Changing Trends in India's FMCG Industry

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NAME : Vasundhara Jalan
COURSE : ( BBA / TP / 606 )
SUPERVISOR : Mr.TAPOBRATA RAY
TITLE: Changing Trends in the Indian FMCG Industry with a Descriptive Case Study
on Hindustan Unilever Limited.
DATE :30/6/2014
Dissertation submitted in partial fulfilment
Of the requirements of the Graduate Degree
BACHELOR IN BUSINESS ADMINISTRATION
J.D.BIRLA INSTITUE
AT THE
JADAVPUR UNIVERSITY
KOLKATA

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The Controller of Examination,
Jadavpur University,
Kolkata
Respected sir,
This research work has been conducted by me and is an original work. The references used
have been mentioned in the bibliography.
This research is a partial fulfilment of the requirement for the BBA degree to be awarded
by the Jadavpur University.
Yours faithfully,
(Vasundhara Jalan)

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DECLARATION
I declare the following:
The word count of the dissertation is 18,079 approximately.
The material contained in this dissertation is the end result of my own work. Due
acknowledgement has been given in the bibliography and references to all sources be they
printed, electronic or personal. I am aware that my dissertation may be submitted to a
plagiarism detection service where it will be stored in a database and compared against
work submitted from this institute or from any other institutions.
In the event that there is a high degree of similarity in content detected, further
investigations may lead to disciplinary actions including the cancellation of my degree
according to Jadavpur University rules and regulations.
I declare that ethical issues have been considered, evaluated and appropriately addressed
in this research.
I agree to the entire electronic copy or sections of the dissertation to being placed on the
e-learning portal, if deemed appropriate, to allow future students the opportunity to see
examples of past dissertations and be able to print and download copies if they so desire.
SIGNED:
DATE:
NAME: Vasundhara Jalan
ROLL NO: 33
SUPERVISOR: Mr. Tapobrata Ray

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ACKNOWLEDGEMENT
I would like to thank my mentor, Mr.Tapobrata Ray, with heartiest respect and gratitude,
for guiding me through my dissertation and for being there for us for all our queries. I
would also like to thank her for her undying support that she so graciously extended
towards us.
I express my thanks to the Director of J.D. Birla institute, Dr. Asit Dutta, for giving me the
opportunity to gather such wonderful learning experience.
I am also obliged to my college librarians who have assisted me in finding various
references for data collection.

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ABSTRACT
The research aims to show the preference of Indian customers when it comes to selecting
a particular brand of FMCG products. The paper tries to uncover the various factors and
considerations that customers make when opting for a particular brand of FMCG product.
The research also aims to understand that how these different factors are interlinked . The
research in the due process will also highlight the different reasons for preferring one
brand over other which are ruling the roost when it comes to guiding the purchase
decision of the consumers. It has been carried out with help of a Case Study on Hindustan
Unilever.

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Index
SERIAL NO.
CONTENT PAGE NO.
1
INTRODUCTION 7-13
2
LITERATURE REVIEW 14-33
3
DESCRIPTIVE CASE STUDY ON HUL 34-38
4
RESEARCH METHODOLOGY 39-42
5
DATA ANALYSIS 43-52
6
FINDINGS & EXPLAINATIONS 53
7
CONCLUSION 54-55
8
ANNEXURE 56-82
9
REFERENCES 83-84

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1.Introduction :
1.1 (refer to reference 1)
FMCG industry, alternatively called as CPG (Consumer packaged goods) industry primarily
deals with the production, distribution and marketing of consumer packaged goods. The
Fast Moving Consumer Goods (FMCG) is those consumables which are normally consumed
by the consumers at a regular interval. Some of the prime activities of FMCG industry are
selling, marketing, financing, purchasing, etc. The industry also engaged in operations,
supply chain, production and general management.
Market potentiality of FMCG industry: Some of the merits of FMCG industry, which made
this industry as a potential one, are low operational cost, strong distribution networks,
presence of renowned FMCG companies. Population growth is another factor which is
responsible behind the success of this industry.
Leading FMCG companies & Industry Potential: Some of the well known FMCG companies
are Hindustan Unilever, Sara Lee, Nestlé, Reckitt Benckiser, Procter & Gamble, Coca-Cola,
Carlsberg, Kleenex, General Mills, Pepsi, Mars, Coca cola, Nirma, Dabur, Himani etc.
The Indian FMCG sector is the fourth largest sector in the economy with a total
market size in excess of US$ 20.1 billion. It has a strong MNC presence and is characterized
by a well-established distribution network, intense competition between the organized
and unorganized segments and low operational cost. Availability of key raw materials,
cheaper labour costs and presence across the entire value chain gives India a competitive
advantage.
The FMCG market was set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion
in 2015. Penetration level as well as per capita consumption in most product categories
like jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped
market potential. Burgeoning Indian population, particularly the middle class and the rural
segments, presents an opportunity to makers of branded products to convert consumers
to branded products. Growth is also likely to come from consumer 'upgrading' in the
matured product categories. With 200 million people expected to shift to processed and
packaged food by 2015, India needs around US$ 28 billion of investment in the food-
processing industry.
Automatic investment approval (including foreign technology agreements within
specified norms), up to 100 per cent foreign equity or 100 per cent for NRI and Overseas
Corporate Bodies (OCBs) investment, is allowed for most of the food processing sector.
That will translate into an annual growth of 10% over a 5-year period. It has been
estimated that FMCG sector will rise from around Rs 56,500 crores in 2005 to Rs 96,100
crores in 2015. Hair care, household care, male grooming, female hygiene, and the

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chocolates and confectionery categories are estimated to be the fastest growing
segments, says an HSBC report.
With the presence of 12.2% of the world population in the villages of India, the
Indian rural FMCG market is something no one can overlook. Increased focus on farm
sector will boost rural incomes, hence providing better growth prospects to the FMCG
companies. Better infrastructure facilities will improve their supply chain. FMCG sector is
also likely to benefit from growing demand in the market. Because of the low per capita
consumption for almost all the products in the country, FMCG companies have immense
possibilities for growth. And if the companies are able to change the mindset of the
consumers, i.e. if they are able to take the consumers to branded products and offer new
generation products, they would be able to generate higher growth in the near future. It is
observed that the rural income has grown, boosting purchasing power in the countryside.
However, the demand in urban areas would be the key growth driver over the long term.
Also, increase in the urban population, along with increase in income levels and
the availability of new categories, would help the urban areas maintain their position in
terms of consumption. At present, urban India accounts for 66% of total FMCG
consumption, with rural India accounting for the remaining 34%. However, rural India
accounts for 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 the
foods segment, it is estimated that processed foods, bakery, and dairy are long-term
growth categories in both rural and urban areas.
1.2 The FMCG Industry & Trends: (refer to reference 1)
Indian Competitiveness and Comparison with the World Markets:
The following factors make India a competitive player in FMCG sector:
1. Availability of raw materials: Because of the diverse agro-climatic conditions in India,
there is a large raw material base suitable for food processing industries. India is the
largest producer of livestock, milk, sugarcane, coconut, spices and cashew and is the
second largest producer of rice, wheat and fruits &vegetables. India also produces caustic
soda and soda ash, which are required for the production of soaps and detergents. The
availability of these raw materials gives India the location advantage.
2. Labour cost comparison: Low cost labour gives India a competitive advantage. India's
labour cost is amongst the lowest in the world, after China & Indonesia. Low labour costs

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give the advantage of low cost of production. Many MNC's have established their plants in
India to outsource for domestic and export markets.
3. Presence across value chain: Indian companies have their presence across the value
chain of FMCG sector, right from the supply of raw materials to packaged goods in the
food-processing sector. This brings India a more cost competitive advantage. For example,
Amul supplies milk as well as dairy products like cheese, butter, etc.
FMCG in India has a strong and competitive MNC presence across the entire
value chain. It has been predicted that the FMCG market will reach to US$ 33.4 billion in
2015 from US $ billion 11.6 in 2003. The middle class and the rural segments of the Indian
population are the most promising market for FMCG, and give brand makers the
opportunity to convert them to branded products. Most of the product categories like
jams, toothpaste, skin care, shampoos, etc, in India, have low per capita consumption as
well as low penetration level, but the potential for growth is huge.
(Refer to Table 25) The companies mentioned in Exhibit I, are the leaders in their
respective sectors. 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 HUL brands in
the 21, aggregating Rs. 3,799 crore or 54% of the personal care category. Cigarettes
account for 17% of the top 100 FMCG sales, and just below the personal care category. ITC
alone accounts for 60% volume market share and 70% by value of all filter cigarettes in
India.
The foods category in FMCG is gaining popularity with a swing of launches by
HUL, ITC, Godrej, and others. This category has 18 major brands, aggregating Rs. 4,637
crore. Nestle and Amul slug it out in the powders segment. The food category has also
seen innovations like softies in ice creams, chapattis by HUL, ready to eat rice by HUL and
pizzas by both GCMMF and Godrej Pillsbury. This category seems to have faster
development than the stagnating personal care category. Amul, India's largest foods
company has a good presence in the food category with its ice-creams, curd, milk, butter,
cheese, and so on. Britannia also ranks in the top 100 FMCG brands, dominates the
biscuits category and has launched a series of products at various prices.
1.3 Investing inIndia: (refer toreference 1)
India‘s market potential lures foreign companies. But local consumers and rivals have
tripped many up. For foreign companies, doing business in India can be gutting wrenching.
Its demanding consumers can be difficult to read, and local rivals can be surprisingly
tough. For most of its postcolonial life, India has shut out the world, adhering to a socialist
ideal of self-reliance. Policymakers have been struggling for the past 16 years to attract
capital and ignite growth. In 1991, the government dramatically rejected its socialist past

