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Project Report On

HINDUSTAN UNILIVER
LIMITED

Submitted by
Neha Malik
BBA-3rd Year

1|Page Hindustan
Unilever Limited
INTRODUCTION TO HUL
HUL was formed in 1933 as Lever Brothers India Limited and came into
being in 1956 as Hindustan Lever Limited through a merger of Lever
Brothers, Hindustan Vanaspati Mfg. Co. Ltd. and United Traders Ltd.

It is headquartered in Mumbai, India and has employee strength of over


15,000 employees and contributes to indirect employment of over 52,000
people. The company was renamed in June 2007 as “Hindustan Unilever
Limited”. The Anglo-Dutch company Unilever owns a 52% majority stake in
Hindustan uniliver Limited.

Hindustan Unilever's distribution covers over 1 million retail outlets across


India directly and its products are available in over 6.3 million outlets in the
country, nearly 80% of all retail outlets in India. It estimates that two out of
three Indians use its many home and personal care products, food and
beverages.

Hindustan Unilever was recently rated among the top four companies
globally in the list of “Global Top Companies for Leaders” by a study
sponsored by Hewitt Associates, in partnership with Fortune magazine and
the RBL Group. The company was ranked number one in the Asia-Pacific
region and in India.

("Present stature", official website)

The Brand Equity rankings in 2010 are ruled by FMCG products with
Hindustan Lever accounting for as many as 6 out of Top 10 most trusted
Indian Brands.

(Brand Equity Survey, 2010)

2|Page Hindustan
Unilever Limited
HISTORY - CHRONOLOGY
In 1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspati
Manufacturing Company, followed by Lever Brothers India Limited (1933)
and United Traders Limited (1935). These three companies merged to form
HUL in November 1956; HUL offered 10% of its equity to the Indian public,
being the first among the foreign subsidiaries to do so. Unilever now holds
52.10% equity in the company. The rest of the shareholding is distributed
among about 360,675 individual shareholders and financial institutions.

The erstwhile Brooke Bond's presence in India dates back to 1900. By 1903,
the company had launched Red Label tea in the country. In 1912, Brooke
Bond & Co. India Limited was formed. Brooke Bond joined the Unilever fold
in 1984 through an international acquisition. The erstwhile Lipton's links
with India were forged in 1898. Unilever acquired Lipton in 1972 and in
1977 Lipton Tea (India) Limited was incorporated.

Pond's (India) Limited had been present in India since 1947. It joined the
Unilever fold through an international acquisition of Chesebrough Pond's
USA in 1986.

Since the very early years, HUL has vigorously responded to the stimulus of
economic growth. The growth process has been accompanied by judicious
diversification, always in line with Indian opinions and aspirations.

The liberalization of the Indian economy, started in 1991, clearly marked an


inflexion in HUL's and the Group's growth curve. Removal of the regulatory
framework allowed the company to explore every single product and
opportunity segment, without any constraints on production capacity.

Simultaneously, deregulation permitted alliances, acquisitions and mergers.


In one of the most visible and talked about events of India's corporate
history, the erstwhile Tata Oil Mills Company (TOMCO) merged with HUL,
effective from April 1, 1993. In 1996, HUL and yet another Tata company,

3|Page Hindustan
Unilever Limited
Lakme Limited, formed a 50:50 joint venture, Lakme Unilever Limited, to
market Lakme's market-leading cosmetics and other appropriate products
of both the companies. Subsequently in 1998, Lakme Limited sold its brands
to HUL and divested its 50% stake in the joint venture to the company.

HUL formed a 50:50 joint venture with the US-based Kimberly Clark
Corporation in 1994, Kimberly-Clark Lever Ltd, which markets Huggies
Diapers and Kotex Sanitary Pads. HUL has also set up a subsidiary in Nepal,
Unilever Nepal Limited (UNL), and its factory represents the largest
manufacturing investment in the Himalayan kingdom. The UNL factory
manufactures HUL's products like Soaps, Detergents and Personal Products
both for the domestic market and exports to India.

The 1990s also witnessed a string of crucial mergers, acquisitions and


alliances on the Foods and Beverages front. In 1992, the erstwhile Brooke
Bond acquired Kothari General Foods, with significant interests in Instant
Coffee. In 1993, it acquired the Kissan business from the UB Group and the
Dollops Ice-cream business from Cadbury India.

As a measure of backward integration, Tea Estates and Doom Dooma, two


plantation companies of Unilever, were merged with Brooke Bond. Then in
1994, Brooke Bond India and Lipton India merged to form Brooke Bond
Lipton India Limited (BBLIL), enabling greater focus and ensuring synergy in
the traditional Beverages business. 1994 witnessed BBLIL launching the
Wall's range of Frozen Desserts. By the end of the year, 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.

