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502 project (1)

  1. 1. 1 A PROJECT REPORT ON “BLUE OCEAN STRATEGY FOR RURAL MARKETING PROFESSIONALS FOR HUL PRODUCTS”Submitted in Partial Fulfillment for the Award of the Diploma of Post Graduate Diploma in Management (2011-2013)SUBMITTED TO SUBMITTED BY-MS. PARUL PURI MANISH KUMAR JHA PGDM-PGD11049
  2. 2. 2 DEPARTMENT OF MANAGEMENT INSTITUTE OF MANAGEMENT STUDIES, NOIDA A UGC Recognized Institute A-8B, Plot –C, Sector-62, Noida DECLARATION I, MANISH KUMAR JHA, bearing Roll No PGD11049 Class PGDM 2nd year of the Institute of Management Studies, Noida hereby declare that the Project Report-PG407 entitled “BLUE OCEAN STRATEGY FOR RURAL MARKETING PROFESSIONALS FOR HUL PRODUCTS” is an original work and the same has not been submitted to any other Institute for the award of any other diploma. The suggestions as approved by the faculty were duly incorporated.SIGNATURE OF FACULTY GUIDE- SIGNATURE OF STUDENT-MS. PARUL PURI MANISH KUMAR JHA
  3. 3. 3 DEPARTMENT OF MANAGEMENT INSTITUTE OF MANAGEMENT STUDIES, NOIDA A UGC Recognized Institute ACKNOWLEDGEMENTThis study of “BLUE OCEAN STRATEGY FOR RURAL MARKETINGPROFESSIONALS FOR HUL PRODUCTS” could not have been possible with myefforts only. I would like to express my deep gratitude to my faculty guide MS.PARUL PURI and DR. VANDANA MATHUR who gave me the guidance invarious ways to make the project a reality.Above all, I would like to express my deep gratitude to my family for providing memoral support and help. MANISH KUMAR JHA ROLL NO- PGD11049
  5. 5. 5 EXECUTIVE SUMMARYMy project title was “BLUE OCEAN STRATEGY FOR RURAL MARKETINGPROFESSIONALS FOR HUL PRODUCTS” In 1931, Unilever set up its first Indiansubsidiary, Hindustan Vanaspati Manufacturing Company, followed by Lever Brothers IndiaLimited (1933) and United Traders Limited (1935). These three companies merged to formHUL in November 1956; HUL offered 10% of its equity to the Indian public, being the firstamong the foreign subsidiaries to do so. Unilever now holds 52.10% equity in the company. Therest of the shareholding is distributed among about 360,675 individual shareholders andfinancial institutions.My objective was To determine the market share of HUL in rural market.To know about theproducts of HUL.To know the marketing strategies employed by HUL.To find out the Factorinfluencing demand of FMCG product.To know about distribution channel used by HULMy findings was implementing its strategy to grow includes focusing on the power brandsgrowth through consumer relevant information, cross category extensions, leveraging channelopportunities and increased focus on rural growth. Hindustan Lever in India has launched ahand-wash product, Surf Excel Quick Wash, with a low foaming formulation, reducing theamount of water needed for rinsing by up to two buckets per wash. HUL is the worlds largestice cream manufacturer, with successful Heart brand which includes Magnum, Cornetto, CartedOr and Solero, and Ben & Jerrys and Brayers in the USMy conclusion was- With its long and luminous history HUL is India‘s true pride. It is acompany which the customers in rural as well as urban India relate to. This explains the deeppenetration of HUL in Indian market. he future for HUL is demanding newer and high levelinnovations so as to cope up with increasing competition. However HUL is well equipped withall what is needed of this Indian Giant.My limitation was Problem in collecting secondary data due to large no. of web site. It was verydifficult to get the complete information. Lack of time for collecting data.
  6. 6. 6 INTRODUCTIONBLUE OCEAN STRATEGYBlue ocean strategy is a set of tools and techniques which guide your thinking to enable you todevelop a strategy which makes competition irrelevant and creates high profit growth.Blue Ocean Strategy is a series of managerial decisions that drive customer value up whiledriving costs down with a series of moves that create value innovation. The well-definedprocess looks at existing markets in a different way and identifies new competitive factors thatadd value and eliminate head-to-head competition. When you apply the Blue OceanStrategy, you unlock new market demand and make the competition irrelevant.The cornerstone of Blue Ocean Strategy is Value Innovation. A blue ocean is created when acompany achieves value innovation that creates value simultaneously for both the buyer and thecompany. The innovation (in product, service, or delivery) must raise and create value for themarket, while simultaneously reducing or eliminating features or services that are less valued bythe current or future market. The authors criticize Michael Porters idea that successfulbusinesses are either low-cost providers or niche-players. Instead, they propose finding valuethat crosses conventional market segmentation and offering value and lower cost. EducatorCharles W. L. Hill proposed this idea in 1988 and claimed that Porters model was flawedbecause differentiation can be a means for firms to achieve low cost. He proposed that acombination of differentiation and low cost might be necessary for firms to achieve asustainable competitive advantage.Companies have long engaged in head-to-head competition in search of sustained, profitablegrowth. They have fought for competitive advantage, battled over market share, and struggledfor differentiation. Yet in today‘s overcrowded industries, competing head-on results in nothingbut bloody ―red oceans‖ of rivals fighting over a shrinking profit pool.In a book that challenges everything you thought you knew about the requirements for strategicsuccess, W. Chan Kim and Renée Mauborgne contend that while most companies competewithin such red oceans, this strategy is increasingly unlikely to create profitable growth in thefuture. Based on a study of 150 strategic moves spanning more than a hundred years and thirtyindustries, Kim and Mauborgne argue that tomorrow‘s leading companies will succeed not bybattling competitors, but rather by creating ―blue oceans‖ of uncontested market space ripe forgrowth. Such strategic moves—termed ―value innovations‖—create powerful leaps in value forboth the firm and its customer, rendering rivals obsolete and capturing new demand. Blue OceanStrategy provides a systematic approach to making the competition irrelevant.
  7. 7. 7Examining a wide range of strategic moves across a host of industries, Blue Ocean Strategyhighlights the six principles that every company can use to successfully formulate and executeblue ocean strategies. The six principles show how to reconstruct market boundaries, focus onthe big picture, reach beyond existing demand, get the strategic sequence right, overcomeorganizational hurdles, and build execution into strategy. In this game-changing book, Kim andMauborgne present a proven analytical framework and the tools for successfully creating andcapturing blue oceans.Upending traditional thinking about strategy, Blue Ocean Strategy charts a bold path to winningthe futureBLUE OCEAN STRATEGY VS RED OCEAN STRATEGYKim and Mauborgne argue that while traditional competition-based strategies (red oceanstrategies) are necessary, they are not sufficient to sustain high performance. Companies need togo beyond competing. To seize new profit and growth opportunities they also need to createblue oceans.The authors argue that competition based strategies assume that an industry‘s structuralconditions are given and that firms are forced to compete within them, an assumption based onwhat academics call the structuralism view, or environmental determinism To sustainthemselves in the marketplace, practitioners of red ocean strategy focus on building advantagesover the competition, usually by assessing what competitors do and striving to do it better. Here,grabbing a bigger share of the market is seen as a zero-sum game in which one company‘s gainis achieved at another company‘s loss. Hence, competition, the supply side of the equation,becomes the defining variable of strategy. Here, cost and value are seen as trade-offs and a firmchooses a distinctive cost or differentiation position. Because the total profit level of theindustry is also determined exogenously by structural factors, firms principally seek to captureand redistribute wealth instead of creating wealth. They focus on dividing up the red ocean,where growth is increasingly limitedBlue ocean strategy, on the other hand, is based on the view that market boundaries and industrystructure are not given and can be reconstructed by the actions and beliefs of industry players.This is what the authors call ―deconstructionists view‖. Assuming that structure and marketboundaries exist only in managers‘ minds, practitioners who hold this view do not let existingmarket structures limit their thinking. To them, extra demand is out there, largely untapped. Thecrux of the problem is how to create it. This, in turn, requires a shift of attention from supply todemand, from a focus on competing to a focus on value innovation – that is, the creation ofinnovative value to unlock new demand. This is achieved via the simultaneous pursuit ofdifferentiation and low-cost. As market structure is changed by breaking the value/cost tradeoff,so are the rules of the game. Competition in the old game is therefore rendered irrelevant. Byexpanding the demand side of the economy new wealth is created. Such a strategy thereforeallows firms to largely play a non–zero-sum game, with high payoff possibilities.