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and admitted foreign investors. The idea was to enlist foreign companies' aid to turn India
into another Asian Tiger, where cheap labour, an English-speaking workforce, a vast new
middle class, and a democratic government would create a wave of prosperity.
Now, the international companies that ventured in after 1991 are tallying their profits and
losses and wondering what the future holds for this market of 950 million people. A
primary lesson, especially for consumer-goods companies, is not to be dazzled by India's
size. Many investors accepted government estimates that India's middle class numbered
250 million. But according to a recent survey of consumer patterns conducted by the
National Council on Applied Economic Research in Delhi, India's consumer class probably
totals 100 million at best-- and there's much stratification among them. People in Madras,
for example, have tastes vastly different from people in Punjab. 'Different states have
different consumption patterns and customs.
1.4 The table summarizes pre and post liberalization scenario ( Refer to
Annexure Table 26 and reference 1)
1.5 FMCG Category and products: (Refer toTable 27 and reference 2)
1.6 Hindustan Unilever Limited – (refer to reference 3) (abbreviated to HUL),
formerly Hindustan Lever Limited, is INDIAs largest consumer products company and was
formed in 1933 as Lever Brothers India Limited. It is currently headquartered in Mumbai,
India and its 41,000 employees are headed by Harish Manwani, the non-executive
chairman of the board. HUL is the market leader in Indian products such as tea, soaps,
detergents, as its products have become daily household name in India. The Anglo-Dutch
company Unilever owns a majority stake in Hindustan Unilever Limited.
The company was renamed in late June 2007 as "Hindustan Unilever Limited".
Some of its brands include Kwality Wall's ice cream, Lifebuoy, Lux, Breeze, Liril, Rexona,
Hamam, Moti soaps, Pureit Water Purifier, Lipton tea, Brooke Bond tea, Bru Coffee,
Pepsodent and Close Up toothpaste and brushes, and Surf, Rin and Wheel laundry
detergents, Kissan squashes and jams, Annapurna salt and atta, Pond's talcs and creams,

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Vaseline lotions, Fair & Lovely creams, Lakme beauty products, Clinic Plus, Clinic All Clear,
Sunsilk and Dove shampoos, Vim dish wash, Ala bleach and Domex disinfectant, Rexona,
Modern Bread and Axe deospray.HUL has produced many business leaders for corporate
India. It is referred to as a ‘CEO Factory' in the Indian press for the same reasons. It’s
leadership building potential was recognized when it was ranked 4th in the Hewiit Global
Leadership Survey 2007 with only GE, P&G and Nokia ranking ahead of HUL in the ability
to produce leaders with such regularity
Today, HUL is one of India’s largest exporters of branded Fast Moving Consumer Goods. It
has been recognized by the Government of India as a Golden Super Star Trading House.
Over time HUL has developed into a viable & competitive sourcing base for Unilever world
wide in Home and Personal Care & Foods & Beverages category of products. HUL is also a
global marketing arm for select licensed Unilever brands and also works on building
categories with core country advantage such as branded basmati rice.
HUL Exports offers high level of service with flexibility and responsiveness thorough out
the supply chain. It has a dedicated organization structure to support this endeavor and
this has helped in growth of these businesses in particular. Intrinsic cost competitiveness
in the end to end Supply chain with appropriate technology and competitive capital
investment operations while delivering best in class quality enables HUL to position itself
as a key sourcing hub for Unilever and also become a preferred partner for Global
customers in categories we operate.
HUL’s key focus in the exports business is on two broad categories. It is a sourcing base for
Unilever brands in Home & Personal Care (HPC) and Food and Beverages (F&B) for
supplies to other Unilever companies. It also focuses on becoming a preferred supplier to
both non-Unilever and Unilever clients in three categories in which India, as a country, has
competitive advantage – Branded Rice, Marine Products and Castor and its Derivatives.
HUL enjoys international recognition within Unilever and outside for its quality, reliability
and speed of customer service. HUL's Exports geography comprises, at present, countries
in Europe, Asia, Middle East, Africa, Australia, and North America etc.
 HUL’s products touches two out of three Indian everyday
 Reach 80% Households
 Direct Coverage of 1mln outlets
 2000 Suppliers and Associates
 71 Manufacturing locations

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 15000 Employees
 1100 managers
 Shelf availability 84% outlets in India
1.6.1 PRODUCT LINE ( Refer to Figure 25 and reference 4)
A) HOME AND PERSONAL CARE:
1) Personal wash
Lux, Lifebuoy, Liril, Hamam, Domex, Breeze, Dove, Pears, Rexona
2) Laundry
Surf Excel, Vim, Rin, Wheel, Comfort fabric and Conditioner
3) Skin Care
Fair & Lovely, Ponds, Aviance, Vaseline
4) Hair care
Sunsilk Naturals, Clinic Plus, Tressemme
5) Oral care
Pepsodent, Close up
6) Deodorants
Axe, Rexona
7) Colour Cosmetics
Lakme
8) Ayurvedic Personal and health care
Ayush
B) FOOD
1) Tea
Brooke Bond, Lipton

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2) Coffee
Brooke Bond Bru
3) Foods
Kissan, Knor, Annapurna
4)Ice-Creams
Kwality Walls
C) WATER PURIFIER
Pureit, New Magic

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2.Literature Review:
(Refer to reference 5)
 The present researcher would like to study the changing trends in the Indian FMCG
Industry with a descriptive case study on Hindustan Unilever Limited. She is
interested in the topic because she wants to know how the increasing disposable
income and improved standard of living in most tier II and tire III cities are
spearheading the FMCG & retailing growth across the nation and how the changing
profile and mind set of the consumers has shifted the thought to “Value for
Money” from “Money for Value” in the industry.
 It's fair to say there is never a dull moment in FMCG. From the pace at which goods
leave the shelves to the rate of product innovation and career progression, things
move quickly. And it doesn't end there. The brands themselves are changing just as
quickly. 40% of brands on the top 100 list twenty years ago have already been
replaced by new names today.
 FMCG industry, alternatively called as CPG (Consumer packaged goods) industry
primarily deals with the production, distribution and marketing of consumer
packaged goods. The Fast Moving Consumer Goods (FMCG) are those consumables
which are normally consumed by the consumers at a regular interval. Some of the
prime activities of FMCG industry are selling, marketing, financing, purchasing, etc.
The industry also engaged in operations, supply chain, production and general
management
 Some common FMCG product categories include food and dairy products,
glassware, paper products, pharmaceuticals, consumer electronics, packaged food
products, plastic goods, printing and stationery, household products, photography,
drinks etc. and some of the examples of FMCG products are coffee, tea, dry cells,
greeting cards, gifts, detergents, tobacco and cigarettes, watches, soaps etc. Some
of the merits of FMCG industry, which made this industry as a potential one, are
low operational cost, strong distribution networks, presence of renowned FMCG
companies. Population growth is another factor which is responsible behind the
success of this industry.

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2.1. BRANCH OF MANAGEMENT
The branch of management this falls in is the Strategic and Marketing branch of
management :-
 The branch of marketing management is a business discipline which focuses on the
practical application of marketing techniques and the management of a firm's
marketing resources and activities and includes the planning, executing, pricing,
promotion and distribution activities.
 The branch of strategic management involves the formulation and implementation
of the major goals and initiatives taken by a company's top management on behalf
of owners, based on consideration of resources and an assessment of the internal
and external environments in which the organization competes.
The various sub-management areas in which the Industry falls in are –
2.1.1 Strategic Brand Management ( refer to reference 6 and 7) - Every organization has a
brand, whether they have consciously developed or not. A brand is an expectation or a
promise of experience. Whether that expectation is trusting, authoritative, innovative,
brands are the short hand for describing the way a business, organization, product,
services, or a person relates to its stake holders. The way to build a strong to put their
customers and their needs at the center of the every decision the organization makes.
Overtime the customer centric action creates the differentiation in the marketplace and
build an emotional connection with the customers. The process of managing brand as
assets begins with the understanding the brand from the customers point of view. What
image, reputation, perception does each customer and stake holder maintain that can be
capitalized or corrected. Managing brand as assets also requires a considerable effort to
measure and quantify the impact of the brand on customer, their decision, and the
companies financial performance.
2.1.1.1 MECHANICS OF STRATEGIC BRAND MANAGEMENT IN THE FMCG SECTOR –
 In any successful consumer-packaged-goods (CPG) company, there have always
been a few creative marketing integrators who made it tick. They are the brand
managers and category managers, the key-account executives and geographic
leaders who played starring roles, pulling the levers at the center of complicated
businesses. The concept of branding originated in the FMCG industry. However,
the process of branding has evolved and has grown to include more than just the
company name/logo, product name/logo. Brands create emotional attachment to
products and companies.

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 Successful premium brands are perceived to evoke a sense of higher quality along
with all intangible qualities that surround the brand. Typically companies think of
brands in development, growth and decline. The ability to sustain them is vital to
protecting your market share. Strategic Brand Management for FMCG offers some
real-life perspectives to help you shape robust brand management strategies in the
competitive FMCG sector.
2.1.1.2 COMPARISONS OF STRATEGIC BRAND MANAGEMENT OF FMCG WITH OTHER
INDUSTRIES
 Emotional Branding in the Pharmaceutical Industry - As opposed to the FMCG
industry, the pharmaceutical industry has not been as efficient in leveraging the
power of their brands primarily because drugs have always competed against each
other based on functional attributes (clinical and product related features).
However with patent expiry, this has become a difficult situation as generics
create competition in the market.
Additionally, the switch of drugs from prescription to over-the-counter is making it
similar to consumer goods. The author of this study attempted to find out if
pharmaceutical drug manufacturers could utilize similar methods used in the
FMCG industry to connect with consumers at an emotional level, in order to build
in brand loyalty and prevent the switch into branded and generic manufacturers of
the same drug. The objectives were to investigate the functional and emotional
benefits and values that are important to consumers who purchase hay fever
medication.
 Branding in the Automobile Industry – From the very beginning
of automobile industry, product and branding strategies are considered as one of
the major functions performed by the manufacturers. In this industry, the core
product is transportation and communication facility backed by actual and
augmented product. Branding is, now-a-days, influencing the consumer buying
behavior to a greater extent. As such manufacturers are now concentrating more
on brand placement rather than product placement. They are developing brand
loyalty in the minds of their customers in order to achieve high retention rate.
Automobile companies can build up both product and corporate brand, but the
recent trend is towards emphasizing on corporate branding. Brand developing
strategies includes line extension, brand extension, multi-brand, new brand. So in
this industry, companies always try to introduce new and quality product and build
and maintain strong brand.