Finally, BBLIL merged with HUL, with effect from January 1, 1996. The
internal restructuring culminated in the merger of Pond's (India) Limited
(PIL) with HUL in 1998. The two companies had significant overlaps in
Personal Products, Specialty Chemicals and Exports businesses, besides a
common distribution system since 1993 for Personal Products. The two also
had a common management pool and a technology base. The
amalgamation was done to ensure for the Group, benefits from scale
economies both in domestic and export markets and enable it to fund
investments required for aggressively building new categories.

4|Page Hindustan
Unilever Limited
In January 2000, in a historic step, the government decided to award 74 per
cent 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.

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.

HUL launched a slew of new business initiatives in the early part of 2000’s.
Project Shakti was started in 2001. It is a rural initiative that targets small
villages populated by less than 5000 individuals. It is a unique win-win
initiative that catalyses rural affluence even as it benefits business.
Currently, there are over 45,000 Shakti entrepreneurs covering over
100,000 villages across 15 states and reaching to over 3 million homes.

In 2002, HUL made its foray into Ayurvedic health & beauty centre category
with the Ayush product range and Ayush Therapy Centers. Hindustan
Unilever Network, Direct to home business was launched in 2003 and this
was followed by the launch of ‘Pureit’ water purifier in 2004.

In 2007, the Company name was formally changed to Hindustan Unilever


Limited after receiving the approval of share holders during the 74th AGM
on 18 May 2007. Brooke Bond and Surf Excel breached the Rs 1,000 crore
sales mark the same year followed by Wheel which crossed the Rs.2, 000
crores sales milestone in 2008.

On 17th October 2008, HUL completed 75 years of corporate existence in


India.

(Official website of Hindustan Unilever Limited)

5|Page Hindustan
Unilever Limited
Mission

1. To add Vitality to life.


• We meet everyday needs for nutrition, hygiene, and personal care with brands
that help people feel good, look good and get more out of life.
2. To help people feel good, look good and get more out of life
(Scribd 2010)

Vision
Unilever products touch the lives of over 2 billion people every day – whether that's through
feeling great because they've got shiny hair and a brilliant smile, keeping their homes fresh and
clean, or by enjoying a great cup of tea, satisfying meal or healthy snack.

6|Page Hindustan
Unilever Limited
A clear direction

The four pillars of our vision set out the long term direction for the company – where we want
to go and how we are going to get there:

• We work to create a better future every day


• We help people feel good, look good and get more out of life with brands and services
that are good for them and good for others.
• We will inspire people to take small everyday actions that can add up to a big difference
for the world.
• We will develop new ways of doing business with the aim of doubling the size of our
company while reducing our environmental impact.

The company has always believed in the power of their brands to improve the quality of
people’s lives and in doing the right thing. As the business grows, so do companies
responsibilities. HUL recognize that global challenges such as climate change concern us all.
Considering the wider impact of company’s actions is embedded in its values and is a
fundamental part of who they are. (Companies official website)

Instilling values
Our corporate purpose states that to succeed requires "the highest standards of corporate
behavior towards everyone we work with, the communities we touch, and the environment on
which we have an impact."

• Standard of Conduct

We conduct our operations with honesty, integrity and openness, and with respect for the human
rights and interests of our employees. We shall similarly respect the legitimate interests of those
with whom we have relationships.

• Obeying the Law


Unilever companies and our employees are required to comply with the laws and regulations of
the countries in which we operate.

7|Page Hindustan
Unilever Limited
• Employees
Unilever is committed to diversity in a working environment where there is mutual trust and
respect and where everyone feels responsible. We will recruit, employ and promote employees
on the sole basis of the qualifications and abilities needed for the work to be performed. We are
committed to safe and healthy working conditions for all employees. We will not use any form
of forced, compulsory or child labor.

• Consumers
Unilever is committed to providing branded products and services which consistently offer
value in terms of price and quality, and which are safe for their intended use. Products and
services will be accurately and properly labeled, advertised and communicated.

• Shareholders
Unilever will conduct its operations in accordance with internationally accepted principles of
good corporate governance. We will provide timely, regular and reliable information on our
activities, structure, financial situation and performance to all shareholders.

• Business Partners

Unilever is committed to establishing mutually beneficial relations with our suppliers,


customers and business partners. In our business dealings we expect our business partners to
adhere to business principles consistent with our own.

(Scribd 2010)

8|Page Hindustan
Unilever Limited
MANAGEMENT

Organization structure
Hindustan Unilever Limited is India's largest Fast Moving Consumer Goods
(FMCG) Company. It is present in Home & Personal Care and Foods &
Beverages categories.

