HUL is one of the oldest and most prominent companies in India in the FMCG sector. HUL has always taken the people of India and the Indian economy into consideration before planning its business activities. HUL has a broad range of operations, and it has secured a major share of the FMCG sector in India. There are multiple reasons behind HUL’s top position in the market, but its governance policies are the primary reason behind its success.

1. Fundamental of Marketing Project report & Economics
Assignment
on
HUL - Marketing Environment Analysis
Submitted by
Ruhila Noor Sayyed
First-year PGDM student
Section - B
Under the guidance of
Prof. Sahil Jasrotia
&
Prof. Megha Jain
Jaipuria Institute of Management, Indore

2. Table of Contents
A.1 Introduction 3
A.2 Porter Five Forces Analysis: Micro Analysis 6
A.2.1 Threat of New Entrant 6
A.2.2 Threat of Substitution 7
A.2.3 Bargaining Power of Suppliers 7
A.2.4 Bargaining Power of Buyers 7
A.2.5 Competitive rivalry 7
A.3 PESTLE Analysis: Macro Analysis 8
A.3.1 Political factors 8
A.3.2 Economic factors 9
A.3.3 Social factors 9
A.3.4 Technological factors 9
A.3.5 Legal factors 10
A.3.6 Environmental factors 10
B.1 Market Analysis 11
B.1.1 Herfindahl Index 11
B.1.2 Pricing Strategy 13
B.1.2.1 Low-cost pricing 13
B.1.2.2 Price segmentation 14
B.1.2.3 Discount pricing 14
B.1.2.4 Competitive pricing 14
B.1.2.5 Premium pricing 14
B.2 News Analysis 15
C.1 Conclusion 17
References 18

3. Section A
A.1 Introduction
Hindustan Unilever Limited (HUL) is Indian subsidiary of Unilever. It was established in
1931 and named as Hindustan Vanaspati Manufacturing Corporation followed by Lever Brothers
(1933) and United Trader Limited (1935) later on these all three merged and became Hindustan
Unilever Limited in November 1956. HUL has served India from the pre Independence era and
has been supportive in post-Independence India. The parent organisation Unilever is
British-dutch MNC. HUL deals in fast-moving consumer goods (FMCG). The equity
shareholding of Indians in HUL is approx 32.75% and rest shareholding is by the parent
organisation. HUL is the first MNC to make its shares public in India.
HUL’s vision is to grow their business while reducing the environmental impact from the
growth and create pragmatic social implications. The motivation for founding this company is
solving the social issues and challenges the world is facing like poor hygiene, impoverished
health, and necessitous livelihood. HUL always targets the social evils with commercial
advertisements and makes society aware of it. The product line of HUL includes various
categories in Beauty & personal care, Foods & refreshment, Homecare and water purifier. It is
the market leader in consumer products in India.
Figure 1: HUL product-line

4. Figure 2: HUL product-line (Personal & beauty care)
Figure 3: HUL product-line (Foods & refreshment)

5. Figure 4: HUL product-line (Homecare)
HUL’s market capitalization as of 16th October 2020 at 2:35 pm is 505,389.55 crores, and the
price to earnings ratio is 73.68.
Figure 5: Revenue share of HUL

6. A.2 Porter Five Forces Analysis: Micro Analysis
Porter’s five forces analysis gives an idea of the market competition and is a tool for
analyzing micro-environmental factors affecting an organization’s business. The five forces
involved in determining the competitive environment are (1) threat from new entrants, (2) threat
of substitution, (3) bargaining power of suppliers, (4) bargaining power of buyers, and (5)
competitor organizations. Porter’s five forces model analysis has been done for Hindustan
Unilever Ltd. (HUL) in the current work. The competition level of HUL in the FMCG sector in
India has been analyzed and is presented.
Figure 6: Porter’s five forces analysis of HUL
A.2.1 Threat of New Entrant
The threat to the business of HUL from a new entrant is low as it is easy for a company to
manufacture and venture into consumer goods, but it is very tough for the new entrant to
compete with HUL. The brand value of HUL is comparatively high as customers rely on it and
brand development is very difficult for new entrants. HUL business policies are designed to
either engulf or merge with smaller, newer brands-that may pose a competitive threat. HUL
keeps evolving and developing their business, which acts as a barrier for new entrants to race
against HUL. One of the examples is Patanjali, as it is widely known newer company in the
FMCG sector in India (since 2006); it has been 15 years yet Patanjali still has to go a long way to
beat the FMCG giant HUL which continues to grow and adapt changes through challenges.