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2.1.2 Channel/ Distribution Management (refer to reference 7 and 8) - Marketing
channels usually cover the analyses of the aggregate supply (logistic) channels at the
present time. They refer to entire economic flows, from the raw material producer, across
all levels of production and distribution and finally to consumption. This means that
relationships need to be built not only with clients but also with key suppliers and
middlemen when producing and delivering goods or services. It consists of both
“upstream” and “downstream” partners. Therefore, this approach is important, since the
success on markets can be ensured only by creating the whole value networks, not only by
its downstream part, i.e. by distribution channels.
2.1.2.1 MECHANICS OF DISTRIBUTION MANAGEMENT IN THE FMCG SECTOR -
 The supply chain of products in the FMCG market in India is one of the longest
supply chains an industry could really have. There are as many as 5 levels of
intermediaries involved in the entire supply chain through which a product passes
before reaching the end consumer.
 What has been observed is that even though these FMCG companies are big
multinationals and Indian but face a major challenge of making their products
available in the market in the right quantities and in the right time.
 These products are transported either via roadways or railways within
the domestic markets and normally don’t take more than a week to reach the
retailers. FMCG products are normally a high volume ball game and products have
to essentially be available in the market at all given points of time and at all given
points of purchase and therefore the distribution activities are highly volatile and
dynamic.
 Since it’s a volume game, manufacturers make all possible efforts to boost sales
and promote their distributors to earn more and more orders from the retailers
and wholesalers. A close check is maintained on the flow of the products on a
daily, weekly, fortnightly and monthly basis to determine the trend in the business
and flow of products and consumption. This activity also helps to find out
drawbacks of the distribution system, if any, and rectify them within time.
2.1.2.2 COMPARISONS OF CHANNEL MANAGEMENT OF FMCG WITH OTHER INDUSTRIES
–
 Distribution in the Newspaper Industry - The newspaper sales involve distributing
highly perishable products under severe time constraints.

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* The printed newspapers have to be dispatched to various distributors across the
region. Transportation is normally through private contract carriers within local
area, public transport in case of longer distances and through couriers in other
cases.
* The newspaper distributor has the rights to distribute the newspaper in his area.
The revenue of the newspaper distributor is based on a commission on the sale of
every newspaper. The circulation is normally through salesmen appointed and
salaried by the distributors, who in turn pass it on to hawkers.
* Hawkers, vendors and book stall owners are the last link of the supply chain
before newspaper reaches readers. The hawkers' remuneration is also normally
based on the commission system and is generally the highest in the entire supply
chain.
* Responsiveness and efficiency play an important role in newspaper distribution
channel. Responsiveness includes supply chain's ability to respond to wide a range
of quantity demanded (due to demand fluctuations) and meet short lead times. On
the other hand efficiency is the cost of making and delivering the newspaper to the
readers.
 Distribution in the Mobile Phones Industry - Indian cell phone subscriber base has
grown rapidly in the last couple of years and now stands at about 50 million. In
many urban areas, the number of cell phone connections is larger than the number
of installed landline connections. This firm employs multiple channels (own outlets
as well direct selling agents) for acquiring customers unlike the competition who
mostly employ marketing agents for this task. The firm imports and sells handsets
which are customized to its network. This makes switching very expensive for
customers and hence is a good proposition for the company. Huge investments in
infrastructure are backed up by the appointment of about 100,000 direct selling
agents for reaching consumers.

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2.2. MARKETING STRATEGY ON DIFFERENT STAGES PLC AND ITS MARKETING
IMPLICATIONS ON FMCG PRODUCTS (refer to reference 9)
When a new product is being introduced in to a market, it normally undergoes a series of
step in the market; these steps are introduction growth, maturity and lastly the decline
stage. These steps follow each other chronologically and thus referred to as the product
life cycle (PLC. The PLC sequence or series is closely linked with the dynamics in the market
environment and has subsequent effects on the product marketing mix and marketing
strategies. A graph that is normally plotted of the revenue against the stages of product is
referred to as the product life cycle graph.
 Rural growth - Most FMCG categories are growing faster in rural as compared to
urban India. This growing importance of rural India will also mean that regional
players and categories with a strong regional franchise will influence marketing
plans. As these categories expand, they will influence the way adjacent categories
and emerging alternatives will seek to market themselves.
Innovation Imperative – Innovation is imperative in the FMCG category today.
Differentiation is the key. Product life cycles are getting shortened given the highly
competitive scenario. There is therefore a very strong thrust on innovation in the
FMCG space across various aspects ranging from brand proposition, packaging,
communication, consumer in sighting to pricing. We are constantly re-engineering
our offerings on the innovation plank with the objective of serving the evolving
needs of the consumer. Some of the examples in the innovation space include the
launch of Goodnight Advanced Active+ and Good Knight Advanced Low Smoke Coil.
Shopper Marketing – With the growth in modern retail, the store is emerging as
the most potent medium in the marketing of brands. The Indian consumer is
clearly enjoying the modern trade shopping experience and is increasingly
shopping there, as is evident from the increased spending at modern stores.
Shopper marketing has, therefore, become an important tool for marketers driving
brand choice inside the stores.
 EXAMPLE, some of our brand campaigns on social media including the “HIT Kill
Malaria” campaign have received an overwhelming response. We continue to be
upbeat about consumer demand in 2012. As India is one of the fastest growing
economies, we will witness significant play on innovation, leading to intensity of
competition. We expect growth to be driven on the back of new product launches
and renovations of existing products. We will invest significantly behind these
launches and support our innovations.
2.2.1 Product Life Cycle of FMCG Products – Implications of the Marketing Strategy (refer
to reference 9) -
The FMCG differentiating and positioning strategy changes as the product market and
competitors change overtime. Most Product Life Cycle curves are portrayed as bell-

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shaped. This curve is typically divided into four stages: introduction. Growth, maturity and
decline (Wassen, 1978). A product has a Life cycle is to assert four things. Products have a
limited Life; Product sales pass through distinct stages, each posing different challenges,
opportunities and problems to the seller; profits rise and fall at different stages of the PLC;
and products require different marketing, financial, manufacturing, purchasing and human
resource strategies in each stage of their life cycle. (Kotler, 2000).
Figure : The product lifecycle
Introduction Stage
It takes time of a new product to begin selling in volume. There may be manufacturing or
logistics issues to contend with. The marketplace may be unfamiliar with the product and
creating awareness takes time. Consequently product sales show a slow growth during the
introduction phase. The FMCG adjust price, place (where the product is sold) and
promotion to meet his marketing objectives. For example, in markets that are large with

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high potential competition it would make sense to invest heavily in promotion and to start
with low prices. This strategy would also apply for a product for which production cost
would decline quickly with economies of scale. Using this strategy, the FMCG penetrates
quickly before competitors has a chance to introduce competing products.
Growth Stage
The growth space is characterized by a rapid increase in sales volume. This is created by
increased product demand. The FMCG and logistics issues are likely resolved and the
market is far more aware of the product. Since economies of scale have started to take
effect the marketer should be able to increase promotional activities. At the same time
competition will begin to stiffen and so the marketer should make necessary adjustments
to the 4 Ps of marketing. For example, it may be appropriate to tweak the products by
adding new features. In this way the competition may be fended off. It may also make
sense to reduce prices a little to bring in more price sensitive consumers.
Maturity Stage
The maturity phase is characterized by sales volumes leveling off. At this point competition
is strong and margins may begin to suffer. Signs of getting to this stage are that
competitors may start advertising more strongly or using other promotional means to
increase sales.
Decline Stage
Finally product sales begin to decrease and it is at this point that some serious marketing
decisions need to be made. It may be possible to extend the life of a product by changing
some of its product attributes, repositioning it or by packaging it with other products. On
the other hand it may make sense to delete the product from your portfolio.
2.3 . MAJOR SEGMENTS IN THE FMCG SECTOR (refer to reference 10)

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 Household care –
 The fabric wash market size is estimated to be ~USD 1 billion, household
cleaners to be USD 239 million, with the production of synthetic detergents
at 2.6 million tonnes. The demand for detergents has been growing at an
annual growth rate of 10 to 11% during the past five years. On account of
convenience of usage, increased purchasing power, aggressive advertising
and increased penetration of washing machines, the urban market prefers
washing powder and detergents to bars. The regional and small
unorganized players account for a major share of the total detergent
market in volumes. Household Care category recorded robust volume and
value growth during the year through focused innovation in the portfolio to
provide greater consumer value.
 For example, Vim bar continues to delight consumers by delivering superior
performance and new offerings like the Anti-Germ Bar and the Monthly Tub
Pack. Vim liquid continues to develop the liquid dish wash category driven
by superior product quality and strong advertising. It has effectively
accomplished the dual job of growing the liquids market by reaching out to
more households, while increasing consumption in existing households.
Domex continued to provide clean and germ free toilets to the consumers.
 Personal Care (HPC) –
 The personal care products (PCP) market in India is estimated to be worth
~USD 4 bn p.a. Personal hygiene products (including bath and shower
products, deodorants etc.), hair care, skin care, color cosmetics and
fragrances are the key segments of the personal care market. Each of these
segments exhibits its unique trends and growth patterns.
 For example,
o The hair care market can be segmented into hair oils, shampoos,
hair colorants & conditioners, and hair gels. The coconut oil market
accounts for 72% share in the hair oil market.
o The skin care market is at a primary stage in India. With the change
in life styles, increase in disposable incomes, greater product choice
and availability, people are becoming more alert about personal
grooming.
o The oral care market can be segmented into toothpaste – 60%;
toothpowder – 23%; toothbrushes – 17%.

