MARKETING PLANNING AND STRATEGY

MARKETING AND SRATEGY OF HUL DETERGENTS

11/25/2011

Presented to: Ms. Shruti Gupta

Presented By: Naman Agrawal Neelam Joshi Nikhil Mishra Nitika Gupta Nirjhar Agrawal

HINDUSTAN UNILEVER
India's largest Fast Moving Consumer Goods company with 100 factories across India. In 1931, first Indian subsidiary, Hindustan Vanaspati Manufacturing Company, followed by Lever Brothers India Limited (1933) and United Traders Limited (1935). HUL formed in November 1956; The Anglo-Dutch company Unilever owns a majority stake in Hindustan Unilever Limited. one of the country's largest exporters and recognised as a Golden Super Star Trading House. HUL works to create a better future every day and helps people feel good, look good and get more out of life with brands and services that are good for them and good for others. With over 35 brands spanning 20 distinct categories such as soaps, detergents, shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water purifiers, the Company is a part of the everyday life of millions of consumers across India. Its portfolio includes leading household brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Ponds, Vaseline, Lakm, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Walls and Pureit. The Company has over 16,000 employees and has an annual turnover of around Rs.19, 401 crores (financial year 2010 - 2011). HUL is a subsidiary of Unilever, one of the worlds leading suppliers of fast moving consumer goods with strong local roots in more than 100 countries across the globe with annual sales of about 44 billion in 2011. Unilever has about 52% shareholding in HUL.

EXECUTIVE SUMMARY

This report examines Hindustan Unilever Limited with main focus on Detergent segment which is a major revenue generating segment. HUL has been the market leader for many years in this segment. This report showcases macro and micro environment for HUL. There is a huge market for detergents in India. HUL with the brand name it has, should cash in on the situation. A marketing plan has been developed keeping in mind current trends in consumer buying patterns. The marketing plan has been drawn upon by considering the feedback from consumers as well. The report consists of PESTL analysis, information on market segmentation, target market identification, competitor analysis, SWOT analysis, and competitive advantage and core competencies of HUL as a company. Marketing mix effectiveness of detergent segment of HUL has been discussed to achieve overall marketing objective for the sales of HUL detergents by targeting the right people and offering them with the improved range of products. New ways of promotions have been suggested. The budget for the promotions has been arrived upon. Various channels have been chosen to promote the detergents. New product launch is been suggested keeping in mind the feedback received from the respondents of the survey. The marketing plan is developed by accessing the primary and secondary data. The prime objective of this report is to precisely analyze the current trends in detergent market in India and develop a strategy for HUL to regain their sales volume share. Some recommendations have been made to improve the way the products have to be promoted; there should be a monthly review by the management of HUL to access the situation. .

MISSION add vitality to life.

VISION

PRODUCT LINES AND PRODUCT MIX

CONTRIBUTION TO DIFFERENT SECTORS

PRODUCT SEGMENTATION OF HUL

BUSINESS MODEL OF HUL:

PESTEL Analysis Political/Legal: Indian governments in excise policies duties Economic: of Detergents segment of HUL has about 36% and segment accounts for at least 40% of the total segment has declined in the last two years, due to heavy competition. Removal of the regulatory framework has allowed HUL to explore every An increase is spending pattern has been product and segment, without witnessed in Indian FMCG market especially in the detergent market. Center for Monitoring Indian Economy (2010). http://www.cmie.com/ [Accessed 12/05/2010] Financial Times (2010) http://www.ft.com/ [Accessed on 13/05/2010] constraints on production capacity. Center for Monitoring Indian Economy (2010). http://www.cmie.com/ [Accessed 12/05/2010]

lifting of the quantitative restrictions, market share in that segment (FY 08-09). This reduction automatic foreign investment has revenue. HULs market share in detergents fostered HULs growth.