The fundamental principle determining the organization structure is to


infuse speed and flexibility in decision-making and implementation, with
empowered managers across the company’s nationwide operations.
Management Committee
Board of Directors
The day-to-day management of affairs
The Board of Directors as
of the Company is vested with the
repositories of the corporate Management Committee which is
powers act as a guardian to the subjected to the overall
Company
9 | P a gas
e also the protectors of superintendence Hindustan
and control of the
shareholder’s interest
Unilever Limited Board.
Unilever Limited
Hindustan 10 | P a g e
2009
HUL was awarded the CNBC AWAAZ Consumer Awards 2009 in
global rankings.
for the Asia Pacific region and bagged the 10th place in the
• HUL ranked fourth in the ‘Top Companies for Leaders, 2009’
durables sector.
HUL won Customer and Brand Loyalty Award in the consumer non
'HR Super Achiever of the Year' award
and our Executive Director-HR, Leena Nair was awarded the 2010
Congress 2010: 'The Most Admired & Best HR Team Award'
HUL won two prestigious awards at the World HRD •
Achievement Year
Awards & Recognisitions
(Companies official website)
Mr. Nitin Paranjpe - CEO and Managing Director
Mr. R. Sridhar - Chief Financial Officer
Mr. Harish Manwani - Chairman
Mr. Shreejit Mishra - Executive Director, Foods
Mr. Gopal Vittal - Executive Director, Home &Mr. Nitin Paranjpe
Personal Care - CEO and Managing Director
Mr. Hemant Bakshi - Executive Director Mr. R. Sridhar - Chief Financial Officer
Mr. Gopal
Mr. Pradeep Banerjee - Executive Director, Supply Vittal - Executive Director, Home & Perso
Chain
Ms. Leena Nair - Executive Director, HR Mr. Pradeep Banerjee - Executive Director, Supply
Mr. Dev Bajpai – Executive Director, CS Mr. D. S. Parekh - Independent Director
Mr. A. Narayan - Independent Director
Mr. S. Ramadorai - Independent Director
Dr. R. A. Mashelkar - Independent Director
three categories: Most Preferred Personal Care Company,
Most Preferred Home Care Company and Value for Money
Brand of the Year.
HUL’s Project Shakti won the Silver Trophy of the EMPI-Indian
Express Indian Innovation Awards.

Ad club Emvies: Hindustan Unilever has bagged 7 Awards (2 Gold,


2 Silver and 3 Bronze) across categories, the only company
with maximum wins.
2008 • HUL won the Bombay Chamber Civic Award 2007 in the
category of Sustainable Environmental Initiatives, for its
water conservation and harvesting project at Karchond
village, Silvassa, Dadra and Nagar Haveli.

HUL won the UK Trade & Investment India Business Award in the
Innovation category for Pureit.
2007 • In 2007, Hindustan Unilever was rated as the most
respected company in India for the past 25 years by
Business world, one of India’s leading business magazines.
2006 • Mr.D.S.Parekh –HUL in depend director received for services
to financial services and banking industry in India and ‘Best
Non-Executive Director 2006’ by the Asian Centre for
Corporate Governance.

(Companies official website)

Corporate Social Responsibility


• The water usage per tonne has been reduced by more than 32% in its
own manufacturing operations against a baseline of 2004.

• More than 50% of our own manufacturing units have a rain water
harvesting facility. As on date, five Company units return more water
to ground than being consumed by them.

• The energy consumption and CO per unit of production since 2004 has
also come down by 38% and 28% respectively.

11 | P a g e Hindustan
Unilever Limited
• Company has initiated works in the area of sustainable agriculture
sourcing for Tea, Fruits & Vegetables and Palm oil.

• The Company has started developing Indian producers for Tomato


paste. We are working closely with key producers and the initiatives
include water conservation, use of authorized pesticides, land
conservation and improvement of farmer income.

• The Brand partnered with the Government of Tamil Nadu and


organized a massive event on Global Hand Washing Day (15th
October, 2009) wherein out of 47,000 children that washed their
hands on that day, 15,000 washed their hands in perfect harmony to
stake claim to the Guinness record for the most people washing their
hands simultaneously.

• In the area of Health and Hygiene, during the Swine Flu epidemic,
'Lifebuoy' undertook rallies in key effected cities, where the message
of the importance of hand washing was emphasized, in preventing
Swine Flu.

• The vast majority of HUL’s products reach the consumers without


being tested on animals.
• Your Company started the Sankalp initiative of employee volunteering
in the 75th year of its existence in India. In 2008 our employees
undertook volunteering and community service totaling more than
48,000 hours against a target of 27,375 hours. In 2009 we have
achieved more than 1, 15,000 hours of volunteering.