7. A.2.2 Threat of Substitution
With close competitors like ITC, Procter and Gamble, Nestle, Emami, etc., the threat of
substitution for HUL is median. For consumers to switch the brand of any consumer goods
depends on either quality, affordability, or availability of the product. HUL continuously works
on the quality through their innovation research labs, and provides affordable quality products in
both urban and rural locations by focussing on operational efficiencies. HUL believes in
investing in both brand and people which reduces the threat of substitution to a large extent.
A.2.3 Bargaining Power of Suppliers
HUL works with more than 10,000 suppliers and has a close relationship based on their
Business Partner code. The size of a supplier lies between moderate to large, hence finding an
alternative in case of any supplier switch is not so easy. However, the occurrence of supplier
switch or price rise by suppliers is rare because of the healthy corporate relationship maintained
by HUL. Considering all the aforementioned parameters the supplier power of HUL is median.
A.2.4 Bargaining Power of Buyers
The business of an FMCG company entirely depends on how consumers respond to the
products. HUL spent 12% of its net sales in the financial year 2019 on brands and people.
However, it is very easy for a consumer to switch to another brand based on their personal
perception of quality and affordability. Despite having high brand equity with more than 35
products in different segments, HUL faces low consumer switching cost (to close-competitors
and sometimes to new entrants). HUL has employed digital marketing and has reached a wider
population, but the competitors are also following similar approaches and the competition is
tougher when it comes to consumer reach. HUL has been on top and is the leading FMCG
company in India, still considering all the factors the bargaining power of buyers is high.
A.2.5 Competitive rivalry
The FMCG market in India has a lot of players both local and MNCs, new and old, big
and small. Although HUL faces high competitive rivalry from all these market players, its
effective marketing strategies and healthy business relations have made it easier for the company
to stay on top. As mentioned in previous subsections the (1) the threat of new entrants for HUL
is low, (2) threat of substitution for HUL is median, (3) supplier power is median, and (4) buyer
power is high. Hence, the competitive rivalry for HUL according to Porter’s five forces analysis
is median.

8. A.3 PESTLE Analysis: Macro Analysis
PESTLE or PESTEL (formerly PEST) analysis is a tool for analyzing the
macro-environmental factors that may affect an organization’s performance. PESTLE is an
acronym for Political, Economic, Social, Technological, Legal, and Environmental factors.
PESTLE analysis was introduced by Francis Aguilar in 1967 and has evolved engulfing several
factors since then. A lot of variants of PESTLE analysis are available such as STEEPLED,
DESTEP, and PESTLIED. However, in the current work, the fundamental PESTLE analysis has
been presented for Hindustan Unilever Ltd. (HUL).
Figure 7: Overview of PESTLE Analysis
A.3.1 Political factors
HUL has always paid keen attention to the political state in India and has helped the
politics to maintain economic stability. During the global recession after 1929 and India’s fight
for independence, HUL decided to open manufacturing units in India (1931) to support the
Swadeshi movement by Mahatma Gandhi. In the post-independence era, HUL remained
supportive of the Indian government and has applauded every government’s decision by
providing positive critical comments to improve the policies. HUL benefitted from the Green and
White revolutions in the 1960s and 1970s and the liberalization in 1994. HUL actively supported
demonetization and GST and has been providing suggestions for better implementation
strategies. HUL supports the governance, welcomes policies of the government, and does not
favor any particular political group.