  8. 8. 8ABOUT FMCGFast moving consumer goods are the goods purchased by the consumers for their own use andPurchased repeatedly. They buy these products on daily or weekly basis in small quantity. The Priceof such products per unit is low. The consumption of such products is very high due to Requirementof every one and large in number of consumers. Indian population is a huge Population over 120corers. A separate sector called FMCG sector is well established in India. India has always been acountry with a big chunk of world population, be it the 1950‘s or the twenty first century. In thatsense, the FMCG market potential has always been very big. However, from the 1950‘s to the 80‘sinvestments in the FMCG industries were very limited due to low purchasing power and thegovernment‘s favoring of the small-scale Sector.The consumer markets in India are constantly evolving. The first phase of consumer marketevolution in the 1980s and the 1990s was characterized by some major structural changes:changes in income distribution, increased product availability (in terms of both quality andquantity), increased competition, increased media penetration and improved advertising(impacting lifestyle). These raised the levels of consumer awareness and propensity to consume,etc. The late 1990s witnessed a surge in consumer finance products owing to steady financialsector reforms in the economy and innovative marketing. The consumer markets in India haveentered the second phase of evolution with the turn of the century. The Fast Moving ConsumerGoods (FMCG) sector is the fourth largest sector in the economy with a total market size inexcess of Rs 60,000 crore. This industry essentially comprises Consumer Non Durable (CND)products and caters to the everyday need of the population. Hindustan Lever Limited (HLL) wasprobably the only MNC Company that stuck around and had its manufacturing base in India. Atthe time, the focus of the organised players like HLL was largely urbane. There too, theconsumers had limited choices. However, Nirma‘s entryChanged the whole Indian FMCG scene. The company focused on the ‗value for money‘ plankand made FMCG products like detergents very affordable even to the lower strata of the society.Nirma became a great success story and laid the roadmap for others to follow. MNC‘s like HLL,which were sitting pretty till then, woke up to new market realities and noticed the latent ruralpotential of India. The government‘s relaxation of norms also encouraged these companies to goout for economies of scale in order to make FMCG products more affordable. Consequently,today soaps and detergents have almost 90% penetration in India. Post liberalization not onlysaw higher number of domestic choices, but also imported products. The lowering of the tradebarriers encouraged MNC‘s to come and invest in India to cater to 1bn Indians‘ needs. Rising
  9. 9. 9standards of living urban areas coupled with the purchasing power of rural India saw companiesintroduce everything from a low-end detergent to a high-end sanitary napkin. Their strategy hasbecome two-pronged in the lastdecade. One, invest in expanding the distribution reach far and wide across India to enablemarket expansion of FMCG products. Secondly, upgrade existing consumers to value addedpremium products and increase usage of existing product ranges. So you could see allcompanies be it HLL, Godrej Consumer, Marico, Henkel, Reckitt Benckiser and Colgate, tryingto outdo each other in getting to the rural consumer first. Each of them has seen a significantexpansion in the retail reach in mid-sized towns and villages. Some who could not do it on theirown, have piggy backed on other FMCG major‘s distribution network (P&G-Marico).Consequently, companies that have taken to rural India like chalk to cheese have seen their salesand profits expanding. For example, currently 50% of all HLL sales come from rural India, andconsequently, it is one the biggest beneficiaries ofThis. There are others, like Nestle, which have till date catered mostly to urban India but havestill seen good growth in the last decade. The company‘s focus in the last decade has largelybeen on value added products for the upper strata of society. However, in the last couple ofyears, even these companies have looked to reach consumers at the slightly lower end. One ofthe biggest changes to hit the FMCG industry was the ‗sachet‘ bug. In the last 3 years, detergentcompanies, shampoo companies, hair oil companies, biscuit companies, chocolate companiesand a host of others, have introduced products in smaller package sizes, at lower price points.This is the single big innovation to reach new users and expand market share for value addedproducts in urban India, and for general FMCG products like detergents, soaps and oral care inrural India. Another interesting phenomenon to have hit the FMCG industry is the mushroomingof regional companies, which are posing a threat to bigger FMCG Companies like HLL. Forexample, the rise of Jyothi Laboratories, which has given sleepless nights to Reckitt Benckiser,the ‗Ghari‘ detergent, that has slowly but surely built itself to take on Nirma and HLL indetergents, and finally, the rise of ‗Anchor‘ in oral care, which hasBecome synonymous with ‗cat‘, which walks away with spoils when two monkeys fight (HLLand Colgate)? There are numerous other examples of this. What does all this mean for the futureof FMCG industry in India? Undoubtedly, all this is good for the consumers, who can nowchoose a variety of products, from a number of companies, at different price points. But for theplayers who cater to the Indian consumer, the future brings a lot more competition. In thisenvironment, only the innovators will survive. Focus will be the key to profitability (ala HLL).From an investor‘s point of view, Indian FMCG companies do offer long-term growth
  10. 10. 10opportunities given the low penetration and usage in most product categories. To choose thebest investment opportunities look at the Shapers (i.e. innovators) that have been constantlyproactive to market needs and have built Strong, efficient and intelligent distribution channels.Management vision to growth is the key, as consumers going forward are likely to become evenmore sophisticated in their demand. The Rs 86,000-crore FMCG industry is expected to witnessa lot of action in 2010. With the economy showing signs of revival, the industry is expected toregister a more than 12% growth in 2010 as compared to the previous year. ―The industry willwitness a spate of acquisitions & mergers in the 2010. There will be a renewed focus on ruralconsumers too,‖ said an analyst based in Mumbai. The country‘s FMCG industry registered a12% growth in 2009 despite the economic downturn. The captains of the FMCG sector areoptimistic about the industry‘s performance in the New Year. Godrej Group chairman AdiGodrej said, ―With 8% GDP growth and GST implementation, we feel it will be a great year forthe FMCG sector in India. The focus area for the Godrej Group will be on FMCG business in2010.‖Sharing similar sentiments, Amit Burman, vice-chairman of Dabur India said the industry isexpected to register a 14% growth this year as India is getting out of the recessionary blues. Ourfocus would be on OTC healthcare and skincare brands to sustain our growth in this sector,‖ headded. According to Wipro Consumer Care & Lighting CEO Vineet agarwal, the industry isexpected to perform better in the new year as compared to the previous year. Even during theeconomic slowdown, the FMCG industry registered a 12% growth. When you see buoyancy ineconomy, the industry will further grow in 2010. Our core focus will continue to be on ruralconsumers,‖ he said. Harsh Agarwal, director of Emami Ltd said Emami is looking at bothorganic and inorganic growth strategy in 2010. ―The industry is poised for a double digit growthas the overall growth rate of the country is growing,‖ he said. Echoing similar views, SaugataGupta, CEO,Consumer Products, Marico Ltd said the industry will register a 15 % growth in 2010 ascompared to the previous year.‖ I expect the topline growth of the industry to register 15-20 %this year,‖ he added. Nikhil Vora, managing director, IIDFC SSKI Securities Ltd said the topline of the FMCG is likely to grow by 14.2% y-o-y in Q3FY2010, substantially driven byvolume growth. Despite the rise in input costs, FMCG industry is likely to sustain its robustgrowth momentum aided by increased rural incomes, taxation benefits and gradual shift fromthe unorganized sector/regional players. With the presence of 12.2% of the world population inthe villages of India, the Indian rural