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 Food & Beverages -
 Food processing industry is one of the largest industries in India, ranking
fifth in terms of production, growth, consumption, and export. The total
value of Indian food processing industry is expected to touch USD 194
billion by 2015 from a value of USD 121 billion in 2012, according to Indian
Council of Agricultural Research (ICAR).
 The packaged food segment is expected to grow 9% annually to become a
`6 lakh crore industry by 2030, dominated by milk, sweet and savoury
snacks and processed poultry, among other products, according to the
report by CII-McKinsey. The ready-to-drink tea and coffee market in India is
expected to touch `2,200 crore in next four years, according to estimates
arrived at the World Tea and Coffee Expo 2013.
 Market share of companies in a few FMCG categories as on March 13’ (
Refer to Figure 26 in the Annexure)
2.4. Journals – Review of consumer marketing theory of FMCG Industry ( refer ro
references 11, 12 and 13) –
 Author 1 – Philip Kotler, 1984 (Journal of Marketing, Vol. 37, No. 4. (Oct., 1973),
pp. 42-49) – The marketer is a professional whose basic interest and skill lies in
regulating the level, timing, and character of demand for a product, service, place,
or idea. He faces up to eight different types of demand situations and plans
accordingly. If demand is negative, it must be disabused (conversional marketing);
if nonexistent, it must be created ( stimulational marketing); if latent, it must be
developed (developmental marketing); if faltering, it must be revitalized (re-
marketing); if irregular, it must be synchronized (synchromarketing); if full, it must
be maintained (maintenance marketing); if overfull, it must be reduced
(demarketing); and finally, if unwholesome, it must be destroyed
(countermarketing). Each demand situation calls for a particular set of
psychological concepts and marketing strategies and may give rise to task
specialization. Managerial marketing, rather than a singular effort to build or
maintain sales, is a complex game with many scripts. The popular image of the
marketer is that he is a professional whose job is to create and maintain demand
for something. Unfortunately, this is too limited a view of the range of marketing
challenges he faces. In fact, it covers only two of eight important and distinct
marketing tasks. Each task calls for a special type of problem-solving behavior and

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a specific blend of marketing concepts. Marketing management may be viewed
generically as the problem of regulating the level, timing, and character of demand
for one or more products of an organization. The organization is assumed to form
an idea of a desired level of demand based on profit maximization, sales
maximization subject to a profit constraint, satisfying, the current or desired level
of supply, or some other type of analysis.
 Arguments – External and uncontrollable environmental factors are very
important elements of the marketing strategy program.
 Propositions –
o The Marketing Mix should include-
- Customers
- Environmental Variables
o Two additional P’s to the 4 traditional ones-
- Political Power
- Public Opinion Formulation
 Author 2 – Kenichi Ohmae, 1982 (European Management Journal, 1982, vol. 1,
issue 1, pages 38-48) - Kenichi Ohmae offers a conceptual framework for strategic
planning and decision-making derived from his extensive strategy work with major
companies in Japan, North America and Europe. The model elaborates the three
key elements — the corporation, its customers and its competitors — forming
what Ohmae calls the ‘strategic triangle’, showing how these should be analyzed
individually and also be integrated with each other in pursuit of effective business
performance.
Ohmae opens the debate with his descriptive 1982 text “The Mind of the
Strategist”adopting a position on the right brain/left brain continuum favoring the
benefits of intuition and creativity over hard analysis. With regard to the relative
use of intuitionand analysis Ohmae (1982, p. 13-14) provides some flexibility for
the strategic thinker: “…the most reliable means of dissecting a situation into its
constituent parts and reassembling them in the desired pattern is not a step-by-
step methodology such as systems analysis. Rather it is that ultimate nonlinear
thinking tool, the human brain. True strategic thinking contrasts sharply with the
conventional mechanic systems approach based on linear thinking. But it also
contrasts with the approach that stakes everything on intuition, reaching
conclusions without any real breakdown or analysis…the best possible solutions
come from a combination of rational analysis, based on the real nature of things,

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and imaginative reintegration of all the different items into a new pattern, using
nonlinear brainpower.”
 Arguments – No strategic elements are to be found in the marketing mix.
The 4 P’s are not the proper basis of the 21st century marketing. The
marketing developments of the last 40 years require a new flexible
platform.
 Propositions – The Marketing Strategy is defined by 3 factors. Three C’s that
define and shape the Marketing Strategy are –
o Customers
o Competition
o Cooperation
Author 3 –Robins 1991 (Journal of Business Ethics and Marketing 10 (4):273 - 284 (1991))
– Robin first proposed market segmentation as an alternative market development
technique to product differentiation in imperfectly competitive markets. Since few
markets correspond with an idealized perfect market, and as market-oriented companies
tend to be more profitable because they define products from the perspective of the
customer rather than their own needs, the rationale for market segmentation seems self-
evident. However, to date the literature on market segmentation has focused quite
narrowly around what segmentation bases to use, particularly advocating customer
characteristics product attributes, benefits sought, service qualities, values
and buying behavior. Such bases are particularly skewed towards the consumer marketing
field, with a more limited treatment in the business to business (where implementation
problems are equally paramount and less well considered)
 Arguments – The 4 P’s of Marketing Mix are too much internally oriented.
 Propositions – Four C’s expressing the external orientation of Marketing
Mix are –
o Customers
o Competition
o Capabilities
o Company

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2.5. PORTER’S FIVE FORCE ANALYSIS (refer to reference 10)
Figure : Porter’s Five Force Analysis of Indian FMCG Industry
To determine industry attractiveness and long-run industry profitability of the Indian
FMCG Industry, we chose to apply the Porter’s five forces in our analysis. Porter’s five
forces are: (1) Barriers to Entry and exit, (2) Threat of substitutes, (3) Buyer bargaining
power, (4) supplier bargaining power, and (5) Industry Competition.
1. Barriers to Entry and exit: The Indian FMCG Industry is characterized with modest entry
and exit barriers. Integrated business model and increasing capital requirement in the
industry restrict new entrants. Huge investments in setting up distribution networks and
promoting brands and competition from established companies. FMCG Industry does not
have any measures which can control the entry of new firms. The resistance is very low
and the structure of the industry is so complex that new firms can easily enter and also
offer tough competition due to cost effectiveness. Huge investments in promoting brands,
setting up distribution networks and intense competition, but the sector is not capital
intensive. Existing large players have competitive advantage on others because of their
large scale of operation, brand attachment, deeply entrenched distribution network and
the experience curve.
 Powerful source of competition (New capacity & product range)

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 Bigger the entrant - more severe.
 Limits prices, affects profitability.
2. Threat of substitutes: Being an essential commodity the demand for consumer
products is elastic. Multiple brands positioned with narrow product differentiation.
Companies entering a category /trying to gain market share compete on pricing which
increases products substitution. Hence, threat of substitute is high in the industry. There
are complex and never ending consumer needs and no firm can satisfy all sorts of needs
alone. There are plenty of substitute goods available in the market that can be re-placed if
consumers are not satisfied with one. The wide range of choices and needs give a
sufficient room for new product development that can replace existing goods. This leads
to higher consumer’s expectation.
 Price advantage
 Performance improvement
 Coir decreased demand synthetic fiber
 Substantial invest - R&D
 Limit price & profitability
3. Buyer bargaining power: High brand loyalty for some products, thereby discouraging
customers’ product shift. But low switching cost and aggressive marketing strategies under
intense competition within the FMCG companies, induce Customers to switch between
products, thereby driving value for money deals for consumers. Bargaining power of
consumers is also very high. This is because in FMCG industry the switching costs of most
of the goods is very low and there is no threat of buying one product over other.
Customers are never reluctant to buy or try new things off the shelf.
 Groups/ cartels (Industrial products), formal/informal groups,
 Pressure on price, quality, delivery
 Affect cost & investment (demand by customers)
4. Supplier bargaining power: Prices are generally governed by international commodity
markets, making most FMCG companies price takers. Due to the long term relationships
with suppliers etc., FMCG companies negotiate better rates during times of high input cost
inflation. The bargaining power of suppliers of raw materials and intermediate goods is
not very high. There is ample number of substitute suppliers available and the raw
materials are also readily available and most of the raw materials are homogeneous. There
is no monopoly situation in the supplier side because the suppliers are also competing
among themselves.

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 Specialized product
 Limited supply
 Affects cost of raw materials Industry attractiveness & profitability
5. Industry Competition: Competitiveness among the Indian FMCG players is high. With
more MNCs entering the country, the industry is highly fragmented. Advertising spends
continue to grow and marketing budgets as well as strategies are becoming more
aggressive. Private labels offered by retailers at a discount to mainframe brands act as
competition to undifferentiated and weak brands. In the FMCG Industry, rivalry among
competitors is very fierce. Players from unorganized and organized sectors continue to
grab each other’s market shares. Low brand awareness enables local players to market
their spurious look-alike brands. Organized retailers are competing for a limited density of
population in a crowded market and the competitors try to snatch their share of market.
Market Players use all sorts of tactics and activities from intensive advertisement
campaigns to promotional stuff and price wars etc. Hence the intensity of rivalry is very
high.
 Influence price
 Cost of competing in industry
 Production facilities - product development
 Advertising, sales force etc.

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2.6. Ansoff Matrix / Boston Consultancy Group Matrix (refer to refernce 14)
For any decision to be taken at corporate level, you need the right strategic tools. Ansoff
matrix is one of them. Ansoff matrix helps a firm decide their market growth as well as
product growth strategies. The 2 questions which the Ansoff Matrix can answer is “How
can we grow in the existing markets” and “What amends can be made in the product
portfolio to have better growth”.
From the above two questions, it is clear that Ansoff matrix deals with the companies
external market scenario as well as the product portfolio which the firm has. The matrix is
divided in two quadrants – The product quadrant and the market quadrant. The Product
quadrant on the X axis is further divided into Existing products and New products. The
market scenario on the Y axis is divided into existing markets and new markets. Thus the
Ansoff matrix divides a firm on the basis of the products it has – Existing products or new
products, as well as the markets it is in – existing markets or new markets.
Depending on the characteristic of each, the marketing strategy is decided. These
marketing strategies are as follows :-
1) Market Penetration –

