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HINDUSTAN UNILEVER LIMITED (HUL)

Company Profile
Hindustan Unilever Limited (HUL), a 52%-owned subsidiary of Anglo-Dutch giant Unilever, has been working its way into India since 1888. Formerly known as Hindustan Lever Limited, the Group's principal activities are to manufacture and market consumer products. Hindustan Unilever Limited (HUL), a subsidiary of Unilever Ltd., is a fast moving consumer goods (FMCG) company based in India. The company focuses on efficient delivery to consumers with an improved supply chain, brand building initiatives and innovation, which has helped the company to sustain its leadership position in the overall FMCG category in India.

Mission
To add vitality to life. Bring safety on top of mind for employees & will integrate it with all business processes & ensuring a safe & healthy work environment.

Vision
To meet consumer needs they will respect the concerns of their consumers & of society. To make injury free organization.

Present Scenario
Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods company, touching the life of two out of three Indians with over 20 distinct categories in Home & Personal Care Products and Foods & Beverages. They endow the company with a scale of combined volumes of about 4 million tones and sales of nearly Rs.13718 crores. HUL is also one of the country's largest exporters; it has been recognized as a Golden Super Star Trading House by the Government of India. Group operates through seven segments: Soaps and Detergents, Personal Products, Exports, Beverages, Foods, Ice Creams and Other. The products include Home and personal care products, food and beverages, industrial and agricultural products. Home and personal care products consists of personal and fabric wash, household, oral care, skin and hair care, deodorants, perfumery, color cosmetics and baby care. Foods and beverages includes tea, coffee, cooking fats and oils, bakery fats, ice cream, tomato products, fruits and vegetables products, rice, salt, atta and rawa, marine products and mushrooms. Industrial and agricultural products includes specialty chemicals, bulk chemicals, fertilizers, animal feeds, seeds, plant growth nutrients, processed-tri-glycerides and agriculture commodities, yeast, leather, footwear and carpets, thermometers and plantations.

Its brands are spread across 20 consumer product categories. Hindustan Unilever markets consumer goods throughout India. The company faces competition from the international, local and regional players.

The company derives 44.3% of its revenues from soaps and detergents, 26.6% from personal care products, 10.5% from beverages, and the rest from foods, ice creams, exports, and other products New Products introduced by HUL in recent years: Lux strawberry and cream Clinic plus multi sachet Ponds age miracle Axe shock and recover Paddle pop Wheel active Green

HISTORY
On November 27th 1931, Unilever set up its first Indian subsidiary of Hindustan Vanaspati Manufacturing Co. Lever brothers India Ltd. Incorporated on October 17th 1933. United Traders Limited incorporated on May 11th 1935. In 1956, three companies merged to form Hindustan Unilever Limited, with 10% Indian equity participation. July 19th 2007, changed the name to Hindustan Unilever Limited.

SWOT Analysis
Strength Innovative Aspects. Presence of Established distribution network. Strong R & D. Highly skilled HR. Effective CSR. Project SHAKTI creating brand awareness in rural India

Weakness Strong Competitors. Low Export Level (At Present).

Changing consumption pattern. High advertising costs. Market myopia led to stagnation of business Low raw material cost-high priced products Lacked the ability to call shots and power pricing Inability to transform its strategies at the right time Opportunity Large Domestic Market. Untapped Rural Market. Changing Life Styles of consumer. Increasing the consumer income.

Threats Tax & Regulatory Structure. Mimic of Brands. New Entrants. Increasing Raw Material Cost

Products & Services The company's key products and services include the following: Products:
Personal Wash: - Lux, Lifebuoy, Liril, Ham am, Breeze, Dove, Pears and Rexona Laundry:-Surf Excel, Sun Light, Rin, Wheel &AlaBleach Dishwasher: - Vim Foods:-Kissan(Jam, ketchup, squashes), Annapurna(aata, salt), Knorr soups, Modern Bread Ice-cream:-Kwality walls Tea: - Brooke Bond, Lipton, TajMahal Coffee:-Brooke bond, Bru Cosmetic Products:- Fair & Lovely, Lakme, Ponds and Vaseline. Hair-Care:-Sun silk, Clinic plus, Dove, Life-buoy Oral-Care:-Pepsodent, Colgate, Close-up Deo-Spray:- Axe and Rexona.