  11. 11. 11FMCG market is something no one can overlook. Increased focus on farm sector will boost ruralincomes, hence providing better growth prospects to the FMCG companies. Better infrastructurefacilities will improve their supply chain. FMCG sector is also likely to benefit from growingdemand in the market. Because of the low per capita consumption for almost all the products inthe country, FMCG companies have immense possibilities for growth. And if the companies areable to change the mindset of the consumers, i.e. if they are able to take the consumers tobranded products and offer new generation products, they would be able to generate highergrowth in the near future. It is expected that the rural income will rise in 2007, boostingpurchasing power in the countryside. However, the demand in urban areas would be the keygrowth driver over the long term. Also, increase in the urban population, along with increase inincome levels and the availability of new categories, would help the urban areas maintain theirposition in terms of consumption. At present, urban India accounts for 66% of total FMCGconsumption, with rural India accounting for the remaining 34%. However, rural India accountsfor more than 40% consumption in major FMCG categories such as personal care, fabric care,and hot beverages. In urban areas, home and personal care category, including skin care,household care and feminine hygiene, will keep growing at relatively attractive rates. Within thefoods segment, it is estimated that processed foods, bakery, and dairy are long-term growthcategories in both rural and urban areas. Indian FMCG industry is expected to grow at a baserate of at least 12% annually to become aRs 4,000 billion industry in 2020, according to a new report by Booz & Company. The Reporttitled ―FMCG Roadmap to 2020 - The Game Changers‖ was released at the CII FMCG Forum2010 in New Delhi Thursday. The Report noted that the positive growth drivers mainly pertainto the robust GDP growth, opening up and increased income in the rural areas of the country,increased urbanization and evolving consumer lifestyle and buying behavior. The report furtherrevealed that if some of the positive factors – driven mainly by improved and supportivegovernment policy to remove supply constraints – play out favourably, the industry could evensee a 17% growth over the next decade, leading to an overall industry size of Rs 6,200 Billionby 2020. The last decade has already seen the sector grow at 12% annually as result of which thesector has tripled in size. Releasing the report, Booz & Company Partner Abhishek Malhotrasaid, ―While on an aggregate basis the industry will continue to show strong growth, we will seehuge variations at multiple levels – product category (e.g. processed foods growing faster thanbasic staples), companies and geographies.‖―Many Indian customer segments are reaching the tipping point at which consumption becomesbroad based and takes off following the traditional ―S shaped‖ curve seen across many markets.‖
  12. 12. 12The sector is poised for rapid growth over the next 10 years and by the year 2020, FMCGindustry is expected to be larger, more responsible and more tuned to its customers,‖ he furtheradded. The Report identifies 9 key mega trends across consumers, markets and environment thatwill have a significant impact in shaping how the industry will look like in year 2020.(a) Increasing PremiumizationContinued income growth coupled with increased willingness to spend will see consumers‘ up-trading, creating demand for higher priced and increased functionality (real or perceived)products. The size of this segment will be large.(b) Evolving CategoriesMany consumers will move up the ladder and will shift from basic ―need‖ to ―want‖ basedproducts. In addition evolving behaviour and emphasis on beauty, health & wellness will seeincreased requirements for customized and more relevant product offerings.(c) Value at BoPSignificant majority of the population in the country, especially in the rural markets, willbecome a consumption source by moving beyond the ―survival‖ mode. This segment willrequire tailored product at highly affordable prices which will come with the potential of verylarge volumes.(d) Increasing GlobalizationWhile many leading MNCs have operated in the country for years given the liberal policyenvironment, the next 10 years will see increased competition from Tier 2 and 3 global players.In addition, larger Indian companies will continue to seek opportunities internationally and alsohave an access to more global brands, products and operating practices.(e) DecentralizationDespite the complexity of the Indian market (languages, cultures, distances) the market hasmainly operated in a homogenous set-up. Increased scale and spending power will result inmore fragmented and tailored business models (products, branding, operating structures).(f) Growing Modern TradeModern trade share will continue to increase and is estimated to account for nearly 30% by year2020. This channel will complete existing traditional trade (~8 million stores which willcontinue to grow) and offer both a distribution channel through its cash & carry model as wellas more avenues to interact with the consumer.(g) Focus on Sustainability
  13. 13. 13Global climatic changes, increasing scarcity of many natural resources (e.g. water, oil) andconsumer awareness (e.g. waste) are leading to increased concerns for the environment. Thepressure on companies to be environmentally responsible is gradually increasing due toinvolvement of various stakeholders – from government (through policy) to consumers (throughbrand choice) and NGOs (through awareness).(h) Technology as a Game ChangerIncreased and relevant functionality coupled with lower costs will enable technologydeployment to drive significant benefits and allow companies to address the complex businessenvironment. This will be seen both in terms of efficiencies in the back-end processes ( chain, sales) as well as the front-end (e.g. consumer marketing).(i) Favourable Government PolicyMany government actions – in discussions as well as planned – will help in creating a moresuitable operating environment. This will be done both on the demand side by increased incomeand education as well as on the supply side by removing bottlenecks and encouraginginvestments in infrastructure.The confluence of many of these change drivers – consumers, technology, government policy,and channel partners – will have a multiplication impact and magnify both the amount as well asthe pace of change. Winning in this new world will require enhancing current capabilities andbuilding new ones to bridge gaps. In this new world FMCG companies will have 6 imperativesfrom a business strategy perspective: disaggregating the operating model, winning the talentwars, bringing sustainability into the strategic agenda, re-inventing marketing for ‗i-consumers‘,re-engineering supply chains, partnering with modern trade. The report urges the need for otherstakeholders – government, retailers, NGOs and investors to play a key role and evolve in asimilar fashion to support the growth of the industry while continuing to deliver on their corebusiness and social mandates.LIST OF MAJOR FMCG COMPANIES IN INDIAThe Indian FMCG sector is the fourth largest in the economy and has a market size of US$13.1billion. Well-established distribution networks, as well as intense competition between theorganized and unorganized segments are the characteristics of this sector. FMCG in India has astrong and competitive MNC presence across the entire value chain. It has been predicted thatthe FMCG market will reach to US$ 33.4 billion in 2015 from US $ billion 11.6 in 2003. Themiddle class and the rural segments of the Indian population are the most promising market forFMCG, and give brand makers the opportunity to convert them to branded products. Most of the
  14. 14. 14product categories like jams, toothpaste, skin care, shampoos, etc, in India, have low per capitaconsumption as well as low penetration level, but the potential for growth is huge. The IndianEconomy is surging ahead by leaps and bounds, keeping pace with rapid urbanization, increasedliteracy levels, and rising per capita income. The big firms are growing bigger and small-timecompanies are catching up as well. According to the study conducted by AC Nielsen, 62 of thetop 100 brands are owned by MNCs, and the balance by Indian companies. Fifteen companiesown these 62 brands, and 27 of these are owned by Hindustan Lever. Pepsi is at number threefollowed by Thumps Up. Britannia takes the fifth place, Followed by Colgate (6), Nirma (7),Coca-Cola (8) and Parle (9). These are figures the softdrink and cigarette companies have always shied away from revealing. Personal care, cigarettes,and soft drinks are the three biggest categories in FMCG. Between them, they account for 35 ofthe top 100 brands. The companies mentioned in Exhibit I, are the leaders in their respectivesectors. The personal care category has the largest number of brands, i.e., 21, inclusive of Lux,Lifebuoy, Fair and Lovely, Vicks, and Ponds. There are 11 HLL brands in the 21, aggregatingRs. 3,799 crore or 54% of the personal care category. Cigarettes account for 17% of the top 100FMCG sales, and just below the personal care category. ITC alone accounts for 60% volumemarket share and 70% by value of all filter cigarettes in India.
  15. 15. 15 LITERATURE REVIEWFMCG Industry Generally, fast moving consumer goods (FMCG) (also known as repeat-purchasepackaged goods) refer to consumer non-durable goods required for daily or frequent use (Paul2006).The FMCG field is very large: Advertising investments in various categories of repeat-purchasegoods are consistently extremely large (Jones and Slater 2002).Marketing according to Bradley (2003) is a philosophy that leads to the process by whichorganizations, groups, and individuals obtain what they need and want by identifying value,providing it, communicating it and delivering it to others.Marketing according to Proctor (2000) is about satisfying wants and needs and in the course ofdoing so facilitating the achievement of an organization‘s objectivesMarketing StrategyIt integrates the activities in marketing as well as sales and advertising (Pinson 2008, p. 44).Targeting is the process of identifying the company‘s consumers to whom the marketingstrategies will be directed. Targeting is considered as an important processThe process of positioning is all about creating a favorable position for the company and itsproducts or services in the market, particularly in the minds of the consumers. A company‘sposition is composed of different factors that spring up from perceptions, impressions andfeelings (Bradley, 2003).Segmentation, Targeting, and Positioning FMCG companies are often viewed as leaders when it comes to segmentation. Thesecompanies seen to be able to effectively segment their markets.The FMCG sector is intenselycompetitive, as the sector continues to progress, companies need to look for ways of makingmoney. Companies such as Unilever and Procter and Gamble are effective in segmentingmarkets into groups of customers with common needs and buying motives, and then developingsolutions that appealed particularly strongly to those segments.