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 In the Ansoff matrix, market penetration is adopted as a strategy when the firm
has an existing product and needs a growth strategy for an existing market. Thus in
such cases the competition is higher and you might have to go out of the way to
cater to your market or to increase your firms market share.
 Several things have to be considered when adopting the Market penetration
strategy. By using market penetration, you are ensuring that only the existing
resources of the firm are used and no extra costs need to be incurred in setting up
a new unit for. At the same time, your current group of employees are the best
people to notice any growth opportunities in the existing market. Thus they need
to be used optimally by providing them the right information at the right time.
There needs to be a combination of marketing and sales promotions if you have to
grow in an existing market with an existing product.
 Over the last few years companies like Dabur, HUL and ITC have managed to
change the face of the FMCG industry in India by using cutting edge technology in
production and a very strong distribution channel. Companies like Colgate
Palmolive and Britannia have also managed to penetrate into the urban areas of
the country.
 Another good example in the FMCG Sector can be of Cell Phones: Models are now
upgraded every 6 to 12 months with the addition of new features and capabilities.
2) Market Development –
 Market development is the second market growth strategy which can be adopted
as per the Ansoff matrix. The market development strategy is used when the firm
targets a new market with existing products.
 There are several examples of the market development strategy including leading
footwear firms like Adidas, Nike and Reebok which have started entering
international markets for market expansion. Every other day we hear of one or the
other companies thinking of lunching their products in a new country. That’s the
perfect example of market development. Similarly, on a micro level, expanding
from a current market to another market where your product does not exist is also
an example of market development.
 For market development, you have to treat your product as a new entrant in the
market. Thus there are several factors which influence the market development
strategy of a firm. If the product already has a high brand equity, it possibly just
needs distribution points in the new market (Example – Walmart). The same goes
if the product is a needs product and known to be of high quality. On the other
hand, if the product is not established in your current market, it is not

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recommended to start a market development strategy. You need to first cater your
existing markets.
3) Product development –
 Product development in the Ansoff matrix refers to firms which have a good
market share in an existing market and therefore might need to introduce new
products for expansion. Product development mainly happens when you have a
good customer base and you know that the market for your existing product has
reached saturation. Thus you cannot apply the market penetration strategy. You
can therefore opt for a new product development strategy which caters to your
existing market.
 Lets take an example – Why do firms like P&G and HUL keep on introducing new
products in different categories? This is because both of these top FMCG firms are
already present in the market. They are only leveraging their strength in the
existing market by introducing new products. Imagine if HUL today introduces a
soap. It is already selling its shampoos and soaps in all grocery stores across a city.
Thus it will start selling this new product in the same distribution channel and
achieve new product launch as well as an improvement in profitability just by using
its current market.
 Another example, Dove by HLL is an example of creating an entirely new premium
segment. For the first time in India, a soap with 1/4th moisturizer was offered to
the customers. So it has now been positioned for the super premium segment as a
skin care product, not as a soap.
4) Diversification –
 Diversification is a strategy used in the Ansoff matrix when the product is
completely new and is being introduced in a new market. The best example for
Diversification can be big groups like Tata or Reliance which initially started with
one product but have expanded into completely unrelated segments by
introducing new or their own products. Tata for example has presence in steel,
motors and now in retail.
 For example, Expansion of the existing product line with related products is one
such method adopted by many businesses. Adding tooth brushes to tooth paste or
tooth powders or mouthwash under the same brand or under different brands
aimed at different segments is one way of diversification. These are either brand

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extensions or product extensions to increase the volume of sales and the number
of customers.
 The addition of tomato ketchup and sauce to the existing "Maggi" brand processed
items of Food Specialities Ltd. is an example of technological-related concentric
diversification.
2.7. SWOT ANALSIS OF FMCG SECTOR (refer to reference 15)
Strengths –
 Well established distribution network extending to the rural areas as well as urban
areas.
 Low cost operations .
 Presence of well-known brands in the FMCG Sector.
 Deep penetration in country.
 Good value for money.
 Excellent R&D facilities..
 High turnover rate.
Weakness –
 Low export levels.
 Lower scope of investing in technology and achieving economies of scale,
especially in small sectors or small scale sector reservations limit ability to invest in
technology and achieve economies of scale.
 "Me-too" products, which illegally mimic the labels of the established brands,
narrow the scope of FMCG products in rural and semi-urban market.
 Lacks innovation and low scope of investing in technology sector.
 No entry barriers, therefore number of producers are entering the market.
Opportunities –
 Large domestic market – a population of over one - billion.
 Export potential.
 Increasing income level will result in faster revenue growth and increase in
purchasing power of customers.
 High spending on consumer goods.
 Tap rural markets and increase penetration in urban areas.
 Increasing consumption rate.

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Threats –
 Removal of import restrictions resulting in replacing of domestic brands.
 Tax and regulatory structures.
 Slow down in rural demand .
 Growth of unrecognized markets.
 Many players in the industry therefore, intense competition.
 High bargaining power of customers.
 Short Product Life Cycle.
 FDI in retail will allow International Brands.

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3.Descriptive Case Study on HUL : Building a Rural
Distribution Channel (refer toreference 16)
Hindustan UnileverLimited(HUL) isIndia’slargestFastMovingConsumerGoodscompany,
touchingtwoout of three Indianswiththeirlarge brandportfolio.HUL’sproductsare household
namesacross the countryand span a hostof categoriessuchas soaps,detergents,personal
products,tea,coffee,ice cream,andculinaryproducts. Today,there are over7.7 millionretail
outletsinIndiawithanaverage of 6.8 storesperthousandpeople –the higheststore densityin
the world.
To maintaintheirmarketleadership,HUL pursuesinnovative distributionmechanismstoreachthe
millionsof potential consumersin bothurbanareasand small remote villageswhere thereisno
retail distributionnetwork,noadvertisingcoverage,andpoorroadsand transport. HUL realized
fromthe onsetthatits salesanddistributionnetworkgave itanedge overthe competition,but
that rivalswouldtryto match itovertime. To maintaintheircompetitive advantage,HULhas
aggressivelyextendedmore deeplyinIndia,movingfromlarge tosmall towns,andfromurbanto
semi-urbanareas.
The unorganizedandscatteredcharacterof marketsinIndiameanssalesanddistributionrequires
a differenttacticfromthatof more developedeconomies. Like Coca-Cola,HULknew itneededto
tailoritsapproach forthe differentmarkets.
Modern Trade
Modern trade, or retail chains, is characterized by standardized store formats, air-
conditioned ambiance, and a variety of goods and typically lower pricing. Global retail
chains such as Walmart and Carrefour fall under this category. In India, modern trade
comprises roughly 10% of all commercial transactions and is growing rapidly.
In the past, HUL’s sales forces were separated by geographies and product categories.
However, this organizational structure was ill equipped to manage modern trade, as one
regional team negotiating the terms of trade with an individual franchisee of a national
retail chain could never be as effective as HUL entering a long-term comprehensive
contract spanning all product categories and outlets of the retail chain. Today, HUL has
specific account managers dedicated to large modern trade customers.
General trade

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General trade consists of the thousands of independent retail and wholesale outlets
across the country. Often called “mom and pop” shops, each of these stores is considered
a distinct customer and has to be addressed individually. HUL services these outlets
through a network of 2,900 stockists. Goods are sent to a local warehouse or carrying and
forwarding agent (CFA), and are then stocked and dispatched to specific retailers upon
orders from the HUL stockists. The stockists are responsible for servicing all the small
retail outlets in a specific geographic area. General trade makes up the majority of HUL’s
sales.
Rural Markets
While general trade encompasses both urban and rural markets, serving customers in
more remote areas of India poses unique challenges. Rural markets are scattered over
large areas with low per capita consumption rates. While the aggregate potential of rural
markets is large, the potential of each of the 600+ dispersed markets is very low. As well,
rural markets are not connected to urban centers by air or rail, with road connectivity
poor at best. Accessing these markets, even when feasible, means additional logistics
costs to HUL.
Despite the roadblocks, conquering the rural markets is a must for HUL. One out of every
eight people on this planet lives in an Indian village. In comparison to the urban market,
which consists of roughly 250 million people, the rural market is 775 million people across
638,000 villages. Within ten years, per household consumption in rural India is forecasted
to equal today’s urban levels.
To penetrate the rural markets, HUL launched a unique four tier distribution system.
Markets were segmented based on their accessibility and business potential.
1. Direct Coverage: HUL appointed a common stockist to service all outlets within a
town and sell a limited selection of the brand portfolio. Towns consisted of
populations of under 50,000 people.
2. Indirect Coverage: HUL targeted retailers in accessible villages close to larger urban
markets. Retail stockists were assigned a permanent route to ensure that all
accessible villages in the vicinity were served at least once a fortnight.

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3. Streamline: Streamline leveraged the rural wholesale channel to reach markets
inaccessible by road. Star Sellers were appointed among wholesalers in a
particular village. Star Sellers would purchase stock from a local distributor and
then distribute stock to retailers in smaller villages using local means of transport
(e.g. motorcycles, rickshaws).
4. Project Shakti: Project Shakti targeted the very small villages (<2,000) and tapped
into pre-existing women’s self help groups (SHG). Underprivileged rural women
were invited to become direct-to-consumer sales distributors for HUL products.
Termed Shakti Ammas (literally “strength mothers”), these women represent HUL
and sell its home-care, health, and hygiene products in their villages.
By the end of 2009, Project Shakti network comprised of 45,000 Shakti Ammas covering
100,000 villages across 15 states in the country, cumulatively reaching over 3 million
households every month. Unilever has replicated Project Shakti’s success in other markets
such as Sri Lanka and Bangladesh.
Rural Marketing Mix –The HUL Way :
How far should a giant company go to understand poor customers in far away markets?
How does such a company manage to sell its product profitably to hundreds of millions of
people, dispersed and isolated, with hardly any disposable income to spend? How does it
develop brand loyalty in markets where, for generations, people have chosen to buy the
product that was cheapest or the items that a store actually had in stock — if they bought
anything at all? These are the questions that occupy in the minds of high-level policy
makers and marketers at most powerful global companies. HUL also considers these
questions and try to formulate a policy that helps them in penetrating in the rural market.
The Table 28 : Depicts the various aspects of HUL rural marketing mix policy.
According a HUL spokesperson, rural India presents enormous potential for growth—both
in terms of penetration and consumption across the categories it operates in. As a market
leader, HUL has led this growth through its range of products and market innovation. Our
portfolio—which includes premium brands for the affluent, value-for-money brands for
middle-income consumers and affordable quality products for low-income consumers—
provides us with a well-entrenched capability to leverage the opportunity in rural areas,”
says the HUL spokesperson.
HUL observers say that the company’s objective to acquire greater customer centricity is
based on innovation across products, pricing and even supply chain. “Everybody wants
brands,” argues Keki Dadiseth, 55, who is in charge of home- and personal-care products
worldwide and who is also a director of Hindustan Lever. “And there are a lot more poor
people in the world than rich people. To be a global business and to have a global market
share, you have to participate in all segments.