9. A.3.2 Economic factors
HUL is one of the largest FMCG companies in India and has been delivering goods since
1888. HUL has witnessed a lot of economic changes in both pre and post-independent India.
Since HUL deals in FMCG products, which are daily use products, and the market is a
never-dying market, it is resilient to the economic recession. However, in a recent media post,
HUL has stated that FMCG is recession resilient but not recession-proof. HUL has bravely dealt
with the repercussions of several economic upheavals in the past, including the 2007-09
recession and demonetization in 2016. HUL is all prepared for the COVID-19 crisis and is
dealing with the same in the current times. HUL has managed to hold its market position by
providing affordable quality products in comparison to its competitors. Also, HUL has either
acquired or merged several brands under its umbrella in order to maintain a stable economic
stand in the market. One of the recent major acquisitions is GlaxoSmithKline (Horlicks, Crocin,
Eno, etc.) in April 2020.
A.3.3 Social factors
HUL has planned the Unilever Sustainable Living Plan (USLP), which is in accordance
with activities in Schedule VII of Section 135 of the Companies Act, 2013. Three main goals
under USLP are (1) help more than a billion people take action to improve their health and
well-being, (2) reduce the environmental footprints of their products, and (3) enhance livelihoods
of people with business growth. With long-lasting brands like Lifebuoy (Hygiene), Vaseline
(Skincare), and Pure-it (Health), HUL continues to fulfill the first goal of USLP, maintaining its
strong reputation. Also, with products ranging from Huggies (Childcare) to Dove (Skincare),
HUL touches multiple dimensions of personal well-being. Fulfilling the third goal of USLP with
the recent acquisition of Vwash (Women Intimate care), HUL emphasizes targeting social
factors.
A.3.4 Technological factors
In recent years with everything going online, HUL has adopted the state of the art digital
marketing technologies. Also, HUL has started partnering with tech startups to remain relevant
in the fast-growing technological age. Along with this, HUL has been consistent in product
innovation by researching and applying newer, finer, better technologies to their products. Some
examples of product innovation are (1) Knorr healthier natural readymade food, (2) Rexona body
responsive micro-capsule deodorant, and (3) Surf Excel quick wash for least water consumption.
On the other hand, HUL has employed a higher level of automation to quickly deliver the
products, keeping up-to-the-name fast-moving consumer goods.

10. A.3.5 Legal factors
HUL has designed its corporate governance structure in compliance with all laws under
the Companies Act, 2013. HUL also abides by the laws of the state it is operating in along with
the national laws for sales, taxation, labor laws, etc. On the other hand, HUL has been marked as
the pure-play FMCG firm for its fair conduct in legal aspects. There have been many legal
battles related to intellectual property rights (IPR) and trademarks between HUL and other
competitors (Emami, Amul, etc.). In the financial year 2019, HUL filed an average of two cases
weekly related to IPR and trademarks.
A.3.6 Environmental factors
HUL has been a promoter of sustainable and non-renewable resources fulfilling the
second goal of USLP. HUL has deployed USLP across all its offices, business practices, and
partners. HUL has also employed the green supply chain and sustainable operations management
strategies. On the other hand, HUL has identified water scarcity as a key area to intervene in its
corporate social responsibilities (CSR) activities. HUL has launched Urban Hygiene and
Sanitation centers and has worked on rural water problems through the ‘Water for Public Good’
program. HUL has also developed the least water-consuming detergent and has a product in
water purifiers.

11. Section B
B.1 Market Analysis
FMCG is the fourth largest sector in the Indian economy. The FMCG sector’s market
size in India in FY 2020 was around 100 billion USD and is expected to grow by 8-10% in the
fiscal year 2021, with a CAGR (forecasted) of 14% till 2025 (IBEF, August 2020). The urban
FMCG sector shares 55% of the total FMCG revenue, with eight per cent growth in the quarter
ending September 2019, whereas the rural FMCG sector shares 45% with a growth rate of five
per cent. According to marketing analysts, the rural FMCG sector is expected to grow better in
FY 2021. The FMCG sector’s major sub-segment in India is the beauty and personal care
segment accounting for almost 50% of the total revenue. With an increase in online users, the
online FMCG market is expected to grow to 45 billion USD in FY 2021. HUL is one of the
major shareholders in the FMCG market in India. It offers multiple brands in the same segment
to reach a wider consumer group. It offers 63 products in the FMCG sector and has different
marketing strategies for different products. HUL follows B2B business model and has not
ventured into B2C.
B.1.1 Herfindahl Index
Herfindahl-Hirschman Index (HHI) or Herfindahl index is a measure to compute the
market concentration; it gives an idea about the firm sizes in the related industry and is an
accepted measure of market competition among the firms in the sector. With around 993
registered companies in India’s FMCG sector (Fundoodata.com), the market proportion is
diluted. In the current study, only the top ten market performers in India’s FMCG sector by
revenue have been studied in detail (Table 1).
The top three firms’ market share is around 5-6% in India’s FMCG sector (Table 1),
predicting a high competitive market. The least value in the top ten FMCG firms’ market share is
0.7%, lower than even one percent. Hence, for the sake of calculation linearity and looking at the
most and the least values in the top ten firms’ market share, it has been assumed that the rest 983
companies have equal market shares of around 0.07% each. In the current work, it also has been
assumed that there might be numerous local unregistered or unaccounted FMCG firms, but due
to the unavailability of data, only 993 firms have been taken for market analysis.
HI
H = ∑
n
i=1
(Market share of the firm )
( i
2
)