  16. 16. 16A company‘s marketing strategy is influenced by the marketplace orientation that the companyadopts (Kotler 2000)Customer is always right, they say. This leads to a challenge of always finding out what thecustomer actually wants. However, one should also take into account how competitors act andhow to communicate and coordinate the information flow between business functions.Combined, these dimensions contribute to market orientation of a company. Market orientationis an important part of contemporary marketing thought with significant amount of researchfrom different perspectives available since the early 1990s.Consequently, several definitions forthis concept have also been offered, making it carefully considered (Noble, Sinha and Kumar,2002). Importance of market orientation has not been questioned in marketing literature; Kotler(2003) even argues that segmentation, targeting and positioning – which all can be effectivelyperformed in companies of high market orientation – is the essence of strategic marketing.Narver and Slater (1990) argue a fundamental benefit of being market oriented to be thecontinuous superior performance for the business. Market orientation cannot be interpreted toexist in a vacuum from other activities and pressures in the business (Hooley , 2001). Oncontrary, it can be evidenced that facing recent changes in business environment, such asglobalization, increased importance of services, information technology and relationships acrosscompany functions and firms, have led to a situation where most industries have to be more andmore market-oriented (Walker, Mullins, Boyd, Larréché,2006). Further, without a doubt,market orientation that stresses the importance of using both customer and competitorinformation (Hunt and Morgan, 2001) should clearly be involved when formulating strategy.Hunt and Morgan (1995) stress the importance of, in addition to current competitors andcustomers, also analyzing potential competitors and market niches. This, I think, is a good andnecessary supplement to the definition of market orientation since myopic market perspectivemay lead to success only in relatively short term. Market orientation, defined by Hunt andMorgan (1995) is (1) systematic gathering of information on customers and competitors, bothpresent and potential, (2) systematic analysis of the information for the purpose of developingmarket knowledge, and (3) systematic use of such a knowledge to guide strategy recognition,understanding, creation, selection, implementation and modification.
  17. 17. 17Some researchers have ended up with somewhat different, but alike, definitions for marketorientation than those described above. For example, Noble, Sinha and Kumar(2002) extendthe definition of market orientation to include brand focus as one of its dimension. On the otherhand, e.g. Ruekert’s (1992) definition for market orientation lacks the competitor component,being ―the degree to which the business unit obtains and uses information from customers,develops a strategy which will meet customer needs, and implements that strategy by beingresponsive to customers‘ needs and wants‖. Whatever the definition, market orientation clearlyis intangible and cannot be purchased in the marketplace. It may well be also true that, as Huntand Morgan (2001) argue, market orientation is socially complex in its structure, hascomponents that are highly interconnected, and has mass efficiencies and effectives that grow instrength in time.Rather closely related to market orientation framework, Treacy and Wiersema (1993)presented the idea of delivering value to customers in one of the following three ways to achievemarket leadership: operational excellence, customer intimacy or product leadership. Byoperational excellence, they mean providing customers with reliable products or services atcompetitive prices and delivered with minimal difficulty or inconvenience.Customer intimacy, the second value discipline, means segmenting and targeting marketsprecisely and then tailoring offerings to match exactly the demands of those niches. Productleadership, in turn, refers to offering customers leading-edge products and services thatconsistently enhance the customer‘s use or application of the product, thereby making rivals‘goods obsolete.Treacy and Wiersema (1993) argue that companies, to achieve leading position in theirindustries, should not broaden their business focus but narrow it; while mastering one of thedisciplines, it is sufficient to meet industry standards in others. Performance impact of marketorientation can in this case be explained with commonly established argument according towhich satisfied customers are more loyal customers than unsatisfied ones (Srivastava, Shervaniand Fahey, 1998). Srivastava et al. (1998) also state that they extend their relationships withvendors to include other products and services and buy offerings in larger quantities, and arewilling to pay higher prices and spread the good word to their circles of acquaintances. Further,due to probably several times lower costs of customer retention compared to new customer
  18. 18. 18acquisition (e.g. Kotler, 2003), successful market orientation rationally increases financialperformance of a firm.The empirical research of Narver and Slater (1990) found out the U-shaped relationshipbetween market orientation and business profitability in numerous industries. Thus, companieswith highest market orientation seem to perform best while those least market oriented do alsorelatively well; here, as with generic competitive strategies of Porter (1980) and value delivering(Treacy and Wiersema, 1993), it does not pay to be ―stuckin the middle‖. Narver and Slater (1990) suggest this kind of relationship to be evidentespecially in basic industries and long-established technology-driven industries. To date, manyauthors have found the positive relationship between market orientation and businessperformance.According to Day (1994), market-driven organizations have superior market sensing, customerlinking, and channel bonding (i.e., outside-in marketing) capabilities. When studying companiesin the UK, Hooley et al. (2005) empirically found positive relationship between marketorientation and customer linking capabilities. Also conceptually, market orientation and outside-in market capabilities are neighboring phenomena, even partly interrelated. This fact leads usnaturally to the next ingredients of strategic marketing, namely marketing assets andcapabilities.
  19. 19. 19 HULIn the summer of 1888, visitors to the Kolkata harbor noticed crates full of Sunlight soapbars, embossed with the words "Made in England by Lever Brothers". With it, began an era ofmarketing branded Fast Moving Consumer Goods (FMCG).Soon after followed Lifebuoy in1895 and other famous brands like Pears, Lux and Vim. Vanaspati was launched in 1918 and thefamous Dalda brand came to the market in 1937In 1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspati ManufacturingCompany, followed by Lever Brothers India Limited (1933) and United Traders Limited (1935).These three companies merged to form HUL in November 1956; HUL offered 10% of its equityto the Indian public, being the first among the foreign subsidiaries to do so. Unilever now holds52.10% equity in the company. The rest of the shareholding is distributed among about 360,675individual shareholders and financial institutions.The erstwhile Brooke Bonds presence in India dates back to 1900. By 1903, the company hadlaunched Red Label tea in the country. In 1912, Brooke Bond & Co. India Limited was formed.Brooke Bond joined the Unilever fold in 1984 through an international acquisition. Theerstwhile Liptons links with India were forged in 1898. Unilever acquired Lipton in 1972 and in1977 Lipton Tea (India) Limited was incorporated.Ponds (India) Limited had been present in India since 1947. It joined the Unilever fold throughan international acquisition of Chesebrough Ponds USA in 1986.Since the very early years, HUL has vigorously responded to the stimulus of economic growth.The growth process has been accompanied by judicious diversification, always in line withIndian opinions and aspirations.The liberalization of the Indian economy, started in 1991, clearly marked an inflexion in HULsand the Groups growth curve. Removal of the regulatory framework allowed the company toexplore every single product and opportunity segment, without any constraints on productioncapacity.Simultaneously, deregulation permitted alliances, acquisitions and mergers. In one of the mostvisible and talked about events of Indias corporate history, the erstwhile Tata Oil MillsCompany (TOMCO) merged with HUL, effective from April 1, 1993. In 1996, HUL and yet
  20. 20. 20another Tata company, Lakme Limited, formed a 50:50 joint 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 to HUL and divested its 50%stake in the joint venture to the company.HUL formed a 50:50 joint venture with the US-based Kimberly Clark Corporation in 1994,Kimberly-Clark Lever Ltd, which markets Huggies Diapers and Kotex Sanitary Pads. HUL hasalso set up a subsidiary in Nepal, Unilever Nepal Limited (UNL), and its factory represents thelargest manufacturing investment in the Himalayan kingdom. The UNL factory manufacturesHULs products like Soaps, Detergents and Personal Products both for the domestic market andexports to India.The 1990s also witnessed a string of crucial mergers, acquisitions and alliances on the Foodsand Beverages front. In 1992, the erstwhile Brooke Bond acquired Kothari General Foods, withsignificant interests in Instant Coffee. In 1993, it acquired the Kissan business from the UBGroup and the Dollops Icecream business from Cadbury India.As a measure of backward integration, Tea Estates and Doom Dooma, two plantation companiesof Unilever, were merged with Brooke Bond. Then in 1994, Brooke Bond India and LiptonIndia merged to form Brooke Bond Lipton India Limited (BBLIL), enabling greater focus andensuring synergy in the traditional Beverages business. 1994 witnessed BBLIL launching theWalls range of Frozen Desserts. By the end of the year, the company entered into a strategicalliance with the Kwality Icecream Group families and in 1995 the Milkfood 100% Icecreammarketing and distribution rights too were acquired.Finally, BBLIL merged with HUL, with effect from January 1, 1996. The internal restructuringculminated in the merger of Ponds (India) Limited (PIL) with HUL in 1998. The two companieshad significant overlaps in Personal Products, Speciality Chemicals and Exports businesses,besides a common distribution system since 1993 for Personal Products. The two also had acommon management pool and a technology base. The amalgamation was done to ensure forthe Group, benefits from scale economies both in domestic and export markets and enable it tofund investments required for aggressively building new categories.In January 2000, in a historic step, the government decided to award 74 per cent equity inModern Foods to HUL, thereby beginning the divestment of government equity in public sectorundertakings (PSU) to private sector partners. HULs entry into Bread is a strategic extension of
  21. 21. 21the companys wheat business. In 2002, HUL acquired the governments remaining stake inModern Foods.In 2003, HUL acquired the Cooked Shrimp and Pasteurised Crabmeat business of the AmalgamGroup of Companies, a leader in value added Marine Products exports.HUL launched a slew of new business initiatives in the early part of 2000‘s. Project Shakti wasstarted in 2001. It is a rural initiative that targets small villages populated by less than 5000individuals. It is a unique win-win initiative that catalyses rural affluence even as it benefitsbusiness. Currently, there are over 45,000 Shakti entrepreneurs covering over 100,000 villagesacross 15 states and reaching to over 3 million homes.In 2002, HUL made its foray into Ayurvedic health & beauty centre category with the Ayushproduct range and Ayush Therapy Centres. Hindustan Unilever Network, Direct to homebusiness was launched in 2003 and this was followed by the launch of ‗Pureit‘ water purifier in2004.In 2007, the Company name was formally changed to Hindustan Unilever Limited afterreceiving the approval of share holders during the 74th AGM on 18 May 2007. Brooke Bondand Surf Excel breached the the Rs 1,000 crore sales mark the same year followed by Wheelwhich crossed the Rs.2,000 crore sales milestone in 2008.On 17th October 2008 , HUL completed 75 years of corporate existence in India.In January 2010, the HUL head office shifted from the landmark Lever House, at BackbayReclamation, Mumbai to the new campus in Andheri (E), Mumbai.On 15th November, 2010, the Unilever Sustainable Living Plan was officially launched in Indiaat New Delhi.In March, 2012 HUL‘s state of the art Learning Centre was inaugurated at the HindustanUnilever campus at Andheri, Mumbai.In April, 2012, the Customer Insight & Innovation Centre (CiiC) was inaugurated at theHindustan Unilever campus at Andheri, MumbaiHUL works to create a better future every day and helps people feel good, look good and getmore out of life with brands and services that are good for them and good for others.