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1. Winning with Brands and Innovation: By reinventing and developing the distinctive
new products with proven consumer benefits that people want :
Modified utility oriented products: Being a carbolic soap, the red brick was offering was
used mainly for males. Lifebuoy active green now talks about HUL’s favorite gamble
ingredient .hoping to leverage herbal fad in the country, the soap talked of natural
ingredients like Tulsi and Neem.
HUL made significant investments in quality up gradation by investing more than
Rs 400 crores or 5 percent of the sales revenue from 2001 to 2005 for example; wheel was
strengthened with enhanced fragrance to differentiate it in the discount segment, and as
about 20-25 percent of the detergent soap can be melted white washing in running water,
therefore, HUL developed soap with a coating on five sides, which saves 20 percent
wastage even in a hostile user environment.
2. Winning in the Market Place: By reinventing the marketing with affordable
innovations and responsible communication :
HUL found that retailers in villages cut the 100 gm lifebuoy soaps in to smaller pieces and sold
to the villages. ThispromotedHULtolauncha75gmcakeoflifebuoyforpricesensitiveconsumers. In
late2003, HUL introduced an 18 gm soap priced at Rs.2.The low priced and small size
lifebuoy had a new packaging, similar to that of shampoo sachets and was sold in strips of
twelve.
Low Units Packaging: It is very important to understand the psyche of rural people and
modify the marketing mix accordingly so as to fit to cater to rural demographics. They do
not have a big dwelling place, they might not have place for storage and many of them
earn their wages daily so that they can’t spend in buying bulk, the companies have taken
up a strategic move. “The most popular concepts to hit the rural market have been
sachets. Sachets meet the needs of rural consumers in several ways. Sachets are
inexpensive, they occupy a small amount of space, and they allow consumers to
experiment with new products that they may never have tried before”.
HUL significantlychangedthe manneritsbrands were being presented at point of sale by
replacingwithstrongervisuals, bolder and brighter colors with model making an emotive appeal
directly to consumers.
HUL istappingthe rural marketswiththe intentionof giving its rural consumers a chance
to sample its brands with a ‘difference’. Speaking to Business Line, Mr. Sudhanshu Vats, Vice
President, Home Care andSkinCleansing,HUL, said, “Deep down in India, the frequency of usage
of FMCG categories is low. We want to drive consumption reaching out to the top villages in the
top states. Our target is to reach out to 50,000-60,000 villages with experiential and educational
campaigns for our brands.” From giving demos on the germ kill proposition of Lifebuoy to the
grease cuttingtechnologybehinditsdishwashbrandof Vim, HUL is showinglive examplesof what
itsbrands can do forits rural consumers insteadof simplythrustingitonthem. With program such
as KhushiyonKi Doli (apalki orpalanquinwithLCDTVsand DVD playermovesaroundthe villageto

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educate rural housewives about HUL brands).
Project I-Shakti : By the end of 2003,HUL pilot tested its latest information technology
based rural marketing initiative, the project I-Shakti in Nalgonda district of Andhra Pradesh
in association with the Andhra Pradesh Government’s Rajiv Internet Village by installing
net enabled computers in the home of Shakti dealers .
3. Winning with the people: By reinventing the selling business partners :
HUL evolved Project Shakti to reach areas of low access and low market potential.
The company is creating demand for its products by having its Shakti dealers and
educating consumers on aspects like health and hygiene.
Project Shakti will be our vehicle to deepen our rural reach to the entire rural India,”
MS Banga, chairman, HUL, told FE. HUL has married its rural penetration programme with
Project Shakti to achieve better results, as coverage through the stockiest route will not be
as.
Harish Manwani, chairman of HUL had said: “Encouraged by our rural initiative Project
Shakti whichistargetedat rural women,we are planning to launch of Shakti Man to help out men
folk in rural belts.”
HUL has shown the way to other companies producing fast moving consumer
goods (FMCG) on how to penetrate the rural market. Intensifying its reach in the rural
markets, HUL has decided to make its brands more ‘experiential’ in nature instead of
merely making them available in these media dark markets. They have carried out one of
the largest sampling exercises for this purpose to overcome barriers like lack of brand
awareness, ignorance of product benefits and complete absence of any first-hand
experience of usage. This development approach of rural marketing will not only create
the much needed capacity to consume but will also develop emotional bond with the
company and its brands with an intention of overcoming the challenges of rural market.

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4.Research Methodology
The design of any study begins with the selection of a topic and a research
methodology. These initial decisions reflect assumptions about the social world, how
science should be conducted, and what constitutes legitimate problems, solutions and
criteria of “proof”.
The word “research” is used to describe a number of similar and often overlapping
activities involving a search for information. It is basically gathering and analyzing a body
of information or data and extracting new meaning from it or developing unique
solutions to problems or cases. This is real research and requires an open-ended
question for which there is no ready answer.
The word “methodology” can properly refer to the theoretical analysis of methods
appropriate to a field of study or to the body of methods and principles or rules from
which specific methods or procedures may be derived to understand different situations
within scope of a particular discipline.
Therefore, research methodology refers to the way in which the data are collected for
the research project.
DATA
Representation of facts, concepts, or instructions in a formalized manner suitable for
communication, interpretation, or processing by humans or by automatic means and
any representations such as characters or analog quantities to which meaning is or
might be assigned is called data.
Research data includes qualitative and quantitative data. In this research paper,
quantitative data and primary data have been used as no secondary data was involved.
QUANTITATIVE DATA- Information that can be counted or expressed
numerically. This type of data is often collected in experiments, manipulated and
statistically analyzed. Quantitative data can be represented visually in graphs
and charts.
QUALITATIVE DATA - Qualitative data is extremely varied in nature. It includes
virtually any information that can be captured that is not numerical in nature.
'Soft' data that approximates but does not measure the attributes,
characteristics, properties, etc., of a thing or phenomenon.
DATA SOURCES
PRIMARY DATA - Primary data is data gathered for the first time by the researcher. It is
collected to address the specific issue or problem under study. These data can be
gathered internally or externally though surveys, observations, experiments, and
simulation

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The following research paper is conducted using primary data with the help of a
QUESTIONNAIRE. Questionnaires are designed to collect requisite information. To
design a questionnaire it is necessary that to find out what type of questions need to be
asked from the survey. Questions should be made such that it has considerable
repercussion on the usefulness of the survey.
There are 2 types of questionnaires:
a. Structured: A structured questionnaire is a formal list of questions frames
so as to get facts. The interviewer asks the questions strictly in
accordance with a pre-arranged order. It is of 2 types:
i. Structure Non- Disguised: It is a questionnaire where the listing of the questions
is in a pre-arranged order and where the object of enquiry is revealed to the
respondent.
ii. Structured Disguised: It is a questionnaire where the researcher does not
disclose the object of the survey.
b. Non Structured: A non-structured questionnaire is one in which the
questions are not structured and the order in which they are to be asked
from the respondent is left entirely to the researcher.
iii. Non Structured Non Disguised: It is a questionnaire where the purpose of the
enquiry is disclosed to the respondents.
iv. Non Structured Disguised: It is a questionnaire where the questions are
classified.
The following research paper is a Structured Non- Disguised Questionnaire.
Advantages:
Researcher can focus on both qualitative and quantitative issues.
Addresses specific research issues as the researcher controls the search design to fit
their needs
Great control; not only does primary research enable the marketer to focus on
specific subjects; it also enables the researcher to have a higher control over how
the information is collected. Taking this into account, the researcher can decide on
such requirements as size of project, time frame and goal.
Disadvantages:
Primary data may be very expensive in preparing and carrying out the research.
Costs can be incurred in producing the paper for questionnaires or the equipment
for an experiment of some sort.

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In order to be done properly, primary data collection requires the development and
execution of a research plan. It takes longer to undertake primary research than to
acquire secondary data.
Some research projects, while potentially offering information that could prove
quite valuable, may not be within the reach of a researcher.
By the time the research is complete it may be out of date.
Low response rate has to be expected.
SAMPLING
A process used in statistical analysis in which a predetermined number of observations
will be taken from a larger population. The methodology used to sample from a larger
population will depend on the type of analysis being performed, but will include simple
random sampling, systematic sampling and observational sampling.
There are three different types of sampling which are as follows:
Probability Sampling
Non- Probability Sampling
Mix Sampling
In the first type of sampling there is always a fixed pre assigned probability. This
sampling scheme is known as simple random sampling.
Some important probability samplings other than simple random sampling are stratified
sampling, multistage sampling, multi face sampling, cluster sampling and so on. Non-
probability sampling, is also known as purposive or judgment sampling. Mixed sampling
is based partly on probabilistic law and partly on pre decided rule. Systematic sampling
belongs to this category.
TOOLS
Tools used in Research Methodology are as follows:
Charts
Charts and diagrams are effective devices for vivid presentation of statistical data. The
main objective of diagrammatic representation is to emphasize the relative position of
different subdivisions and not simply to record details.
Pie Diagram
A pie chart (or a circle graph) is a circular chart divided into sectors, illustrating
numerical proportion. In a pie chart, the arc length of each sector is proportional to

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quantity it represents. Pie charts are very widely used in the business world and the mass
media. Pie chart shows the percentage of different factors and questions asked the
customers and the retailers.
Column Chart
The column chart consists of a group of equi-spaced rectangular bars, one for each category
of given statistical data. The columns, starting from a common base line, must be of equal
width and the length represents the values of statistical data. Column Chart is used to show
the frequencies of different data.
Factor Analysis
Factor analysis attempts to identify underlying variables, or factors, that explain the
pattern of correlations within a set of observed variables. Factor analysis is often used in
data reduction to identify a small number of factors that explain most of the variance that
is observed in a much larger number of manifest variables. Factor analysis can also be used
to generate hypotheses regarding causal mechanisms or to screen variables for subsequent
analysis (for example, to identify collinearity prior to performing a linear regression
analysis).
The factor analysis procedure offers a high degree of flexibility:
• Seven methods of factor extraction are available.
• Five methods of rotation are available, including direct oblimin and promax for
nonorthogonal rotations.
• Three methods of computing factor scores are available, and scores can be saved as
variables for further analysis.
The test used in factor analysis is:
i. Correlation Matrix: It is a table which indicates the extent of association
between two variables. It varies from -1 to +1.If the significance is less than 0.05 then
the factors are significant to each other. The correlation value is the value of a factor
on the other factor where the significance is less than 0.05.
A factor analysis was done to find out the buying decisions of a n FMCG product by the
customers on different factors.
A survey was conducted on 110 customers to find out customer and retailer preferences
while purchasing and selling a laptop respectively.