12. Table 1: Market share of top ten Consumer goods firms in India
Firm Mar’20 Revenue (in crores
INR)
Market share
ITC 48633.36 0.066316
HUL 39518 0.053887
AMUL by GCMMF 38550 0.052567
Adani Wilmar Ltd. 36000 0.049089
Nestle India Ltd. 12615.78 0.017203
Britannia Industries Ltd. 11322.11 0.015439
Dabur India Ltd. 6586.7 0.008982
Marico Ltd. 6161 0.008401
Varun Beverages Ltd. 5713.67 0.007791
Godrej consumer products
Ltd.
5565.71 0.007589
Others (983 companies) 522688.67 0.000732452*983
India’s FMCG Market size 733355 1.0
The Herfindahl index of India’s FMCG sector is 0.013806, which is very low and
suggests high market competition and low market power for the individual firms. However, HUL
occupies a fair portion of India’s FMCG sector, which comes under monopolistic market
competition. Since 993 firms in the market have several products in different segments, HUL
competes with different firms in different product segments and subsegments. The products are
mostly similar with variations justifying the IPRs; even HUL offers similar products in different
price segments. There are several examples of similar products from HUL and competitor brands
in India, some of which are listed in Table 2. From the list given in Table 2, it is clear that HUL
belongs to a monopolistic market.

13. Table 2: List of competitive brands of HUL
HUL Product Top Similar product in the market
(Competitor)
Annapurna Atta Ashirwad Atta (ITC)
Annapurna Salt Tata Salt (TCL)
Bru Coffee Nescafe (Nestle)
Brooke Bond (3 Roses, Taj Mahal, Taaza,
Red Label) tea
Tata tea (TCL)
Kissan ketchup Heinz
Horlicks Bournvita (Mondelez)
Surf excel/Wheel/Rin Ariel (P&G)
Kwality Wall's/Magnum/Cornetto AMUL
Lever Ayush Patanjali
Axe McNroe
B.1.2 Pricing Strategy
The pricing strategies followed by a company has a significant impact on the marketing
strategy. Pricing strategies are adopted for medium to long terms in order to achieve marketing
objectives of the company. HUL being the top FMCG firm in India has deployed different
pricing strategies to cater different consumer segments in the market. It offers a variety of
products with a variety of pricing strategies. Some of the pricing strategies followed by HUL are
as follows
B.1.2.1 Low cost pricing
HUL is a consumer friendly firm and offers its products at the lowest prices possible
without compromising with the quality. Low cost pricing helps the company to reach a wider