Ecological/Physical environment:

Social/Cultural:

HUL has contributed significantly in The size of the detergent market in India is saving water through technology. estimated to at Rs.12, 000 Crores. Detergent Educating people on Rain water segment is characterized by high degree of harvesting, soil conservation and competition and high level of penetration. With reduction of greenhouse gases. rapid urbanization in India, emergence of small pack size and sachets, the demand for the A carbon reduction supply-chain detergents is flourishing. With the use of hard project has enabled (HUL) to be water for washing and scarcity of water it is awarded carbon credits. imperative that HUL produces products that suit the water type in India. (Refer Appendix C for information on Corporate social responsibilities) Annual report 2008-09 HUL. http://www.hul.co.in/ [Accessed 13/05/2010]

Technological: HUL has research centers in Bangalore and Mumbai which has more than 200 scientists and technologists. Addressing the washing needs of consumers is a key challenge for the laundry Research group. How to minimize water usage while washing? How to impart stain repellent treatment to garments? These are the questions which have been answered by HUL R&D team.

SWOT ANALYIS

Strength:
Strong brand portfolio, price , quantity & variety.

Innovative aspects. Presence of established distribution networks in both rural and urban areas like 3400 distributers. Strong R&D of the company. Highly skilled human resource.
Corporate Social Responsibility (CSR)

Weakness: Strong Competitors. High advertising cost. Changing consumption pattern. Low exports level.
49% of HUVR's sales come from detergent and personal wash.

BSG MATRIX OF HUL:

STAR Hair care & Skin Care Premiums Soap & Deos Laundry Water Pure It QUESTION MARK Processed foods
Color cosmetics

COW Mass soap Beverages Oral care Laundry DOG Sea food export

MICRO ENVIORNMENT
Microenvironment as according to (Jobber, 2010) consists of factors in the firms immediate environment which affects its capabilities to operate effectively. The useful framework that is utilized when undertaking this analysis is Porters Five forces model. This analysis is carried out at the level of Detergent SBU of HUL. Suppliers: HUL has a very strong supplier base. Supplier power is considerable in case of detergent segment of HUL as there is a lot of costing involved when switching suppliers. As HUL provides a large amount of its business to the suppliers, these suppliers are beholden to HUL. As said earlier, the supply power is limited. Potential Entrants: Given the capital investment required to enter the detergent market in India, with the pricing of the products being very low, threat of potential entrants is low. With a lot of local brands in the market and names like Nirma, P&G, the detergent market has become extremely competitive and crowded. For the new entrant to position its products on the shelves of retailers alongside Surf Excel, Rin, Henko and Rin would be a real challenge. Buyers: Buying power of retailers of HUL when it comes to detergent market is very high as they are able to negotiate on price. Buying power of consumers is low as the consumers are fragmented and they do not have a great influence on the price as well as the product. Buyer loyalty is considerably less when it comes to Mass market detergents, as the consumers of that segment are price sensitive. Consumers in the premium and mid priced segment are very loyal to the brand. Substitutes: There is a strong threat from substitutes from the local market especially in the rural market. Even though within the detergent market, brand succeeds in building up a competitive market the threats

from substitutes are high such that the pricing power of HUL brands are eroded. Government regulations for local brands are very conducive to set up the business in India. For e.g. Local detergent brands like Ghari, RMC, etc. Competitive Rivalry: Consumers of detergents have enormous amount of choices. The brand loyalty in detergent segment is very poor. Price wars among competitors of HUL like P&G, Nirma is fierce. The competitive rivalry in the detergent segment is very high. Price wars are regular affairs which is beneficial from a customer perspective. Due to this the companies are forced to bring down their operational costs to survive in this hostile atmosphere.

Indian Detergent Market

STRATEGIC ISSUES ANALYSIS HULs current marketing objective is to improve the market share, which has gone down in the last two years through high marketing spend and bringing down the packaging cost of detergents. Marketing segmentation Marketing segmentation as stated by (Ferrell, O.C and Hartline, D. 2007) is the process of dividing the total market for a particular product or product category into relatively homogenous segments. In the discussion that follows, we look more closely at segmentation in detergent markets by examining the different factors that can be used to divide the market. As table 4.1 illustrates, these factors fall into one of these categories: Behavioral segmentation, Demographic segmentation, Psychographic segmentation and Geographic segmentation.