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5.Data Analysis: (references given with each point)
5.1 UsingPrimary Data –
 By takinga sample of 112, we findthat 63% of people,thatis70 outof 112 people use
HindustanUnilever’sFMCGproductsin comparisonto16% usingP&G,12% Dabur,3% Emami
and 7% otherbrands. The frequency ofpurchase fromHindustanUnileverisrated as52%.
Additionally,62 outof 112 people purchase theirFMCGproducts from Retail Stores i.e,55% in
comparisonto22% people purchasingfrom SuperStores,16% purchasingfrom Semi
Wholesalers,4%fromSuper Value Stores, and2% from Chemists.(Table 6 and 7, Figure 6 and
7)
 The Ratingsgivenbythe Sample Size whichconsistsof 59% of Male population and41% of
female population of which43% are students,38% are Self-Employed,13% are inthe Service
Sector, 4% Housewives and 1% retired, (Table2 and 3, Figure 2 and 3) basedon theirdegree of
AgreementandDisagreementandgivenasfollows –
 The factor that the Variety ofproducts available,offersthemagreaterchoice andleadsthem
to shopfrom HindustanUnileverwas“StronglyAgreed”by23% of the Sample Size of 112,
“Agreed”by59%, “Disagreed”by3% and “stronglydisagreed”by3%.13% were “Indifferent”to
the factor. (Table 8 and figure 8)
 The factor that the Experience from usingother productsof HUL inthe pastdrivesthem
towardsthe products of the same companywas “StronglyAgreed”by19% of the Sample Size of
112, “Agreed”by3%, “Disagreed”by4% and “stronglydisagreed”by3%.9% were “Indifferent”
to the factor. (Table 9 and figure 9)
 The factor that Low Price and Reasonability makesthempreferHindustanUnileverproducts
was “StronglyAgreed”by17% of the Sample Size of 112, “Agreed”by46%, “Disagreed”by8%
and “stronglydisagreed”by4%.26% were “Indifferent”tothe factor. (Table 10 and figure 10 )
 The factor that Multiple-brandavailabilityleadsthemtoshopfromHindustanUnileverwas
“StronglyAgreed”by17% of the Sample Size of 112, “Agreed”by54%, “Disagreed”by3% and
“stronglydisagreed”by5%.21% were “Indifferent”tothe factor. (Table 11 and figure 11)
 The factor that people purchase fromHindustanUnileverdue toReliabilityandHealth
Consciousness was“StronglyAgreed”by23% of the Sample Size of 112, “Agreed”by49%,
“Disagreed”by4% and “stronglydisagreed”by5%.18% were “Indifferent”tothe factor. (Table
12 and figure 12)
 The factor that Packagingofproductsinfluencespurchase fromHindustanUnileverwas
 The factor that Ease of Accessibilityisa reasonfor purchase fromHindustanUnileverwas
 The factor that Informationgivenby TelevisionAdvertisements inducesthemtotry HUL
productswas “StronglyAgreed”by14% of the Sample Size of 112, “Agreed”by46%,

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“Disagreed”by4% and “stronglydisagreed”by4%.30% were “Indifferent”tothe factor. (Table
15and figure 15)
 The factor that HUL’s Reputationand Brand Equity drivestopurchase itsproducts was
 The factor that frequent Offersand Schemes inducestopurchase HUL’s productswas “Strongly
Agreed”by8% of the Sample Size of 112, “Agreed”by44%, “Disagreed”by12% and “strongly
disagreed”by8%.29% were “Indifferent”tothe factor. (Table 17 and figure 17)
 The factor that Service Qualityof the retailer influencespurchase decisionof HULproductswas
 The factor that Hygiene, Freshnessand Nutrients isthe reasonforpurchase fromHUL was
“stronglydisagreed”by4%.12% were “Indifferent”tothe factor. (Table 19 and figure 19 )
 The factor that people goforHUL due to Sustainabilitywas“StronglyAgreed”by15% of the
Sample Size of 112, “Agreed”by60%, “Disagreed”by4% and “stronglydisagreed”by4%.17%
were “Indifferent”tothe factor. (Table 20 and figure 20)
 The factor that Project Shakti is responsible forcreatingBrandAwarenesswas“Strongly
Agreed”by8% of the Sample Size of 112, “Agreed”by37%, “Disagreed”by8% and “strongly
disagreed”by7%.40% were “Indifferent”tothe factor. (Table 21 and figure 21)
 The factor that CSR isresponsibleforpreference towardsHULwas “StronglyAgreed”by13% of
the Sample Size of 112, “Agreed”by43%, “Disagreed”by8% and “stronglydisagreed”by6%.
30% were “Indifferent”tothe factor. (Table 22 and figure 22)
 The factor that HUL’s products are Customer drivenand Customized was“StronglyAgreed”by
21% of the Sample Size of 112, “Agreed”by50%, “Disagreed”by8% and “stronglydisagreed”by
3%. 18% were “Indifferent”tothe factor. (Table 23 and figure 23 )
 The factor that HUL’s products are preferreddue tothe company’s Technical know-howand
R&D was “StronglyAgreed”by18% of the Sample Size of 112, “Agreed”by53%, “Disagreed”by
5% and “stronglydisagreed”by6%.18% were “Indifferent”tothe factor. (Table 24 and figure
24)
 The FACTORS are scaled down to 5 factors namely; Facilities, High Standards,
Innovation, Goodwill and Extrinsic Attributes.
 It is found that the factor - High Standard of the company Hindustan Unilever which
includes its reputation, quality, R&D and its Highly customized products and Innovation
are very much important factors and the variable among them as shown in annexure are
highly correlated among themselves.
 The variance of the factor High Standard of Hindustan Unilever amounts to 28.228 %
and thus, the variables among them are highly correlated which are the reputation of
HUL, Quality of products of HUL, highly customized products of HUL and the R&D of
HUL . (Table 1(b))

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5.2 According to the Journals, The author Philip Kotler says that, a marketer faces 8 different
types of demand situations namely -
- Conventional marketing,
- Stimulational marketing,
- Developmental marketing,
- Maintenance marketing,
- Demarketing,
- Counter marketing
- Synchromarketing.
Applying his theory on the Hindustan Unilever Limited, it suggests that a company can involve
itself in the wealth creation efforts for its potential customers. For example,
5.2.1 STIMULATIONAL MARKETING (refer ro reference 18) –
 If demand is non-existent, it must be created. For instance Hindustan Unilever Ltd has
developed a network of rural poor women for the direct marketing of its products in
rural India. This project titled Shakti (power) has helped the company improve its
distribution reach. The other benefit for the company is that the direct marketer herself
becomes a customer of the company.
 Project Shakti by HUL - New distribution channels - This model creates a symbiotic
partnership between HUL and its consumers. Started in the late 2000, Project Shakti had
enabled Hindustan Lever to access 80,000 of India's 638,000 villages. HUL's partnership
with Self Help Groups(SHGs) of rural women, is becoming an extended arm of the
company's operation in rural hinterlands. Project Shakti has already been extended to
about 12 states - Andhra Pradesh, Karnataka, Gujarat, Madhya Pradesh, Tamil Nadu,
Chattisgarh, Uttar Pradesh, Orissa, Punjab, Rajasthan, Maharashtra and West Bengal.
The respective state governments and several NGOs are actively involved in the
initiative. The SHGs have chosen to partner with HUL as a business venture, armed with
training from HUL and support from government agencies concerned and NGOs. Armed
with microcredit, women from SHGs become direct to home distributors in rural
markets. The model consists of groups of (1520) villagers below the poverty line (Rs.750

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per month) taking microcredit from banks, and using that to buy our products, which
they will then directly sell to consumers.
5.2.2 CONVENTIONAL MARKETING (refer to reference 18) –
 If demand is negative, it must be disabused. Conventional or traditional marketing is
generally termed as a “push” process, which means you are pushing your marketing
material at your target market through TV, radio, brochures, exhibitions, direct mail,
cold calling, e-mail marketing etc. In theory you “broadcast” and “present” your
services or products directly to your potential customers.
 The key to successful conventional marketing is to find the right target market and the
most cost-effective and efficient marketing tools.
 For example, HUL attempts to push its detergents business using out-of-home
aggressively to grow its foods business. Out-of-home means initiatives undertaken
beyond just selling products. In the process of pushing “vim” in rural areas, keeping into
mind the dynamics of rural consumer and distribution infrastructure, the marketer had
adopted a different push strategy to promote the vim in rural areas. The informal Push
Strategy was formulated.
 The first step was the usage of audio- visual publicity vans. This publicity vans were
covered by beautiful banners, this banners were embossed with the product photos,
the base or tagline of the product and colorful picture that can attract the rural
consumer. The audible material used were a tunes of current filmy songs, which were
composed with new lyrics, this lyrics gave the special features about the vim. This step
was used as an introduction of the product vim in rural markets.
The second step in the Conventional Push Strategy was to do Door-to-door marketing.
This step was very well designed. To do Door- to- door marketing the marketer
employed the young local youths who can communicate with rural people in the local
language. This youth carried along with them flip charts as a substitute medium to T.V.
5.2.3 DEVELOPMENTAL MARKETING (refer to reference 19)-
 If demand is latent, it must be developed. For example, brands such as Axe, Dove,
Knorr and Lipton is selling small packs of its brands in markets such as India, Spain,
Greece and the US. In India, for instance, Hindustan Unilever sells Surf detergent in
packs offering five washes, and offers mashed potatoes and mayonnaise in small
packages in Greece. It has also launched a low-cost brand for tea and olive oil for the
euro markets.
 For example, HUL has noted that the recession drives more consumers to packed
lunches and home-baking. The company has now introduced new baking products like