(Annual Report 2010, p.38 & Sustainability Report 2010, p.10)

12 | P a g e Hindustan
Unilever Limited
PRODUCTS PROFILE

Product Categories/Segments

13 | P a g e Hindustan
Unilever Limited
Two out of three Indians use Hindustan Unilever products. From
feeding your family to keeping your home clean and fresh, our
brands are part of everyday life.

Health, hygiene & beauty Nutrition

Food

Beverages

Water

Personal care
Home care

3 Segments in Detail

14 | P a g e Hindustan
Unilever Limited
HUL is the proud owner of around 35 major Indian brands. HUL has
divided its products into following categories:

1. Food brands: HUL is one of India’s leading food companies.


Companies passion for

understanding what people want and need from their


food - and what they

love about it-makes their food brands a popular


choice.

15 | P a g e Hindustan
Unilever Limited
S.No Brand Key Facts
• 3 Roses is a 30 year old regional brand and is
the market leader in Tamil Nadu.
• It is one of the largest FMCG brands in Tamil
1 Nadu across categories.
• It has a strong presence in both in home and
out of home segments.

• It has two functionally differentiated variants - 3


Roses Natural Care and 3 Roses Mind Sharp.
• Red Label is a 105 year old brand and has
tremendous equity and heritage in the Indian
market.
• It is the second largest tea brand in the
country.
2
• It has both leaf and dust variants, as well as a
health and immunity variant -
Red Label Natural Care.
• It is now proven that regular consumption of 3
cups of Red Label Natural Care every day can
enhance one's immunity and help one fall ill
less often.

• Red Label holds the Guinness Record for the


world’s largest tea party.
• Taaza is a 20 year old brand with strong
presence in North & West India.
3 • It is the 3rd largest tea brand in the country
with a portfolio spanning in both leaf and dust
segments.

• It has a strong presence in the out of home


segment in South India.
• Taj Mahal was launched in 1966 by Brooke
Bond.
• Taj Mahal since 2007 has Saif Ali Khan as its
4 ambassador, a relevant choice for today’s
Indian.
• Taj Mahal is the most premium brand of tea in
the Indian market.

• It was the first brand to launch tea bags and is


the only tea brand in India to be sold in vacuum
sealed packs.
16 | P a g e Hindustan
Unilever Limited
• Unilever’s only coffee brand
• Enjoys a rich heritage, came into existence in
5 1962 under the brand name Deluxe green
(Companies official website)

2. Home care brands: HUL has a diverse portfolio of brands


offering home care

17 | P a g e Hindustan
Unilever Limited
Solutions for millions of consumers across
India.

Brands Key Facts


• Wheel, biggest laundry brand in India,
dominates a complex mass market laundry
business in India.
• Sales Turnover of about 1500 crs in 2007
1
as per AC Nielson Data.
• Wheel powder commands the market with
20 shares as per AC Nielson data.

• Its contribution to HPC business in Value


and Volume terms is 17% and 47%
respectively.
• Cif is the number 1 cream cleaner in the
World.
• It is the number one cleaner in various
countries including France, Germany, and
Russia.
2 • It’s a 500 million Euro Brand.

• Cif is sold in 51 countries around the globe.


• The world’s largest fabric conditioner
brand.
• Worldwide sales of over Euro 750 million.
(approx. 4,500 crore)
3
• Comfort is the number 1 in 14 of the 23
countries in which it is sold!

• Domex is the number 1 or 2 bleach in 9


countries (Croatia, Greece, Hungary, India,
Ireland, Netherlands, Philippines, Poland,
and South Africa).
4
• Domex is sold in 35 countries globally.
• There are more than €250 million sales of

18 | P a g e Hindustan
Unilever Limited
Domex every year.

• Domex is also sold as Domestos, Glorix,


and Klinex.

• Rin was launched in India as a bar in 1969


with the iconic lightning mnemonic.
• Rin powder was launched in 1994 as Rin
5 Power White
• Rin Matic for washing machines, launched
in July 2008.
• Sold in developing markets in Africa, Asia
and Latin America.

• Sold as Brilhante (Brazil), Rin (India) and


under other local brand names.

6 • First Brand of uniliver in India

• No 1 brand in Kerala and West Bengal

7 • Surf Excel was introduced in 1959

• Vim was the original hand dishwashing


brand: so we invented the whole category!
• Vim is sold in four continents, is the leading
hand dishwashing brand in twenty
countries, and is available to more than 2
8 billion people around the world.

• Vim began life as a soap (both in England,


and in Thailand, where King Rama V asked

19 | P a g e Hindustan
Unilever Limited
Unilever to supply his household with
soap), but is now available as a complete
range of hand dishwashing – including bars,
powders and liquids.