14. population and increases the net sales. One such example of a low cost pricing product by HUL
is Rs. 1 Sunsilk sachet (Shampoo).
B.1.2.2 Price segmentation
HUL offers similar products in different price segments with slight variations, so that
consumers can opt for any one according to their financial capabilities. Price segmentation helps
in catering the needs of different consumer segments and maximizing the profit. One such
example of price segmentation by HUL is Sunsilk shampoo (₹ 34.77/100 ml) and Tresemme
shampoo (₹ 60.17/100 ml).
B.1.2.3 Discount pricing
From time to time HUL offers several discount schemes on its products to attract
consumers. Discount pricing helps in increasing consumer traffic, clearing old inventory, and
thereby increases sales. One such example of discount pricing by HUL is offering 200gm Surf
excel detergent free on purchase of 1kg Surf excel.
B.1.2.4 Competitive pricing
The objective behind selecting pricing models for their products at HUL is to not create
price wars, yet it has kept some products in the market with a competitive pricing strategy.
Competitive pricing helps when the company offers a variant of a product that is already
available in the market by another competitive firm. This strategy helps in maintaining a position
in the market and keeping the consumers from switching. One such example of competitive
pricing by HUL is Bru coffee competing with Nescafe and vice versa.
B.1.2.5 Premium pricing
HUL offers several products in the premium price ranges in urban areas and offers
smaller packages of the same in rural areas. Premium pricing of products helps in maximizing
profit by offering high priced products in the market. One such example of a premium product
by HUL is Dove soap.
Through its pricing strategies HUL targets consumers from all aspects of life, children to
adults, rural to urban, and from all income segment groups. It also offers its premium products at
lower cost small packages to penetrate the premium category into lower income segment
consumer groups. HUL keeps changing its pricing strategies of different products and leads the
market in the FMCG sector.

15. B.2 News Analysis
“HUL soap, detergent, tea sales go up; firm expects rural to recover after a year of
FMCG slowdown” - Financial Express, September 17, 2020
The company reported that 80% of its portfolio comprising essential commodities such as
soaps, detergent, tea etc. has shown a growth of 6% in the first quarter of FY 2021. And the
skincare segment which contributes majorly to the remaining 20% portfolio of HUL has reported
poor performance in the market. However, with the recent merger of GSK healthcare HUL
expects to improve in the next quarter. Also, the company reports that the rural sector is
recovering and has shown growth in the first quarter of FY 2021.
This particular piece of news shows that having a large portfolio allows HUL to deal with
losses in one segment for a considerable period. Also, the merger shows that HUL continuously
targets to overcome its shortcomings by evolving its marketing and business strategies. And the
rural segment growth shows the deep penetration of HUL in the rural FMCG market.
“Hindustan Unilever hits over 3-month low; stock falls 12% in 2 months” - Business
Standard, September 21, 2020
The stock value of the company has fallen by 12% since July due to poor performance of
the company in the market. Despite increase in the revenue by 4.4% the net profit of the
company has fallen by 0.1% in the first quarter of FY 2021. The major reason behind such
numbers as suggested by market experts is the lockdown and several restrictions due to
coronavirus pandemic, but they expect the numbers to bounce back once the situation
normalizes.
This piece of news shows that the company is growing however it has increased its
expenditure to profit ratio. As suggested by the experts since lockdown has affected productions
but the company has not cut-down its expenses on a large scale. However, HUL has focussed
into keeping up with the situation and meeting customer requirements.
“SBI signs MoU with HUL for an end to end digital solutions for ecosystems” -
CNBC TV 18, October 01, 2020
“Consumer demand and liquidity gradually improving, says SBI and HUL” -
Economic Times, October 02, 2020
“SBI partners HUL for supply chain financing” - Times of India, October 02, 2020
This MoU marked the partnership of India’s largest money lender SBI with India's largest
FMCG company HUL. According to the MoU SBI will provide corporate solutions to the trade

16. partners (suppliers and distributors) of HUL. The solutions include UPI (Unified Payment
Interface) gateways and PoS (Point of Scale) terminals. The digital solutions are a way to work
through coronavirus pandemic following safety measures. Also, this partnership is beneficial to
SBI as its consumer base will also increase along with a potential increase in credit banks credit
base.
This piece of news shows the strong market and partner relations of HUL, and its
dedication towards increasing and maintaining the business of its partners even in the tough
times of pandemic. It also shows that HUL is open to accept the technological advancements in
all forms to grow its business.
“How HUL is dealing with sexual harassment and ensuring women are safe at the
workplace and beyond” - Money Control, October 09, 2020
HUL has always kept its HR policies favoring its employees, and in recent wake of
crimes against women in the country has updated their HR policies. However, some of the
policies are criticized but the employees rectified the misconceptions and the criticism. Some of
the policies are that female employees are suggested to avoid overtime, and if necessary a
message is directly sent to the manager in line about the employee working overtime. Also, the
female employees are given a choice to have a male colleague accompanying them to home after
8:30 pm. The company has also assured that the employees travel to commute provided by the
company and not public transport. Along with this the HR policies encourage employees to
report in any case of harassment.
This piece of news suggests the employee friendly environment in HUL. It also suggests
that HUL responds to the current affairs immediately and acts upon them to set examples.
All the news articles studied and presented in this analysis point towards the reasons why
HUL is market leader in its sector. HUL not only works toward benefitting its own business, but
also works to make lives easier for its consumers, partners, and employees.