  22. 22. 22With over 35 brands spanning 20 distinct categories such as soaps, detergents, shampoos, skincare, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and waterpurifiers, the Company is a part of the everyday life of millions of consumers across India. Itsportfolio includes leading household brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair& Lovely, Pond‘s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe,Brooke Bond, Bru, Knorr, Kissan, Kwality Wall‘s and Pureit.The Company has over 16,000 employees and has an annual turnover of around Rs. 21,736crores (financial year 2011 - 2012). HUL is a subsidiary of Unilever, one of the world‘s leadingsuppliers of fast moving consumer goods with strong local roots in more than 100 countriesacross the globe with annual sales of about €46.5 billion in 2011. Unilever has about 52%shareholding in HUL.
  23. 23. 23STEP TOWARD RETAIL INNOVATION FOR TAPPING RURAL MARKETPrior to the late 1990s, HUL like any other company had traditional modes of reaching out tothe rural consumer, i.e., through wholesalers and retailers. It used van campaigns to induce thevillage retailers to sell their products. Later HUL‘s vans were replaced by vans belonging toredistribution Stockiest, who served a selected group of markets. Only 25% of the villages couldbe tapped this way. Thus, HUL realized that a vast section of the rural market is still untapped.So, in 1998 they conceptualized ―Project Streamline‖ to increase the presence in the ruralmarket and reach out 100,000 retail outlets by 1999. The project aimed at covering 50% of therural population by 2003. HUL appointed Rural Distributors (RD). These RDs were attached to15-20 sub-stockists. These sub-stockists, who were located in the villages, were expected todrive distribution in the neighbouring villages through unconventional modes of transport liketractors, camel carts, bullock carts, etc. This project helped HUL in extending its rural reach toabout 37% in 1998 from 25% in 1995.HUL realized that consumption of personal products among rural consumers was very low. Forinstance, out of every ten people, only three were using toothpaste or talcum powder orshampoo, while six out of 10 were using washing powders. Even in a category like soaps, theyfound that frequency of usage was once per five bathing occasions. To increase the usage ofthere product in rural market, in 1998 the Personal Products Division of HUL took an initiated―Project Bharat‖ - a massive rural home-to-home exercise to address these issues. Companyvans visited villages across the country to educate the customers and distributed samples of low-unit price packs of shampoos, toothpastes, talcum powder or cream among the rural people.The retailing activities were supported by product demonstration or video shows about productbenefit and usage. In the first phase of the project, HUL targeted the villages having populationfive thousand and above, while the second phase targeted the villages with population in therange of 2,000 to 5,000. This project enabled HUL to cover 13 million households by the end of1999. The idea of providing micro-credit to villagers began with HUL‘s Project Bharat. Groupsof villagers (15 to 20) below the poverty line were offered micro credit of Rs.750 by banks.HUL trained them to use this credit to buy the company‘s products and sell them at a profit.
  24. 24. 24Phase I - Operation Streamline - AccessibilityIn 1998, HUL launched Operation Streamline to extend their distribution network throughoutIndia. Operation Streamline is one of the major initiatives undertaken by HUL in recent times topenetrate the rural markets, i.e., to make their product accessible in rural market. In the case ofOperation Streamline, the goods are distributed from the C&F Agents to the Re-distributors,who in turn pass the products to the Star Sellers. Being a cross-functional initiative, the StarSeller sells everything starting from detergents to personal care products in rural areas.Operation Streamline opened up a new distribution channel beyond the territories that werecovered by HUL‘s earlier, they appointed 7,500 new odd distributors. In less than two years, thecompany doubled its reach in rural India. By implementing Operation Streamline HUL‘sdistribution network able to cover 60 per cent of the villages with population greater than 2,000and the villages having roads.Sell of some of the product shot up in a very short span of time, one of the greatestachievements was the penetration levels for its Fair & Lovely cream raise nearly three times injust three months of launch of project. Interestingly, the sell of various products appears to crackopen the rural markets. But 300,000 villages are still out of reach of HUL, so to reach them itcreated a new super stockist and sub-stockist structure. The super-stockist in the bigger townsserve these sub-stockist, who are paid 1-2 per cent more margins that the retailers. This is tocover the sub-stockist‘s costs of servicing retailers in his area. Since the distributor cannot coverthese retailers regularly in rural areas, these sub-stockists play a very crucial role as a stockpoints for the rural retailers. Then, once distributors create the necessary demand in ruralmarket, the sub stockists carries this process forward.Phase II – Project Bharat - AwarenessHUL implemented a major direct consumer programme called Project Bharat, which covered2.2 crore homes in rural areas. The primary objective of this project is to create awareness ofHUL‘s personal care products. Each home was given a combo pack, at a special price of Rs.15,comprising a low unit-price pack of hair-care (Clinic shampoo), dental (Pepsodent toothpaste),skin-care (Fair & Lovely) and body-care (Pond‘s Dream flower talc) products along withleaflets to make the customer educated on different products of HUL. Close to 160 vans andaround thousand promoters (sales staff of the distributors and other private operators) werepressed into this Operation. The cost of this project came up to be roughly Rs.13 crore. For
  25. 25. 25demonstrating the products each van was equipped with a TV and VCR, had six ‗promoters‘.The project helped eliminate barriers to trial, and strengthened salience of both particularcategories and brands. Supported by audio-visual demonstrations, film songs and mythologicalserials interspersed with ads of Lever product, this campaign helped the company in furtherpenetration of the rural areas.Phase III - Project Shakti - ActionHUL brought innovation in rural retailing through ―Project Shakti‖. To develop sustainablemarket of their product in rural area they involved the rural poor. Distribution acquired furtherimpetus through HUL‘s ―Project Shakti‖ which was based on the successful Grameen BankModel of Bangladesh. The project was started in 2001 in 50 villages involving womenbelonging to micro credit Self-Help Groups (SHGs) in the Naklgonda district of Andhra Pradesh(AP). Rural women organised themselves into ―thrift and credit‖ groups and began saving onerupee per day. By 2003 corpus fund had increased to Rs.1500cr, of which Rs.800cr had beensaved by 58 lakh women. This group continues its operation funded by the saving of themembers, bank loans and government assistance. Members may borrow from this group corpustwice in a year, at the interest rates fixed by the group. Though such loans can also be used tomeet personal needs, the objective of the programme is to use the funds to generate moreincome.For Project Shakti, the SHGs were covered by three Mutually Aided Cooperative Thift Societies(MACTS). Each MACTS had 14 to 15 SHGs under them. HUL along with a social serviceorganisation, Marketing And Research Team (MART), assisted women in getting microcredit toset up an enterprise to distribute HUL‘s range of products. To start an enterprise initially Shaktientrepreneurs take loan from SHGs. They take training for three month then they start sellingHUL products in six to ten villages having population from 1000 to 2000. They receive thestock at their doorstep from the company. They then sell the products to village retailers andcustomers. To start they began with four to five brands of HUL like Lifebuoy, Wheel,Pepsodent, Clinic Plus and Annapurna salt. Later they keep on adding other brands like Lux,Nihar etc. Shakti entrepreneur normally earn Rs.1000 on the sales of Rs.10,000. By 2005, HULhad reached 12,000 villages in 100 districts and was able to reach 1 crore customer through2800 Shakti entreprepeurs.