(Companies official website)

3. Personal care brands: Our personal care brands, including Axe,


Dove, Lux,

pond's, Rexona and Sunsilk, are


recognised and love by

consumers across India. They help


consumers to look good

and feel good – and in turn get more


out of life.

S.N Brands Key Facts


o

• Number 1 male deodorant brand in India.


• Available in over 60 countries.
2

20 | P a g e Hindustan
Unilever Limited
• LEVER Ayush has five categories across health
care and personal care range
• LEVER Ayush is a unique combination of the Truth
3 of Ayurvedic with the Proof of Science.
• It is also endorsed by Arya Vaidya Pharmacy,
Coimbatore

• Free from harmful levels of heavy metals like


Arsenic, Mercury and Lead; Pesticides and
Bacterial contamination.
• Launched in 1988 as a family beauty soap with
the promise of a fresh feeling of nature
4

• Comes in 5 attractive variants Lemon Twist, Rose


Mallika, Sandal Sparsh, Rajni gandha & Morning
Muskaan
• Presence in countries like Indonesia, Thailand,
Philippines, Vietnam, Arabia, Russia, turkey etc
5
• USP: Clinic is clear is the only brand that offers
specially formulated Anti dandruff shampoo for
men.

• Clinic All Clear also has Anti Dandruff Hair Oil that
fights dandruff gently and effectively, giving you
dandruff free hair.

• Largest selling shampoo in India.


• Largest distributed shampoo in India.
6
• Its known as ‘Lifebuoy’ in Pakistan, Sri Lanka,
Indonesia and Vietnam and in Philippines its
known as ‘Vaseline’

• It’s a huge $200mn brand across the 6 countries


• Launched first in the US in 1957; is one of the
leading brands of Unilever globally.
7 • Dove has its footprint in 80 countries worldwide
with a range of superior products from bar,
lotions, body washes, face care and creams.
• It is the leading bar brand in UK, US and Canada.

21 | P a g e Hindustan
Unilever Limited
• Fastest growing hair category brand in India
• First HUL offering in the oral care category
• First gel toothpaste in India – launched in 1980
8 • Market leader in the gel-segment for almost 3
decades

• Making stars out of models (Present-day stars like


John Abraham, Deepika Padukone, Salman Khan,
etc. are some of many who have been models of
Closeup in the early days of their careers)

• Only 400 crores Herbal soap brand in the


personal care segment.
10
• 21.36% market share in the South Indian state of
Tamil Nadu.
• Lakme was the first major beauty brand in India
and takes pride in being the expert on Indian
11
Beauty for over 50 years.
• It is complete beauty brand spanning color
cosmetics, skin care & hair styling products and
extending to beauty services through the network
of Lakme Beauty Salons.
• Its bond with beauty and fashion is manifested
through the Lakme Fashion Week, which is now
the largest fashion event of its kind in the
country.

• Lakme has a foot print of over 1200 assisted


sales outlets, which is the largest span of outlets
with “Beauty Advisors” in the country.
• Undisputed Leader in the soaps market of India,
with 18.4% share.
• Turnover of €350 million a year globally, € 200
million in India.

22 | P a g e Hindustan
Unilever Limited
• Has a consumer base of 140 Million households in
12 India
• The iconic jingle of Lifebuoy – “tandrusti ki
raksha…..” is almost like the health anthem of
India and Indians.
• Recent Awards: Voted in the top 10 most trusted
brands in India in the “Brand Equity Survey”
(came in at No. 9 in 2008 as well)Marketing
excellence awards for its recent innovations and
activations:
o “Gold” at the Emvies 2008 for best use of
media innovation

o ASIA Pacific CSR Award 2007, for Lifebuoy


Swasthya Chetna
• Liril was launched in 1977. Its 30 years old!
• Liril has been a trendsetter over times. The soap
& its advertising have been considered to be
13 revolutionary!
• The first TV ad dates back to 1985. The Liril
expressions, associations & the Liril ads are
recalled even till now!

14 • Lux stands amongst India’s top 10 most trusted


brands

• The story of this popular soap was first created in


1789 by a young man called Andrew Pears. This
15
is from whom it derived its name!
• The most famous Pears 'face' is 'Bubbles', from
an original painting by Sir John Everett Millais in
1866. The painting later came to be the very first
advertising on the brand!