Common segmentation variables used in Consumer markets.

Category

Variables Benefits sought Product usage Occasions / Situations Price sensitive Age Gender Income

Examples Quality, Value, Convenience, Heavy , Medium and Light, Non users Daily use Price sensitive, Value conscious, Status conscious 18-60 Male/Female Low income, Mid income, High income White collared, technical, Professional, Managers, Laborers, Homemakers, Retired, Unemployed High school, College graduate, Graduate Upper class, Middle class, Lower class, Poverty level Generation Y,X Baby boomers, Laggards Outgoing, Shy, Materialistic, Anxious, Civic minded, Venturesome Outdoor Enthusiast, Homely, Workaholic, Family centered Cleaning North, South, East, West Urban, Sub urban ,Rural

Behavioral segmentation

Demographic segmentation

Occupation Education Social class Generation

Psychographic segmentation

Personality Lifestyle Motives

Geographic segmentation

Regional Population

Competitive Advantage:

HULs Competitive advantage lies in its strong and efficient distribution network. Its culture to continuously innovate for product betterment keeps them ahead of competition. Their high markets spend that enables their products gets a greater reach. HUL operates at zero working capital. The key is constant efforts to reduce capital investments by outsourcing manufacturing, streamlining supply chains and paying close attention to distributors performance*. Developing new channels like Rural marketing (for eg. Shakthi Ammas) and direct selling. Most importantly their products are low priced and good value for money and strong commitment towards improving the community.

Core competencies HUL has a wide range of quality products designed to meet the needs of the consumers. It has country wide reputation and presence. All their detergents are conservatively priced. They have an innovative style and low cost packaging. HUL has an excellent distribution network which enables greater reach. Their main focus is on providing value to customers through continuous product innovation and to be known as socially responsible company. HUL has a very good brand name in the market which they have used to their advantage to maintain their market share.

Product life cycle of HUL

HUL detergents are in between the growth and maturity stage. The marketing mix elements have been planned keeping the product life cycle in mind. Detergent features should be such that it is differentiated from the rest of the competition. Pricing should be lower because of intense competition. The distribution channels needs to be very effective with investment on IT, so as to increase the efficiency. Promotions are aimed at a larger target audience with focus on product differentiation. With right promotions in the right place, HUL can reap the benefits

Ansoff Matrix

PRODUCTS Existing New Market Penetration New Product Development Quality products for Washing Design detergents specially for woollen clothes machines Reduction in Prices Customer focus Market Development Develop a market in Liquid detergent segment Conduct demonstrations to observe the needs of Customer and educate them on the products Design detergents specially for color clothing Develop an Insta-whitening system Diversification Diversify the products into liquid detergent segment

MARKETS

Segmentation of detergents offered by HUL Premium Surf Automatic-Front Load Mid-Priced Surf Excel Blue Mass Market Wheel Regular

New

Existing

Surf Automatic- Top Load

Surf Excel Quick Wash

Rin Advance

Products are designed keeping in mind the nature of water in India and the scarcity of it. New technology wherein less water is consumed while washing clothes makes HUL products fare better. Detergents have micro granules which can penetrate into the fabric easily and remove the dirt and stains easily. They are available in small sachets also. Currently a lot of promotions are splashed in the media to educate the audience about the products. Place HUL products are made easily available through the efficient distribution system. The detergents are available in the Local grocery stores, Super markets and there is a door to door sale.