In India the company is positioned as the leader having a market share of 52 % . In the year 2010-2011 the company had total sales of Rs.20,305.54 crores. The company claims that two out of three Indians use the products of the company. As indicated by the overall market share the company is placed at top in many categories in which it operates. The company is placed at top in categories like soaps, laundry, hair care, home care, skin care & deodorant. The companies understand the Indian market well and make products that suit the local people and their demand. The company also spends a significant amount on its Research & Development (R&D) to come up with new and innovative products. Company follows the channel distribution strategy to reach out to its customers. It has a vast number of dealers and distributors. Companys products are easily available all over.

Initiative on Product & Market Development:

1. Market Penetration: The Company grew through this matrix a lot. The Company increased its market penetration with the help of project Shakti in rural areas. Company added 6,00,000 outlets in rural areas that tripled its reach in rural market. Company made rural women self-dependent as they use to sell the companys product in the designated area. This project also helped in creating employment at the lower level. Life of many women and families changed through this project. Further Shakti-Maan was also launched after project Shakti Amma became hit. It helped the company to exploit the uncaptured market of the village. Around 23,000 Shaktimaans and 60,000 Shakti amma work under this project in different villages. This project helped the company to grow at a very healthy rate. This also became part of their corporate social responsibility. The company also increased its presence by increasing the number of dealers. The company initiated its scheme that its product should be sold at every store. The company made a specialised and dedicated sales team for top skin and cosmetic care which already existed in different product

Lines.The Company also devised new tool for distributors which analyses the performances and reward them accordingly. Thus, motivating dealers to perform better. Company also focussed onshelf availability backed by extensive merchandising and visibility. These made the company supplier of the year in 2010 by many retailers. The company also focused on reducing inventory and delivering fresh products. The company follows TPM in the supply-chain department so that any damage is prevented. The company re-launched many of its existing brands with new packaging and design. Rin, Lifebuoy, Wheel were re-launched. As the figures show that this project Shakti-Amma played a very vital role in maintaining the double digit growth of the company.

2. Market development: The Company did not serve any new market. It served the same old market.

3. Product development: New products were launched in these years but older ones also stayed in the market. New products like Cif, Fair & Lovely eraser pen, Ponds Gold Radiance range were introduced. In food business Kissan Nutrismart were launched. Company has got a very vast distribution network so they are able to make the product available easily through their distributors. The Company also launched Kissan soya n Kissan spread in sauce and spread respectively. The company also plans to open Bruwold cafe on a pilot basis. The companys brand Knorr tried to make a soup time among kids and also entered in the noodles market with Knorr soupy noodles. The company launched new flavours in ice-creams through its brand Kwality which won many awards. The Company always come up with its new innovations in its products which are better and easy to use. Company also launched many different variants of bread through its brand Modern Bread.

4. Diversification: Although the company launches it products in the same line. It launched Purit water purifier which was different from its previous launches. It was a horizontal diversification as it was focused on the same set of customers who already use the companys product. Pureit when launched captured the market and became leader in its category. Pureit worked on a simple formula of giving boiled water. Later on looking at the success, different variants of Pureit were launched.

BCG Matrix Stars -These are products with a high market share in a strongly growing market. Cash Cow -These are products with a high market share in a market that is not growing very much. Question Marks -These products have a small market share in a rapidly growing market. Dogs -These are products with a low market share in a market that is growing very little.

BCG Matrix of HUL

STAR
Lux, sunsilk, fair & lovely, Kissan ketchup and Surf excel.

?
Rin, Pepsodent, Domex

Growth matrix of HUL

COW
Axe, Vaseline jelly

DOGS
Wheel

Distribution System of HUL


HUL's products, are distributed through a network of 7,000 redistribution stockiests, covering 6.3 million retail outlets reaching the entire urban population, and about 250 million rural consumers. There are 35 C&FAs in the country who feed these

redistribution stockiest regularly. The general trade comprises grocery stores, chemists,

wholesale, kiosks and general stores. Hindustan Unilever provides tailor made services to each of its channel partners. It has developed customer management and supply chain capabilities for partnering emerging selfservice stores and supermarkets. Around 2,000 suppliers and associates serve HULs 40 manufacturing plants which are decentralized across 2 million square mile of territory.

Distribution at the Villages:


The company has brought all markets with populations of below 50,000 under one rural sales organization. The team comprises an exclusive sales force and exclusive

redistribution stockiest. The team focuses on building superior availability of products. In rural India, the network directly covers about 50,000 villages, reaching 250 million consumers, through 6000 substockiest.

Marketing
HULs team are now relying more on tried and tested marketing models such as the 6P model, which focuses on getting right the product, price, package, proposition, place and promotion to attract a consumer, to expand the market and outpace competitors.

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Key points The Company deployed its full portfolio effectively with re-launch of most of the brands on the back of high quality innovations and intensive consumer activation. For e.g.: The 'Lifebuoy' brand was re-invigorated through its re-launch, bolstering its health credentials with its strong ability to kill germs.