23 | P a g e Hindustan
Unilever Limited
• Endorsed by FDI ( the largest dental association
globally)
• Among the most trusted brands in India (Brand
16 Equity, Economic Times, India)

• Also sold as Mentadent, Zhonghua, PS and Signal


in other countries

17

• World’s leading Deodorant Brand


• Number one Deodorant brand in more than 40
countries.
18
• First Deodorant Brand to be launched in India,
launched in 1995
• Number 1 in Asia, Latin America and the Middle
East
• Sales of more than €1 billion a year.
19 • Selling in 80 countries.
• Their main target market is females between the
age group 16-40 belonging to the two upper
income classes.
• But in their promotional activities, they cover the
whole market irrespective of these classes.
( http://www.slideshare.net/Onlyurs/sunsilk-vs-
headshoulders)

20

(Companies official website)

24 | P a g e Hindustan
Unilever Limited
25 | P a g e Hindustan
Unilever Limited
CURRENT
PERFORMANCE

Human Resource
The belief that 'great people create great organizations’ has been at the core of the Company's
approach to its people. Their human resource policy focused on nurturing talent
and motivating and empowering their work force. Hence they continued to
make significant investments for training in the areas of marketing excellence, customer service
and building capabilities for organized retail trade. Many training programmes were delivered
through classrooms, new capability building courses and external learning sessions. There e-
learning platform offers a bouquet of 3000+ courses via internet. Nearly 20,000 course
registrations took place in 2009 providing access to learning anywhere, anytime.

26 | P a g e Hindustan
Unilever Limited
The technology applications have been made available on a self service portal which has
increased the productivity of every line manager and HR manager by freeing up their time from
managing routine and transactional workload. The year 2009-10 marked the completion of this
exercise as the HR transactions were successfully transferred to Accenture with high standards
of delivery and performance.
(Annual Report 2009-10, p.34)

Companies’ ability to attract the best talent in the market has been a key factor for success. The
HUL employer brand made significant progress in 2009 and continued to retain top spot as the
'Dream Employer' on all top B-School campuses.
(AC Nielson Study)

Education and training are important components of the HUL’s approach to people and in
consonance a License to operate programme was created for Supply Chain officers which
resulted in every officer undergoing at least three e-learning courses during 2009.

HUL’s focus on proactive and employee focused shop floor practices, quick grievance
resolution mechanisms and alignment to overall business goals ensured that there was
practically no loss of man days due to industrial issues in 2009. Seven productivity linked long
term settlements were signed through the process of collective bargaining involving over 2,200
employees. All these settlements were signed with zero disruption to business activity reflecting
the maturity of workmen collectively. The process of rehabilitation was undertaken with utmost
concern for our people. One unit went through a process of consolidation and there were some
separations in the field force and Head Office. The process of separations was handled with the
utmost care and sensitivity to our people's needs.
(Annual Report 2010, p.35)

Information Technology
HUL continued to invest in IT infrastructure to support their business
applications. They have leveraged the expanded telecom footprint in the
country to provide high bandwidth terrestrial links to all operating units.
Video conferencing is extensively used to collaborate across locations while
reducing travel costs.

As part of the backbone IT capability for Sales and Customer Development,


HUL successfully established a common transaction system that is used by
all Redistribution Stockiest and that is fully integrated with Company's

27 | P a g e Hindustan
Unilever Limited
systems. For this, stockiest have been connected through an Internet-based
network, called RS-Net, for online interaction.

Distributor salesmen use a Hand Held Terminals as an aid for taking retail
orders. In 2009, they have enhanced this capability for analytics and
intelligent sales calls. As part of the thrust of further improving their direct
coverage in rural areas, they are leveraging geospatial aids extensively.
HUL have also established an IT enabled consumer interaction centre for
addressing complaints and suggestions.

(Annual Report 2010, p.36)

Operations
HUL has traditionally been a company, which incorporates latest technology
in all its operations. The company priorities speed and flexibility in their
supply chain to deliver growth. They are doing this through simple ideas. For
example, in some of company’s detergent factories they are running 'twin
track' on single production lines. This has helped to nearly double the
production thus enabling better customer service while improving operating
efficiencies.
Apart from this, today most of their production lines have developed the
capability of quick changeovers to meet the market demand. The principles
of Total Productive Maintenance were applied and progress tracked across
all the manufacturing sites during past year. This resulted in an increase in
asset productivity levels. HUL’s buying function also delivered improved
efficiencies and reduction in procurement costs, fully leveraging benefits of
scale and synergy through Unilever's global buying network.

(Annual Report 2010, p.12)

Marketing
Hul’s 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.
(Livemint online newspaper)

28 | P a g e Hindustan
Unilever Limited
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
Product germs.
• 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
Place 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.
• 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


Promotion ‘Hamam’ & ‘Rexona’.
• HUL has gone into strategic partnerships with technology
companies for deeper market penetration.

• In the soaps and detergents cuts in the prices of Wheel and


Price Lifebuoy and gram mage increases in Lux were done.

