, drive
& influence
Done through
test and
interviews.
Develop training
stint, which is
inclusive of all
skill.
Teach them to
numbers first and
then interrogate
reality.
Start on field
training, let them
spend right time on
positions.
Leaders build
leaders through
controlled
interaction.
Gender balance.
And equality in
opportunity.
Encourage
creators and
company men to
the top.
promote
competitive
culture and set
objective goals
Discourage
collaboration
and promote
based on ratings
Inculcate values
of honesty,
charity,
determination.
Value your
employees till
they are your
employees

19. Thank you!
Creating brands, businesses and people with purpose remains at the very
heart of Unilever.
20.