Product

Moreover the company had a excellent product mix, in the last one year alone, HUL had 30 product launches like: 'Pure it',. Further Hul is driving up gradation .For e.g. It has expanded its portfolio in packet tea by launching a new brand to participate in the mass segment with differentiated offering.

HUL has rolled out the new Go-To-Market distribution model in 32 Cities across the country. Through this the frequency of dispatches to the distributor increased, enabling him to stock less and use the benefits to build scale and superior talent.

Company has also made great strides in expanding its rural distribution network, with significant investment made in expanding the infrastructure. Across the country rural markets were brought under the direct coverage enabling better service and control.

Place

The number of distributors in rural markets has been scaled up. HUL also rolled out a unique and innovative concept of 'Perfect Stores' as part of endeavor to win with consumers at the point of sale.

Hul is focusing on its cherished regional brands such as Hamam & Rexona.

Promotion

HUL has gone into strategic partnerships with technology companies for deeper market penetration.

Marketing Strategies for Urban Areas


Focuses on short supply chain for distribution. Meet every need of people everywhere. Build segments & market for the future wise Unilever has strong expertise. Emphasis on Direct selling, Franchisee to reach everyone .

Marketing Strategies for Rural Areas


For long term benefit HUL started PROJECT STREAMLINE in 1997. Appointed 6000 sub stockiest that directly covers about 50000 villages & 250million customers.
Integrate, economic, environment, & social objective with Business Agenda

Promotion Strategy a) Project Shakti


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 directtohome distributors in rural markets. The model consists of groups of (1520) villagers below the poverty line (Rs.750 per month) taking microcredit from banks, and using that to buy our products, which they will then directly sell to consumers. In general, a member from a SHG selected as a Shakti entrepreneur, commonly referred as 'Shakti Amma' receives stocks from the HUL rural distributor. After being trained by the company, the Shakti entrepreneur then sells those goods directly to consumers and retailers in the village. Each Shakti entrepreneur usually service 610 villages in the population strata of 1,0002,000. The Shakti entrepreneurs are given HUL products on a `cash and carry basis.'

The following diagram show the Project Shakti model as initiated

b) Project Streamline
To cater to the needs of the inaccessible market with high business potential HUL initiated a Streamline initiative in 1997. Project Streamline is an innovative and effective distribution network for rural areas that focuses on extending distribution o villages with less than 2000 people with the help of rural substockiest/Star Sellers who are based in these very villages. As a result, the distribution network directly covers as of now about 40 per cent of the rural population. Under Project Streamline, the goods are distributed from C & F Agents to Rural Distributors (RD), who has 1520 rural substockiest attached to him. Each of these substockists / star sellers is located in a rural market. The substockiest then perform the role of driving distribution in neighboring villages using unconventional means of transport such astractor and bullock carts. Project Streamline being a cross functional initiative, the Star Seller sells everything from detergents to personal products. Higher quality servicing, in terms of frequency, credit and fullline availability, is to be provided to rural trade as part of the new distribution strategy. The diagram in the next page shows the model of Project Streamline.

c) Hindustan Unilever Network


Started in 2003, Hindustan Unilever Network (HUN) is HUL's Direct Selling arm. It is a multicategory direct selling business offering a wide range of high-quality, high-performance products for its consumers and also exciting business and personal development opportunities for its consultants. It already has about 7 lakh consultants - all independent entrepreneurs, trained and guided by HUN's expert managers and trainers. HUNs mission is to a create millionaire club in India. There are many consultants who are earning at over a rate of Rs.1,00,000 per annum. Several consultants earn over Rs.50,000 per month.

HUN offers to build a business with different categories of Home & Personal Care (HPC) and Food products. They are all essential household needs. And they are all exclusive to HUN, specifically developed for the Direct Selling channel, and not available in the retail channel.

HUN has already spread to 1500 towns and cities, backed by 28 offices and over 130 service centres across the country. HUN's vision is to earn the love and respect of India by making a real difference to the lives of million Indians.

d) Lifebuoy Swasthya Chetana :- The programe endeavours to induce adoption of


hygienic practices among rural Indians and aims to bring down the incidence of diarrhoea.

e) Out-of-Home :- This deals in providing vending machines for hot beverages like tea and
coffee. HULs alliance with Pepsi Co. has significantly strengthened the channel.

f) Health and Beauty services :- (i) Lakme Salons provide specialised beauty services and
solutions, under the recognised authority of the Lakme brand. (ii) The Ayush Therapy Centres provide easy access to authentic Ayurvedic treatments and products.