Financials
29 | P a g e Hindustan
Unilever Limited
HUL’s focus on cash generation continued and the company delivered a strong
operating cash flow during the year; this was driven by the business performance,
efficiencies and cost savings across Supply Chain and greater focus on working
capital management. The Company managed the investments prudently by
deployment of cash surplus in a balanced portfolio of safe and liquid instruments.
Capital Expenditure during the year was at Rs. 572 crores and was in the areas of
capacity expansion, consolidation of operations, information technology, energy
and other cost savings. The Company has not accepted any fixed deposits during
the year. There was no outstanding towards unclaimed deposit payable to
depositors as on 31st March, 2010.
(Annual Report 2010, p.35)

30 | P a g e Hindustan
Unilever Limited
PORTER’S FIVE FORCES
ANALYSIS
BUYER POWER:

• 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.
• Verdict: strong buyer power of consumers

SUPPLIER POWER

• 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
• Verdict: limited supply power

THREAT OF NEW ENTRANTS:

• Given the amount of capital investment needed to enter certain


segment in house hold
Consumer products, the threat of new entrant is fairly low.
• Whether the new entrant can get its products on the shelves of the
same retailers as its much larger rivals to derive sales would be
difficult for him.
• Verdict: low threat of new entrants.

THREAT OF SUBSTITUTES:

• There are complex and never ending consumer needs and no firm can
satisfy all sorts of needs alone.

31 | P a g e Hindustan
Unilever Limited
• There are plenty of substitute goods available in the market that can
be replaced 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.
• Verdict: high threat of substitutes.

DEGREE OF RIVALRY

• Consumer in the category which HUL deals in enjoy multitude of


choices.
• It does not cost anything for a consumer to buy one brand of shampoo
instead of another, making the industry quite competitive. As the
switching costs are negligible.
• Moreover competitors use all sorts of tactics from intensive
advertisement campaigns to promotional stuff and price wars etc. so
overall the intensity of rivalry is very high.
(Scribd 2010)

http://www.scribd.com/doc/5227464/Hindustan-Lever

SWOT ANALYSIS
Strengths

• Uniliver Group: Hul is a subsidiary of Unilever, which sells Foods, home


and Personal Care brands in about 100 countries worldwide. Hul gain lots of
advantages from the parent company in terms of knowledge sharing, fully
leveraging benefits of scale and synergy through Unilever's global buying
network.

• Largest market share: HUL is India’s largest consumer products


company by sales.

• Strong Product Portfolio : HUL, unlike international and local


competitors such as Nestle India Ltd or Godrej Consumer Products Ltd that
are focused on one or two categories, HUL straddles several sectors right
from food to personal care products.

32 | P a g e Hindustan
Unilever Limited
• Strong Distribution Network: Hindustan Unilever's distribution
network is recognised as one of its key strengths. Its focus is not only
to enable easy access to our brands, but also to touch consumers with
a three-way convergence - of product availability, brand
communication, and higher levels of brand experience. HUL's
products, manufactured across the country, are distributed through a
network of about 7,000 redistribution stockiest covering about one
million retail outlets
HUL's distribution network in rural India already directly covers about
50,000 villages, reaching about 250 million consumers, through about
6000 sub-stockists.

• Strong R&D: HUL has build on its R&D by further strengthening the
R&D Units in Bangalore and Mumbai with stronger integration with
Unilever Global. R&D technology centers in India have over 200 highly
qualified scientists and technologists. With the strong support from
Unilever R&D as well as the brand development capabilities, the
company is well placed to meet the challenges arising from the
increased competition intensity.

• Highly Skilled human resource: The ability to attract the best


talent in the market & to retain it has become one of the key factors
of HUL’s success. Currently HUL have an efficient manpower of 15000
employees over 13000 mangers.
(Scribd 2010)

(Annual Report 2010, p.38)

Weakness

• High Competition: HUL is facing high competition from companies


like ITC,P&G,Dabur etc. P&G and HUL have entered into a price-war, as
P&G is giving tough competition to HUL soaps and detergents brands. The
2010 price war, though lower in quantum, has just started and is likely to
significantly impact HUL's Earnings

• Losing Market share: Hul is steady losing its market share in


segments including soaps, hair, oral & skincare.

(Economic times)

33 | P a g e Hindustan
Unilever Limited
• High Advertising Costs: HUL is incurring high advertisement costs
in current fiscal year. There is 66% increase in the advertising budget.

• Changing Consumption Patterns: Demand for high-end products is


dropping. Indian consumers are still buying; it's just that they're avoiding the
most expensive brands. That's why HUL will need to become more sensitive
to price by offering price reductions on some of the existing products and
introducing more new innovative products at low price points.