  26. 26. 26A woman from SHGs selected as a Shakti entrepreneur receives stocks at her doorstep from theHUL rural distributor and sells direct to consumers as well as to retailers in the village. EachShakti entrepreneur services 6-10 villages in the population strata of 1,000-2,000 people. AShakti entrepreneur sets off with 4-5 chief brands from the HUL portfolio - Lifebuoy, Wheel,Pepsodent, Annapurna salt and Clinic Plus. These are the core brands that they layer it withwhatever else is in demand like talcum powder or Vaseline during winters.The Shakti Model trains women from SHGs to distribute HUL products of daily consumptionsuch as detergents, toilet soaps and shampoos - the latter‘s penetration being only 30 per cent inrural areas. The women avail of micro-credit through banks. The established Shaktientrepreneurs are now selling Rs.10,000-Rs.15,000 worth of products a month and making agross profit of Rs.700-Rs.1,000 a month.The company is creating demand for its products by having its Shakti entrepreneurs andeducating consumers on aspects like health and hygiene. The Shakti brand endorsers are under-privileged rural women trained to manage businesses. Shakti project is a win-win initiative thatcreates livelihoods and a social initiative that improves the standard of life and catalysesaffluence in rural India. What makes Shakti project uniquely scalable and sustainable and itcontributes not only to HUL but also to the larger interests of the community.Phase IV - Product Innovation – Acceptable and AffordableTo tap more and more rural consumers they develop Non-Soap Detergent Powder which waslaunched in the rural market in name of Wheel detergent in year 1988 to counter Nirmadetergent. Within a decade Nirma and Wheel targeting the rural consumer started sharing equalmarket share of 38%.To meet the challenge given by another company in early 1980s, i.e., CalvinKare whose earlyavatar is Chik Shampoo which created a revolution in shampoo market, HUL launched Clinicand Sunsilk shampoo in small sachets. The Low Unit Price (LUP) packs were successful in ruralmarket to convert the consumer from soap to shampoo. 95% of the total sales of shampoo inrural area were through sachets till late 90s.In early 2000s, to increase the penetration of HUL products in rural area they introduced SurfExcel, Pond‘s talcum powder, Fair and Lovely, Pepsodent, Rexona Deo-sticks in LUP packs.All these products are successful in winning the mind of the rural consumers. HUL‘s effort and
  27. 27. 27Shakti entrepreneurs initiative together played an important role in making all these productssuccessful in rural market.In May 2000, HUL launched ―Aim‖ toothpaste to compete with Dabur toothpaste and waspriced at Rs.3 per 20gm, Rs8 per 50gm and Rs.16 for 100 gm for the rural consumers. Theywere launched in plastic flow wraps rather than traditional cartons, so that they could be hangedalongside of the store. But within five month of its launch they decided to withdraw the productfrom the market and decided to put its effort to increase the penetration of their other twoproducts, Pepsodent and Closeup.To support the Shakti entrepreneur HUL engaged Ogilvy Outreach to enhance the awareness oftheir products in rural markets. HUL realized that 30 seconds advertisement in the Televisionmay not able to create an impact in the mind of rural consumers, they have to be tapped by usingunconventional media through colourful flyers, entertaining jingles, street plays, cinema vansetc.Phase V – ReplicationThe huge success of the ―Project Shakti‖ has inspired the company to take it to the internationallevel. Anglo-Dutch consumer goods major Unilever has begun replicating HUL‘s rural micro-enterprise, led by women-entrepreneurs, Project Shakti in several international markets. Theproject has emerged as a successful low-cost business model and enhanced HUL‘s direct ruralreach in the so-called media-dark regions. Armed with micro-credit, rural women becomedirect-to-home distributors of Unilever brands in rural markets. The Fortune 500 transnationalwhich sells foods and home and personal care brands in about 100 countries has stepped upfocus on the project given that emerging markets now contribute around 44% to globalrevenues.The effort is expected to help Unilever tap fresh growth avenues in emerging markets in the faceof recessionary trends in the US and Europe. Also, given the saturation of urban markets,companies try to re-engineer their business models to derive growth from rural consumers.
  28. 28. 28 PRODUCTSWith 400 brands spanning 14 categories of home, personal care and foods products,no other company touches so many peoples lives in so many different ways. Brandportfolio has made us leaders in every field in which we work. It ranges from much-loved world favorites including Lipton, Knorr, Dove and Omo, to trusted local brandssuch as Blue Band and Suave. From comforting soups to warm a winters day, tosensuous soaps that make customers feel fabulous, and products help people getmore out of life. HUL is constantly enhancing its brands to deliver more intense,rewarding product experiences. It invests nearly €1 billion every year in cutting-edgeresearch and development, and has five laboratories around the world that explore newthinking and techniques to help develop products. Consumer research plays a vital rolein its brands development. They are constantly developing new products anddeveloping tried and tested brands to meet changing tastes, lifestyles andexpectations. And our strong roots in local markets also mean they can respond toconsumers at a local level. By helping improve peoples diets and daily lives, can helpthem keep healthier for longer, look good and give their children the best start in life.There is a big list of products of this company and explained below:(i) Health & personal care• First launched in France in 1983, leading male grooming brand, Axe, now gives guys the edgein the mating game in over 60 countries• Oral care brands Mentadent, Peposodent and Signal have teamed up with the worlds Largestdental federation, the FDI, which represents over 750 000 dentists around the world• Lux became the first mass-marketed soap when it launched in 1924. Today it achieves annualglobal sales of over €1 billion• Domestos is a best-selling brand in nine of the 35 countries in which its sold• Recent breakthroughs at Rexona include Rexona Crystal, a deodorant that eliminates unsightlywhite deposits on dark garments• Small & Mighty concentrated liquid fits into a smaller bottle, requiring half the packaging,water and lorries to transport it, making it kinder on the environment
  29. 29. 29• Hindustan Unilever in India has launched a hand-wash product, Surf Excel Quick Wash, witha low foaming formulation, reducing the amount of water needed for rinsing by up to twobuckets per wash.(ii) Foods• Knorr is our biggest food brand with a strong presence in over 80 countries and a productrange including soups, sauces, bouillons, noodles and complete meals• Liptons tea-based drinks include the international Lipton Iced Tea range, the Lipton range inNorth America and Lipton Yellow Label, the worlds favourite tea brand• Becel/Flora pro.activ products have been recognised as the most significant advancement inthe dietary management of cholesterol in 40 years• In the mid-1990s it led the industry with a programme to eliminate almost all trans fat frommargarine• Worlds largest ice cream manufacturer, thanks to the success of Heartbrand which includesMagnum, Cornetto, Carte dOr and Solero, and Ben & Jerrys and Breyers in the US.
  30. 30. 30 Food BrandsPlayful banter, a little Lipton has a range India’s favorite cup Brooke Bond Taaza lifts Brooke Bond Taj Mahalmischief, serious of vitality teas that of tea, the great me people unshackles is an exclusive selectionconversation… there’s truly encompass taste of Red Label the mind, allowing them of teas for theno time for young the goodness of brings people closer to see and realize discerning consumer.couples like the time tea. together and possibilities.spent sharing a cup of strengthens3 Roses. relationships. Ek cup Bru aur A good honest With Kissan, good Kissan Amaze Knorr helps families Partnering with the mood ban jae… scoop of daily food is loved not Brainfood is speci - make meal times mom in nurturing her pleasure. shoved! fically designed special, nutritious, dreams, Annapurna for the mental tasty and healthy. Atta is aimed at development of helping her provide kids. wholesome tasty nutrition to her family.