Pricing Detergent Brands Surf Excel Quick wash 500 gm 1 kg 70 130 2 kg 260

Surf Excel Automatic Rin Advanced Wheel Regular Tide Naturals Nirma Henko Ariel

82 28 20 35 45 48 78

164 55 38 70 87 90 152

320 125 72 135 165 169 300

Various channels through which HUL promotes its detergents Print Media- HUL advertises in leading dailies like Times of India and Indian express which has a wide reach. Television-Advertisements of Detergents are aired in prime time to get the attention of women.

Demo campaigns- Demo campaigns are done regularly with sales people going to household and give a demo to the consumers so that the consumers can have a firsthand experience and they believe what they see. Live shows-TV shows like Wheel Shrimati which is aired in prime time on National channel, the target audience being women was well received. Internet-Online promotions are conducted regularly on respective detergents websites.

Hoardings- Hoarding advertisements are done usually during a new product launch or a reduction in price. For e.g. when the prices of Surf excel was cut by 5%, huge hoardings were put in prominent places across all cities. Radio- Radio Jingles are aired which promote detergents.

Rural Marketing- Rural campaigns such as Shakthi Amma have enabled HUL to get such deep penetration into the rural market.

SWOT analysis Strengths Presence of established distribution networks in both urban and rural Weakness Focus on building a power brand so priced higher than others and

areas Attractive packaging and available in small quantities High brand value High spend on product innovation Opportunities Large Consumer base Forecast of Detergent market to grow in India Per capita consumption is High High consumer goods spending

neglecting other brands Gave unwanted publicity to Tide in the ad war between Rin and Tide Sticking to old strategies for long time Threats Emergence of Rural brands which are cheaper Imitation or Me-Too versions of detergents Price reduction by competitors

Strategic objectives for HUL detergent division

Build Invest of new product development like Liquid detergents Invest on product innovation Harvest Divest Hold Selective investment on new methods of packaging

HUL has traditionally followed the Non performing brands such as Breeze is Harvest method, wherein more emphasis dropped from the Indian market was on maximizing profit margins, sales and market share was allowed to fall

Problematic Areas in Research HUL is such a big brand that it is one of the most discussed companies in Management studies, so when I started researching about HUL, i was a little skeptical about choosing HUL. But

later I realized I could contribute a new perspective to the HUL marketing plan. Although the response to the survey was encouraging, it took constant follow ups with the respondents. Compiling the responses was very time consuming and a tedious process. The reason that I started early on the project helped me, as i never faced a time crunch. Since HUL is a listed company in India and is one of the most discussed company, huge chunks of data was available on the internet like the annual reports, newspaper articles, Case studies. To go through them, understand the write ups and precisely use the information in the report was a very challenging task. What went right? As stated earlier since HUL is a listed company in India getting relevant data like Annual reports very relatively easier, compiling these data and arriving at PESTL analysis was easier. By speaking to few friends who work for HUL in different departments and understanding the work culture, marketing initiatives was very useful experience and this has helped me to present certain facsssts with more depth. Based on the product life cycle and the macro and micro environments the marketing mix decisions and SWOT has been derived. Role of Marketer Being in a Sales and marketing position for over two years has helped me visualize the plan with relative ease. Since marketing is the most important aspect of business as it has a direct impact on the companys profitability and sales, role of the marketer is very challenging. It requires constant interaction with customers as well people within the organization. Collecting the information from the customers and compiling the data in a way most suitable for the people concerned in the organization for e.g. R&D department is a vital function of a marketer. One of the things which have changed over the years is the perception of people that a company is not just a seller of products but also have responsibility to be more socially responsible. Being socially responsible means an organization shows concern for the people and environment in which it transacts business. It also means that these values are communicated and enforced by everyone in the organization. In addition to insuring these values exist within the organization and its business partners, social responsibility may also manifest itself in the support of social causes that help society. For instance, marketers may sponsor charity events or produce cause-related advertising.

Marketers who are pursuing a socially responsible agenda should bear in mind that such efforts do not automatically translate into increased revenue or even an improved public image. However, organizations that consistently exhibit socially responsible tendencies may eventually gain a strong reputation that could pay dividends in the form of increased customer loyalty.