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Stork baking liquid as an option to the more expensive butter as well as in packs that
can be re-used as lunch boxes.
5.2.4 SYNCHRO MARKETING (refer to reference 20)–
 If demand is irregular, it must be synchronized. For example, advertising
on rotis (chapattis). Hindustan Unilever has come up with a “Roti Reminder” promotion
campaign for their soap brand, Lifebuoy at the Maha Kumbh Mela, Allahabad (Uttar
Pradesh).
 The Maha Kumbh Mela is the largest congregation on the planet where all the big
marketers are vie to sell their wares and boost their brands. It’s a unique idea, to say the
least. Apparently, Hindustan Unilever, the biggest consumer products firm in the
country, along with creative agency Ogilvy, has partnered with more than a
hundred dhabas at the mela site to serve rotis that are stamped with the slogan,
“Lifebuoy se haath dhoye kya?”(Have you washed your hand with Lifebuoy?)
5.3 ANSOFF MATRIXOF HINDUSTAN UNILEVER LIMITED (refer to reference 22)
Ansoff’s matrix identifies alternative growth strategies by looking at present and potential
products in current and future markets. The four growth strategies are market penetration,
market development, product development and diversification
5.3..1 Market Penetration - Market Penetration is growth strategy in which an organization try

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to increase their market share by selling more with existing product into a market in which it
has a prior presence.
For Example-Tooth paste maker such as Colgate and HUL try to capture more market share of
already existing market with existing product such as in India . It may include aggressive
advertisement , offers ,etc to penetrate more into existing market
5.3.2 Product Development - Product Development is growth strategy that is used by marketer
in order to increase their market share by introducing new product into existing market .
According to this strategy an organization try to stimulate its growth by adding new product
into its portfolio into existing market where they are already doing business . This strategy is
very common in highly competitive market .
For Example - Colgate and Pamolive introduce Colgate Salt as their new product in highly
competitive market of tooth paste . By introducing new product Colgate wants to get more
market share.
5.3.3 Market Development - When market is saturated into existing market , in order to keep
pace of growth ,an organization adopted Market development strategy to grow itself.
According to this strategy an organization try to enter into new market with existing product
portfolio in order to grow itself.
For Example -Pizza Hut and McD is opening their outlets in India and thus adopted strategy of
Market development to grow themselves. They are entering into market with existing product .
5.3.4 Diversification- The strategies of diversification can include internal development of new
products or markets, acquisition of a firm, alliance and joint venture with a complementary
company, licensing of new technologies, and distributing or importing a product line
manufactured by another firm .
For Example - When any company try to make joint venture with totally new company of
different product then they adopt diversification strategy . This strategy is very popular among
large organization to diversify their risk and grow itself with totally new product into new
market. Bharti is one of the conglomerate of telecome Industry , but it Joint Venture with AXA
of French Insurance company to from joint venture Bharti AXA in India. So Bharti included
insurance product into its portfolio to diversify itself.

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5.4 SWOT ANALYSIS OF HINDUSTAN UNILEVER LIMITED (primary survey and refer
to reference 22) –
5.4.1 Strengths -
1. Strong and well differentiated brands with leading share positions.
2. Distinctly placed products providing reach to every segment of society.
3. Consumer understanding and systems for building consumer insight.
4. Integrated supply chain and well spread manufacturing units.
5. Distribution structure with wide reach, high quality coverage – The launch of project “Shakti”
has helped HUL to create brand awareness and extensive reach in rural India.
6. Access to Unilever global technology, capability and sharing of best practices from other
Unilever companies.
7. Well placed to take advantage of growth in rural India and lower strata of the society through
“Shakti”.
8. It could look at introducing products from its parent company like margarine in order to cater
to changing consumer tastes and opportunities in food sector.
9. It can be a leader in exports by positioning itself as a sourcing hub for Unilever companies in
various countries.
10. Two R&D centres in India in Mumbai and Bangalore
11. Products with presence in over 20 consumer categories with over 700 million Indian
consumers using its products
12. As a part of CSR, HUL has initiatives like project Shakti, plastic recycling, women
empowerment etc
5.4.2 Weaknesses –
1. Price positioning in some categories allows for low price competition like Amul captured
Kwality’s market.
2. Limited success in changing eating habits of people.
3. Competitors focusing on a particular product and eating up HUL’s share, like Nirma focusing
on soaps and detergents.
4. Market share is limited due to presence of other strong FMCG brands.
5. HUL products has stiff competition from big domestic players and international brands.

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5.4.3 Opportunities –
1. Growing consumer base due to increasing income levels and new consumers from lower
strata of the society
2. Untapped market in branded Ayurvedic medicines and other such consumer products.
3. Opportunity in Food sector: changing consumer tastes.
4. Expansion of horizons towards more and more countries.
5.Tap rural markets and increase penetration in urban areas.
6. Mergers and acquisitions to strengthen the brand.
7. Increasing purchasing power of people thereby increasing demand.
4.4.4 Threats –
1. Unfavorable raw material prices due to inflation, reducing profitability.
2. Heavy onslaught of competition in the core categories from emerging players like ITC will
result in higher advertising expenditure.
3. Spurious/counterfeit products in rural areas and small towns.
4. Reduction in real income of consumers due to high inflation. 5. Intense
and increasing competition amongst other FMCG companies.
6. FDI in retail thereby allowing international brands.
7. Competition from unbranded and local products.
5.5 MARKETING MIXOF HINDUSTAN UNILEVER LIMITED – (refer to reference 23)
5.5.1 Product –
Satisfaction suffices. But delight dazzles the average company will compete for customer by
conforming to her expectation consistently. But the winner will surpass them by constantly
exceeding her expectation, delivering to her door step additional benefits which she would
never have imagined possible. Hindustan Unilever Ltd(HUL) offer such product. The wide
variety products offered by the company include: The company’s popular products include:
 ‡ Bathing soaps : Lux, Lifebuoy, Liril, Hamam, Breeze, Dove, Pears and Rexona
 ‡ Laundry items : Surf Excel, Rin and Wheel
 ‡ Skin care: Fair & Lovely, Ponds and Vaseline
 ‡Hair care: Sunsilk and Clinic
 ‡ Oral care: Pepsodent and Close up

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 ‡ Deodorants: Axe and Rexona
 ‡ Colour cosmetics : Lakme
 ‡ Ayurvedic: Ayush
 Tea: Brooke Bond and Lipton
 Coffee: Bru
 Foods: Kissan, Annapurna and Knorr
 Icecream: kwality walls
5.5.2 Pricing –
Make no mistake. Second P of marketing is not another name for blindly lowering prices and
relying on this strategy alone to increase sales dramatically. The strategy used by Hindustan
Unilever Ltd (HUL) is for matching the value that customer pays to buy the product with the
expectation they have about what the production is worth to them. Hindustan Unilever Ltd
(HUL) has launched various products which cater to all customer segments. So every customer
segment has different price expectation from the product. Therefore maximizing the returns
involves identifying right price level for each segment, and then progressively moving through
them.
5.5.3 Place –
The operations involve over 2,000 suppliers and associates. HUL's distribution network,
comprising about 4,000 redistribution stockists, covering 6.3 million retail outlets reaching the
entire urban population, and about 250 million rural consumers. Television has already primed
and population for consumption, and the marketer who can get to the to the consumer ahead
of competition will give a hard to overtake lead. But getting their means managing wildly
different terrains-climate, language, value system, life style, transport and communication
network. And your brand equity isn’t going to help when it comes to tackling these issues. Own
distribution network consist of clearing and forwarding (C&F) agents & distribution stockiest.
This network of distribution can either contact wholesalers and which in turn retailers or the
distributors can contact to the retailers directly. Once the stock product reaches retailers, the
prospective customers can have access to the product. Hindustan Unilever Ltd(HUL) distributes
the product in the manner stated above. Hindustan Unilever Ltd(HUL) distribution network has
expanded. Beside use of improved logistics, Hindustan Unilever Ltd(HUL) is also attempting to
improve the distribution quality. To address the issue of product stability, it has installed visi
colors at several outlets. This helps in maintaining consumption in summer when sales usually
drops due to the fact that the heal effects product quality and thereby off takes.
Looking at the low penetration of few products, a distribution expansion would itself being
incremental volume. The other reason is arch rival Procter & Gamble Co. reaches more than a

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million retailers. This increase in distribution is going to be accompanied by reduction in
channel costs. Hindustan Unilever Ltd(HUL)marketing costs, at 18% of total costs, is much
higher than Procter & Gamble Co. The company is looking to reduce this parity level. At
Hindustan Unilever Ltd(HUL), they believe that selling FMCG is it like selling soft drinks.
5.5.4 Promotion -
Finding showed that the adults felt too conscious to be seen consuming a product actually
meant for children. The strategic response address the emotional appeal of the band to the
child within the adult. Naturally, that produced just the value vacuum that Hindustan Unilever
Ltd(HUL)was looking to fill. Thereafter it was the job of the advertising to communicate
customer the wonderful feeling that he could experience by re-discoursing the careful,
unselfconscious, pleasure seeking child within himself a graft these feeling onto the Ad
campaign like “Hasso toh khul ke hasso” for Closeup, “Cream bathing bar” for dove soap and
“daag ache hain” for surf excel have been sure shot winner with the audience. It has also
launched Pure it, a home water purifier which supplies drinking water without boiling/need of
electricity , As well as outdoor and radio ads, ad agency contract has created communication
for cinemas and even ATM machines for the brand .All ICICI s ATM a message flashes on the
screen as soon as customer insert his ATM card. Something familiar is planned for phone-book
as well. In cinemas, Hindustan Unilever(Ltd)has a message on-screen just before the lights are
dimmed to give them a chance to get their product There will also be after dinner sampling in
restaurants ± to begin with, 30 catteries in Mumbai have been selected. Ad spend in 2000 was
about 14% of sales and the management said that plans to maintain as spend at this level in the
current year also. And since any discussion today would be incomplete without mention the
word, the management plans to tap this new channel of marketing. Beside the company
website (i.e. www.unilever.com), that the company has launched, it had also entered into
various marketing relationship with other portals, specially targeted during festivals and events
such as Valentines day, etc.

Changing Trends in India's FMCG Industry

Changing Trends in India's FMCG Industry

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