  31. 31. 31 Home Care Brands Sunlight is a color Cif- the best cleaner The world’s largest The sheer power of care brand to let you shine. fabric conditioner Domex bleach gives brand. you the confidence you need, eradicating all known germs.Created in 1885, the Vim Active Wheel de Rin provides ‘best in Giving your kids thebrand is still innovating "Mehnat se Aazadi" class whiteness’ which freedom to get dirty andand using the magic of Freedom from painful is demonstrable. experience life, safe innatural ingredients to & tiring laundry the knowledge that Surfcreate unbeatable results Excel will remove thoseover a hundred years stainslater.
  32. 32. 32 Personal Care BrandsLux believes in passion Holistic skin care Breeze, with the goodness Awaken, and enliven yourfor beauty. It continues experiences perfected over of glycerine gives soft, senses with a Liril be a favorite with the ages to deliver healthy, fragrant and smooth skin.generations of users for a beautiful skinsensuous experience ofluxury. Rexona gives you 24 Dove stands for real Pears – the purest and most Lifebuoy is available in hour protection from beauty. All around the gentle way to skincare! multiple variants in sweat and body odour world, Dove is making soaps and specialist and therefore the complete therapy for your formats such as liquid confidence to handle hair. hand wash, catering to whatever the day has the entire family. in store.
  33. 33. 33 Personal Care BrandsNew Clear with Essential Oils, Clinic Plus is India’s largest selling Sunsilk encourages young women inguarantees Zero dandruff and shampoo and has won the trust the India to live for today. Sunsilk helps youleaves your hair feeling fabulous. millions of families across India. transform the beauty of your hair instantly because LIFE CANT WAIT!! Dove stands for real beauty. All around Freshness that brings you Closer Pepsodent India is committed to improve the world, Dove is making complete theoverall Oral health of Indians. therapy for your hair.
  34. 34. 34 Personal Care Brands Your skin is Rexona gives you 24 Axe with Best The new expansion Lakme is an ally to the amazing. It hour protection from Quality Fragrance of fairness cream for Indian Woman and deserves to be sweat and body men inspires her to express her treated as such. odour and therefore unique beauty and the confidence to sensuality. Thus, enabling handle whatever the her to realize the potency dayhas in store. of her beauty.Aviance enables women LEVER Ayush aims to Get the expert to look after More than 30 years ago,actualize their unique help a new generation your skin a unique brand waspotential through expert of Indians rediscover born. Wrapped within acustomized beauty everyday health and humble lavender tube,solutions. vitality through it went on to become customized Ayurvedic the World’s No.1 solutions. Fairness cream.
  35. 35. 35PROJECT SHAKTIEmpowering womenfolk through a wired network for linkage activities or connecting the ruralwith urban world is the new mantra adopted by many FMCGs to sell their products as well asimprove the lot of rural women. Indeed, a win-win partnership for both womenfolk and thecompany.This has been made possible due to the initiatives taken up by Hindustan Lever Ltd (HLL) foran exclusive project called Shakti through which women in a remote village can accesshappenings around the world. As part of this commitment, HLL is leveraging on Self-HelpGroups (SHGs) as they become direct-to-home (DTH) dealers in line with other micro creditmodels to be implemented initially as a pilot project in the Nalgonda district of Andhra Pradesh,Shakti is expected to spread its roots across all the districts of Andhra Pradesh. It will beintegrated with its Project Shakti program which is a linkage of women SHGs with privatesector companies.There are about 300 Shakti dealers in the state with about 40 dealers in Nalgonda. Working on acluster approach, the Shakti program operates through Shakti dealers who market HLL productsand use their services for stocking their produce. Besides health education, there is also anoption of ‗e-learning‘ to prepare home foods like pickles and curry powders among other things.i-Shakti will also help women to know about crop protection, weather forecasting, soilconditions, cropping patterns in different weather besides integrated pest management practices.The whole operation is primarily through SHGs who act as direct dealers in the rural markets ofHLL. The Project Shakti programme is facilitated by the District Rural Development Agency(DRDA) of Nalgonda district.
  36. 36. 36From the time HLLs new distribution model, named Project Shakti, was piloted in Nalgondadistrict in 2001, it has been scaled up and extended to over 5,000 villages in 52 districts in AP,Karnataka, Gujarat and Madhya Pradesh with around 1,000 women entrepreneurs in its fold.The vision is ambitious: to create by 2010 about 11,000 Shakti entrepreneurs covering one lakhvillages and touching the lives of 100 million rural consumers.How it worksTypically, a woman from a SHG selected as a Shakti entrepreneur receives stocks at herdoorstep from the HLL rural distributor and sells direct to consumers as well as to retailers inthe village.Each Shakti entrepreneur services 6-10 villages in the population strata of 1,000-2,000 peopleA Shakti entrepreneur sets off with 4-5 chief brands from the HLL portfolio - Lifebuoy, Wheel,Pepsodent, Annapurna salt and Clinic Plus. "These are the core brands, they we layer it withwhatever else is in demand like talcum powder or Vaseline during winters. These brands apart,other brands which find favour with a rural audience are: Lux, Ponds, Nihar and 3 Roses tea.Typically, unit packs are small. All the brands are national and HLL is cool to the idea ofcreating a rural-specific brand as it will only dissipate the advertising media effort for thebrands. To get started the Shakti woman borrows from her SHG and the company itself choosesonly one person. With training and hand-holding by the company for the first three months, shebegins her door-to-door journey selling her wares.The future of ShaktiHaving perfected the model in Nalgonda, in 2003 HLL plans to extend Shakti to a 100 districtsin Madhya Pradesh, Gujarat and UP. There are other plans brewing. One is to allow othercompanies which do not compete with HLL to get onto the Shakti network to sell their products.The most powerful aspect about this model, is that it creates a win-win partnership betweenHLL and its consumers, some of whom will also draw on the organisation for their livelihood,and it builds a self-sutaining virtuous cycle of growth for all.The next stage of Project Shakti is even more ambitious. HLL is now in the process of piloting`I-Shakti, an IT-based rural information service that will provide solutions to key ruralneeds in the areas of agriculture, education, vocational training, health and hygiene. The project
  37. 37. 37will be piloted in Nalgonda district again. Based on a palm pilot. Women in the rural areas arethe catalyst of change and that is why its whole program keeps women in focus. It‘s the ruralwomen who give Shakti its strength.LIFEBUOY SWASTHYA CHETNA Hindustan Lever Limiteds Lifebuoy, recently announced the launch of Lifebuoy Swasthya Chetna, the first single largest rural health and hygiene educational program. Lifebuoy will make multiple repeat contacts in nearly 15,000 villages in 8 states across rural India. The campaign aims to educatechildren and the community about the threat of unseen germs and basic hygiene practices.Lifebuoy has already successfully conducted pilot studies in Madhya Pradesh, Chhattisgarh,Uttar Pradesh, West Bengal, Orissa and Bihar. This campaign teaches people about maintaininggood health through practice of basic hygienic habits including the hand wash habit.Lifebuoy is among HLLs power brands, which the company is focusing on, selected on thebasis of their absolute size, brand strength, brand relevance, competitive advantage andpotential for growth. The new Lifebuoy range now includes Lifebuoy Active Red (125 gm, 100gm, and 60 gm) and Lifebuoy Active Orange (100 gm). Lifebuoy Active Orange offers theconsumer a differentiated health perfume while offering the health benefit of Lifebuoy. At theupper end of the market, Lifebuoy offers specific health benefits through LifebuoyInternational (Plus and Gold). Lifebuoy International Plus offers protection against germswhich cause body odor, while Lifebuoy International Gold helps protect against germs whichcause skin blemishes.
  38. 38. 38HUL launched multi-brand rural activation programme:-  30/08/2010 : ―Khushiyon ki Doli‖ is a rural marketing initiative of HUL. It was launched this year in three states – Uttar Pradesh, Andhra Pradesh and Maharashtra. During the year itself, over 14 million consumers would be contacted through this initiative in over 35,000 villages across these three states  The main objective of the campaign is to reach out to media dark villages with HUL Brand messages and to engage with consumers deeply to rapidly change brand adoption metrics. The main aim is to change attitudes of the rural mass to inculcate good personal hygiene and through this create greater preference for the company brands by association to daily hygiene habits  Through a multi-brand approach, Khushiyon ki Doli also helps to create a cost efficient rural activation module. It involves various personal care and home care brands of HUL including Wheel, Surf Excel, FAL, Sunsilk, Vim, Lifebuoy and Closeup. The module follows a 3-step process, starting with awareness, moving on to consumer engagement and finally retail contact.