17. Section C
C.1 Conclusion
The FMCG industry is one of the biggest contributors to the Indian Economy. HUL being
the most trusted brand in India the demand for HUL products is growing high. As India is a
developing country the largest share of the population consists of the working-age group (15-65
years). This group is becoming brand conscious and aids the growing demand for branded
products such as HUL. The urban FMCG sector shares 55% of the total FMCG revenue, whereas
the rural FMCG sector shares 45%. The market share for HUL is also similar and HUL is
continuously investing in the growth of the rural sector. The Government policies for rural areas
like MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act, 2005), Food
Security Bill ,etc. for FMCG products and the rural sector is expected to grow 5% in FY 2021.
In urban areas, the working population is more prevalent and in the fast-paced world,
they barely get time to cook food. The handy option for them is ready to eat products which also
increases the demand. In the current covid-19 scenario people are preferring more online
purchase and e-commerce sites for home delivery. Approx 40% of all FMCG product
consumption in India is by online portals.
The revenue of ITC is double than the revenue of HUL but, the sales of HUL products is
double than the sales of ITC products. Both companies are competitive rivals for each other.
Despite all the fact HUL is one of the major shareholders in the FMCG industry and offers
multiple brands in the same product. HUL has covered a wider range in the territory including
rural and urban areas. The corporate governance structure, policies, and pricing strategies of
HUL contribute to its top position in the industry. Despite having a very high competitive market
and several competitive products in the market, HUL strives to remain on top by having a variety
of strategies in marketing, branding, and corporate relations.
HUL not only works toward benefitting its own business, but also works to make lives
easier for its consumers, partners, and employees. Along with this, HUL contributes to society
through its CSR activities. The social sector chosen by HUL is water scarcity, and it
continuously works in rural and urban areas for water conservation.
In conclusion, HUL is one of the oldest and largest companies in India in the FMCG
sector. HUL has always taken the people of India and the Indian economy into consideration
before planning its business activities. HUL has a broad range of operations and it has secured a
major share of the FMCG sector in India. There are multiple reasons behind HUL’s top position
in the market, but its governance policies is the major reason behind its success.

18. References
1. HUL official website, ​https://www.hul.co.in/
2. M. E. Porter, "How Competitive Forces Shape Strategy", Harvard Business Review, May 1979
(Vol. 57, No. 2), pp. 137–145
3. J. Richardson, “A Brief Intellectual History of the STEPE Model or Framework (i.e., the Social,
Technical, Economic, Political, and Ecological)”
4. “Companies Act”, 2013
5. India Brand Equity Foundation, ​https://www.ibef.org/industry/Fmcg-presentation
6. Fundoodata.com,
https://www.fundoodata.com/companies-in/food-fmcg-agriculture/list-of-fmcg-companies-in-indi
a-i98?
7. “Herfindahl–Hirschman Index-Merger Guidelines”, 2010
8. “HUL market and pricing”, ​https://economictimes.indiatimes.com/markets/
9. FE Online, “HUL soap, detergent, tea sales go up; firm expects rural to recover after a year of
FMCG slowdown” - Financial Express, September 17, 2020
10. SI Reporter, “Hindustan Unilever hits over 3-month low; stock falls 12% in 2 months” - Business
Standard, September 21, 2020
11. P. Seth, “SBI signs MoU with HUL for an end to end digital solutions for ecosystems” - CNBC
TV 18, October 01, 2020
12. S. Malviya and S. Shukla, “Consumer demand and liquidity gradually improving, says SBI and
HUL” - Economic Times, October 02, 2020
13. M. Shetty, “SBI partners HUL for supply chain financing” - Times of India, October 02, 2020
14. M Saraswathy, “How HUL is dealing with sexual harassment and ensuring women are safe at the
workplace and beyond” - Money Control, October 09, 2020
15. “Mahatma Gandhi National Rural Employment Guarantee Act”, 2005