Market Share
Market Shares of Soap 60%. Market Shares of Food Brands 70%. Market Shares of Oral Products 36%.

Market Shares of Household Cares 62%. Market Shares of Personal wash 60%. Market Shares of Skin Care 53%.

Competitors
1. Procter and gamble (P & G) 2. Indian Tobacco Company Limited (ITC Ltd.) 3. Dabur 4. Loreal Paris

5. Ayur 6. Calvin Kare 7. Finesse 8. Himalya Herbal Health Care

The Porters Five force Model

Edge over Competitors

Unilever, in its worldwide operations, strives to be a multi local multinational. Working since 1912. Reflected national priorities over the years and remained committed towards India. Large market capitalization and Product Variety. Good Company policies such as : Developing and using relevant technology Generating productive employment Stimulating industrialization and dispersing its benefits. Adding value to agriculture. Sustaining export performance. Mergers and Acquisitions In 1992, the erstwhile Brooke Bond acquired Kothari General Foods, with significant interests in Instant Coffee. The erstwhile Tata Oil Mills Company (TOMCO) merged with HUL, effective from April 1, 1993. In 1993, it acquired the Kissan business from the UB Group and the Dollops Ice cream business from Cadbury India. HUL formed a 50:50 joint venture with the US-based Kimberly Clark Corporation in 1994. In1994, the company entered into a strategic alliance with the Kwality Ice-cream Group families and in 1995 the Milk food 100% Ice-cream marketing and distribution rights too were acquired. In 1995, HUL and yet another Tata company, Lakme Limited. Amalgamation of new businesses -- Brooke Bond Lipton India in 1996-97; Pond's India in 1998; and a smaller subsidiary, Industrial Perfumes, in 1999. In 2003, HUL acquired the Cooked Shrimp and Pasteurized Crabmeat business of the Amalgam Group of Companies, a leader in value added Marine Products exports. In January 2000, in a historic step, the government decided to award 74 % equity in Modern Foods to HUL, thereby beginning the divestment of government equity in Public Sector Undertakings (PSU) to Private sector partners. HUL's entry into Bread is a

strategic extension of the company's wheat business. In 2002, HUL acquired the government's remaining stake in Modern Foods. Future Plans HLL has drawn up a comprehensive plan to expand its portfolio in the area of Health Care and Contraceptives. Chemicals business (encompassing Flavours, Fragrances and other Specialty Chemicals), as well as several non-FMCG export businesses such as Thermometers and Mushrooms. HLL has been pepping up its rural distribution systems and has launched low unit price variants of its popular brands to draw in new users in the rural areas.

Recommendations and Suggestions


Hindustan Lever Limited has established it roots successfully in the Indian market with HUL products becoming a household preference in almost all the major cities. But with the increasing number of competitors in the FMCG industry, HUL should gear up to compete with them. The biggest rival in the market is Procter & Gamble that is threatening HULs strong hold by introducing cost leadership strategies and price cuts. Whereas, at the local from numerous small to medium sized firms are enjoying the benefit of local presence thorough TV ads and low cost products. For some time now HUL pursued the strategy of P&G but it could not reap similar benefits and the strategy is now shrinking HULs profit margins. Moreover, with increased saturation in the industry HUL is facing problems positioning its power brands as consumers buying pattern is changing. It is found out that the problems with the HUL are primarily related to the environment in which the company is operating. The HUL management should scan and evaluate its internal and external environment and then re-align its strategies accordingly. Here are some recommendations for HUL after the analysis we have conducted above:

HUL should allocate its advertisement budgets more evenly among the major cities and small towns to compete with the international as well as local competitors alike. HUL should focus on market research and product development more. This is very crucial activity if the company wants to see steady growth in future. Innovation is the key to success here. HUL should seriously start developing improved products to cater the emerging needs of the consumers.

HUL should not use price-cuts to compete with its key rivals like P&G, instead it should promote its power brands as premium and value added products for the following reasons:
Price competition among rival firms is stern and it is not possible for HUL to maintain its profit margins without compromising on product quality. Products of other firms are quite similar to what HUL is offering. Buyers have low switching costs and thus low brand-loyalty.

There are few ways of differentiating a product from other than developing a new one.

Thus, we strongly recommend that HUL should adopt value leadership strategy to skim

profits. HUL should maintain its presence as an international brand differentiated by superior quality products. This can be achieved through proper pricing, efficient advertisement and promotion and innovation in product development and brand extension. This will help achieve financial stability and generate cash flows that can be used to support the weaker brands in local markets.