  39. 39. 39 FAILED PRODUCTLIRIL SOAP:If you are looking for a case of an iconic Brand that is going to be killed by poor marketingstrategy, look no further, here is Liril for you. Launched in 1975, the year I was born, this is abrand that built a segment or should I say category for itself in the Indian market. The brand isalso the testimony to the genius of Indias Ad man Alyque Padamsee. This is what he says aboutthe Liril Brand ―The name Liril had been registered by Hindustan Lever from a list sent to themby Unilever in London. Levers were very keen that the soap has striations, wiggly stripes ofdifferent colors running across the tablet. I recommended the tablet be blue – because waterfallis blue with white striations. Hindustan Lever was very excited and produced 1,000 tablets fortesting. At this point Derk Wooller, the Marketing Controller of Hindustan Levers soapsDivision, stepped in and suggested we add the freshness of lime to our story. He felt that thoughthe waterfall had tremendous emotional appeal, Liril needed a rational ingredient to clinch thedeal. I was not averse to this but suggested that we do an `As marketed test: Blue Liril versusGreen Liril with limes. I was wrong and Wooller was right. The rest is history." Alyque Padamsee in his book A Double Life. The brand was a runaway success and the Lirilgirl became the talk of the town. The brand has been consistent with its communication and theeffective use of brand imagery.Waterfall with the unique jingle ensured that the freshness is experienced by the audience. Lirilcan be called as an experiential brand and the communication perfectly supported that. Liril didnot change its positioning for 25 years although the models changed, the brand communicationwas consistent. Then some nut in the company or the agency thought that they should change
  40. 40. 40the communication that worked so effectively. The rest as I say it " Liril became history". Lirilhas changed the imagery and the jingle in the name of freshness .The new jingle or the ad neverhad that freshness. That is why Liril had to change the Ads twice within a span of five years.Mind you Liril never changed its imagery or the Jingle for 25 years...Reports say that Liril had to change because of its stagnant market share. I think there arereasons for declining market share which can be that the brand failed to understand the changingconsumer expectations. There was a flurry of brand launches during the past 10 years and Lirilwas sleeping all the time ―may be resting on the laurels‖. It should have hold on its positioningof freshness " not by changing its communication but by communicating more, developingvariants, bringing in flanking brands or variants thus owning the whole segment for itself andBut it never happened , Liril tried to introduce the Icy mint variant very late and that too with adifferent jingle and imagery. We knew that the Old Liril had died. HLL could have used thesame communication strategy. Then came the horrible experiment of Orange Liril with a stupidJingle OOFYUMMA.... excuse me what the hell is that? The product failed. Then came the newcampaign involving a couple and a new jingle " La-ira -ela", the ad was good but where is liril ?Like Onida, Liril has to come back with the old imagery and old jingle that made liril what it Is( or WAS?) [It is a prediction].2- MOTI SOAP:Moti was Indias premium brand of soaps during the seventies. Now there is no trace of thisbrand. Moti originally was a brand of Tata Oil Mills Company (TOMCO). In 1993, TOMCOmerged with HLL. Moti was a special soap which had certain differentiation. The firstdifferentiation point was the Shape. Unlike other soaps which came in cake form, Moti wasround soap. Moti is the vernacular term for Pearl . So the soap was also in the shape of pearl.Another uniqueness was the size of the soap. Moti was a big soap. Often one gets bored of thesoap and it never quite finish fast. Moti came in popular fragrances like Gulab ( Rose) andSandal. Moti was promoted as a premium soap . The soap was expensive and during theeighties, the soap was priced around Rs 25. Tomco also promoted this brand heavily. Most ofthe campaign had a signature brand imagery the soap surrounded by pearls. Those ads were inmost of the magazines during the peak stage of this brand. Pearls formed an important role in
  41. 41. 41the entire brand communication and pearl was an anchor which created an association with thebrand in the consumers mind.I was searching for an ad of Moti and thanks to Saumyadips blog, I got a vintage ad of moti.Moti then moved to HLL following the merger. That marked the end of this brand.I am not sure why HLL decided to sideline Moti soap. The brand was never promoted andslowly the brand faded into oblivion. The reason for this brands death may be because it did notfit into the brand portfolio of HLL. While Hamam ( another Tomco brand ) thrived, Moti wasnever in the picture. Then with the Power Brand strategy, brands like Moti never had a chance tosurvive.The brand had prospects if HLL had done some serious product development. In the brandingperspective Moti had certain assets. The name and the imagery were wonderful assets for amarketer. Moti had both these assets. The problem was with the product. There was somethingmissing in the soap which ultimately lead to the death of this brand. Another factor was at thesegmentation side. Now also the market for a premium soap is abysmally low in India. Now alsothere is no successful premium brand of soaps in India ( Essenza de wills is trying hard ). So itwas also a tough choice for HLL. The company may have felt that Moti did not have a future asa premium soap. And it may cannibalize some existing brands if the prices are rationalized.Moti may had to be repositioned if it had to survive . But HLL was not prepared to invest in abrand which had a minuscule 2% of the market. So the decision was to slowly kill the brand.
  42. 42. 42 DISTRIBUTION SYSTEM Distribution system‘s focus to enable easy access to their brands, touch consumers with a three-way convergence - of product availability, brand communication, and higher levels of brand experience. The most obvious function of distribution system is to provide the logistics support to get the company‘s product to the end customer. The important role of this system is to maintain the information flow between company to consumer. HULs products are distributed through a network of about 7,000 redistribution stockists covering about one million retail outlets. The general trade comprises grocery stores, chemists, wholesale, kiosks and general stores. Company provides tailor made services to each of its channel partners. HUL is using the point of purchase method for much higher level of direct contact, through in-store facilitators, sampling, education and experience.
  43. 43. 43 RESEARCH METHODOLOGYRESEARCH OBJECTIVES  To determine the market share of HUL in rural market.  To know about the products of HUL  To know the marketing strategies employed by HUL  To find out the Factor influencing demand of FMCG product  To know about distribution channel used by HUL RESEARCH DESIGN:Basically there are three of approaches 1- Exploratory Research. It is loosely structured and the basic premise is to provide direction to subsequent, more structured method of enquiry. Lays the foundation for the formulation of hypothesis (hypotheses). For e.g., literature survey, experience survey. 2- Descriptive research. The main goal of this type of research is to describe the data and characteristics about what is being studied. The annual census carried out by the Government of India is an example of this research. It is carried out with specific objective(s) and hence it results in definite conclusions. For e.g., consider TV as a product. The degree of use of the TV varies with respect to age, sex, income level and profession of the respondents as well as place & time of use. Hence, the degree of use of television to different types of respondents will be of importance to a researcher. 3- Experimental Research It is characterized by much greater control over the research environment and in this case some variables are manipulated to observe their effect on other variables.
  44. 44. 44 FINDINGS HUL has a strong marketing strategy and distribution network is very good. Its implementing its strategy to grow includes focusing on the power brands growth through consumer relevant information, cross category extensions, leveraging channel opportunities and increased focus on rural growth. Hindustan Lever in India has launched a hand-wash product, Surf Excel Quick Wash, with a low foaming formulation, reducing the amount of water needed for rinsing by up to two buckets per wash. HUL is the worlds largest ice cream manufacturer, with successful Heart brand which includes Magnum, Cornetto, Carte dOr and Solero, and Ben & Jerrys and Brayers in the US HUL is amongst the top five exporters of the country and also the biggest exporter of tea and castor oil. They continually developing new and improved products. Knorr is biggest food brand with a strong presence in over 80 countries and a productrange including soups, sauces, bouillons, noodles and complete meals.
  45. 45. 45 SUGGESTIONS HUL should start some another health program for rural people HUL should reduce their price of soap HUL should do more brand building to aware the rural people HUL should motivate the rural people. HUL should introduce new medium package of product.
  46. 46. 46 CONCLUSION With its long and luminous history HUL is India‘s true pride. It is a company which the customers in rural as well as urban India relate to. This explains the deep penetration of HUL in Indian market. The future for HUL is demanding newer and high level innovations so as to cope up with increasing competition. However HUL is well equipped with all what is needed of this Indian Giant.
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