Major Challenge
Inflation reducing profits. Competitions in core strategies. Consumer Behavior. Global Exposure. Help to improve nations nutrition. Give life an extra Flavor.

Future Direction OF HUL

HUL plans to launch global margarine brand in India


Company plans to launch global margarine brand in India. The initiative is a part of companies plan to strengthen their presence in food portfolio. The company will also launch other food item after this big launch. Margarine is also 25%-30% cheaper than butter. The Company is currently working on setting up distribution network across all its retailers as it will require different facilities such as cold chain. The company will also have to facilitate its retailers with appropriate cold storage machines and transportation facilities. The company will have to fight with AMULs LITE which is present in the market for last twenty years. AS the companys CEO in a recent interview said that there has been a change in the market with rise in income of people, more working women, younger population willing to experiment, fight for time in urban India and increased global awareness towards health and packaged food items. More organized distribution system and cold stores will help the company to sell its product. Company is also entering into Bakery products along with future group, where they will sell bakery products in Big Bazar and name of both the companies will be there on the products. It will be sold with the brand name Modern. The Company will make it of their own and will sell through Big Bazar outlets only. In this they will get the wide selling networks of Big Bazar and the product can also be kept safely in the store so the extra cost for HUL will down in transportation. Initially the project will be started in selected cities and then it will be expanded in many cities. The Company also plans to enter into organized retails and want to increase its share in the total revenue by 20% -25% which is currently 6-7%. On 16-05-2011 company launched India water body which focuses on developing those products which consume less water so that more water can be saved. As the company states that by 2030 there will be a huge water scarcity in India. Company is focusing on those products which will consume lesser water. Surf Excel quick wash was a move in this direction. The Company is planning to enter high end of personnel care goods.as the demand has increased with rise in income of the consumer and with more working women, the demand will increase in

the near future The Company plans to introduce complete range of personnel products with a new brand name. HUL may not have a smooth sailing as the dairy segment is already too crowded. There are lot of regional as well as national players operating in this segment. Some such as Amul (Anand Milk Union Ltd), Nestle India Ltd and Britannia Industries Ltd are well penetrated. It will not be easy to crack into this category, said Sameer Deshmukh, an analyst with Mumbai-based brokerage. Even rivals such as Amul say the new product will have to compete with well-entrenched brands to establish itself. Our margarine brand Amul Lite has been present in the market for the past 20 years, said Sodhi It was launched around the same time when HUL brought Blue Band to India. While Blue Band was withdrawn, we have stood the ground all this while and will continue to do so. According to market research firm AC Nielsen, the butter and margarine market is currently estimated at Rs688 crores.

HUL and Bharti Retail partner to promote consumer awareness on plastic Recycling.
This programme launched jointly by Hindustan Unilever Limited and Bharti Retail is called Go Recycle. It will run for three months in all the 31 easyday and easyday Market stores across National Capital Region (NCR). This is a first-of-its kind initiative in India and is targeted to help reduce packaging waste and also inform and educate consumers to practice responsible consumption. The Go Recycle programme will be promoted to consumers through in-store displays, leaflets and mailers. The programme aims to drive consumer participation through a consumer incentive scheme. Consumers who bring empty plastic bottles and pouches of any brands in five FMCG categories (tea pouches, detergent powder pouches, shampoo & conditioner bottles, tooth paste tubes and ketchup pouches & pet packs) will be awarded discount coupons at the easyday and easyday Market stores in NCR. The coupons can be redeemed at these

stores to buy any products of the five leading Hindustan Unilever brands, namely Surf, Kissan, Dove, Red Label and Closeup. This initiative builds on the Unilever Sustainable Living Plan. Hindustan Unilever Limited is a subsidiary of Unilever. The Sustainable Living Plan aims to help everyone enjoy a good quality of life while respecting the planet. The Unilever Sustainable Living Plan decouples business growth from environmental impact. It sets out over 50 social, economic and environmental targets. The Unilever Sustainable Living Plan has set three big goals for Unilever to achieve by 2020:

Help more than one billion people improve their health and well-being Help the environmental impact of our products Source 100% of our agricultural raw materials sustainably

NitinParanjpe, CEO, Hindustan Unilever Limited, said, One of our key endeavors as part of the Unilever Sustainable Living Plan is to motivate consumers to take the small achievable actions that add up to a big difference and enable us all to live more sustainably. With over 700 million consumers across India using our products we believe that such small actions by our consumers will result in a big difference to promote sustainable living. It will ensure that while consumers have the opportunity to improve their quality of lives through use of our products it will also reduce the environmental impact of this consumption.