(Businessweek.com)

Opportunities

• Large domestic market: There is huge market development


opportunity in countries like India with population of over a billion, as
consumption is still one-third that in Indonesia and one-seventh that in
China.

• Changing Lifestyles: Per capita income of Indian customer is


increasing and FMCG products are relatively elastic in nature hence
the expected sale should increase.

• Diversification: HUL can enter into the new brand segments like
confectionery, medicines etc.

• Opportunity in Food Sector: The advent of modern trade has opened


up greater opportunities for HUL to diversify its brand and strength its food
division. It could look at introducing products from its parents stable like
margarines and could also look at expanding its Knorr range of products.
Moreover consumer expenditure in food sector rose by 13%.

• Untapped rural Market: With the presence of 12.2% of the world


population in the villages of India, the Indian rural FMCG market is
something of high importance for HUL.

(Authourstream.com)

Threats

• Increasing costs of raw material: input costs have been on a rise.


Prices of palm oil and copra--key components in products like hair oils and
toilet soaps--have surged. Copra prices have gone up 4% in the last month
and in this financial; rates are expected to advance around 10% from a year
ago. Palm oil prices have seen a sharper rise of around 14%.

34 | P a g e Hindustan
Unilever Limited
"Every 10% change in palm oil prices affects Hindustan Unilever's operating
profit margin by 60 basis points.”

(NDTV.com)

• ITC Entry: ITC has reduced its dependence on the cigarettes business. TC
has extended its presence into areas like foods, retailing, hotels, greetings,
agri, paper, etc. With ITC gaining momentum in each of these businesses, it
is turning into a consumer monolith, and hence, the greatest threat to HUL's
Business.

• Segment threat: Laundry is important business for HUL and we have


strong share position.HUL faces competition not only from rival multinational
company, Procter & Gamble, but also from a slew of new price-warrior
brands that have emerged in the mass segment. There is an extraordinary
situation in the laundry market, over 500 new brands of laundry and over
200 washing powders are posing a new threat to Hul.

(Times of India 2010)

• Tax & Regulatory Structure: Some FMCG products such as shampoos,


processed food, soft drinks and toiletries containing alcohol attract high
rates of excise duty and sales tax. Such high tax incidence hampers growth
of these product categories.

(www.slideshare.net)

EXTERNAL FACTOR ANALYSIS


SUMMARY
Weighte
External
d
Weight Rating Comments
Strategic Factors Scores

Opportunities
Large domestic market 0.10 4 0.40 Economies of scale
Changing lifestyle 0.05 3.5 0.18 Higher sales & demand
Can help in achieving
Diversification
0.05 3.5 0.18 higher sales.
Greater market
Untapped rural market
0.15 5 0.75 penetration

35 | P a g e Hindustan
Unilever Limited
May increase the
Opportunity in food sector
0.10 4 0.40 margins

Threats
Increasing raw material Higher finished
costs 0.15 3 0.45 products costs
ITC Entry 0.15 2.5 0.38 reducing the demand
Threat to laundry segment
0.10 2 0.20 Reduce the margins
Tax and regulatory
structure 0.15 2.5 0.38 Hindrance to growth

TOTAL SCORES 1.00 3.30

EFAS Analysis:

A total score of 3.30 shows that the company’s strategies are very well
aligned to deal with potential threats. There are various opportunities that
the company can take advantage of as introduction of new products in rural
market with greater usability and utility for the customers.

INTERNAL FACTOR ANALYSIS


SUMMARY
Internal Weighted
Weight Rating Comments

Strategic Factors Scores

Strengths
Subsidiary of Unilever
group 0.15 4 0.60 Enhance brand image

36 | P a g e Hindustan
Unilever Limited
Largest market share 0.10 4 0.40 Higher growth & revenues

Strong product portfolio 0.10 3.5 0.35 Competitative edge point


Strong Distribution High customer loyalty &
network 0.15 5 0.75 satisfaction
Strong R&D 0.15 4.5 0.68 Higher innovation level
Highly skilled Human High Management
resource 0.10 3 0.30 efficiency

Weaknesses
Intense competition 0.10 2.5 0.25 May hamper revenues
Losing market share 0.05 2 0.10 May hurt goodwill
May increase operational
High advertising costs 0.05 2.5 0.13 costs
Changing consumption
pattern 0.05 2 0.10 Decline in sales

TOTAL SCORES 1.00 3.65

IFAS Analysis:

A total score of 3.65 of HUL shows that the company is doing very well internally. It is
efficiently utilizing its strengths and eradicating the weaknesses to improve its performance.

STRATEGIC FACTOR ANALYSIS


SUMMARY
Weighted
Weight Rating Comments
Scores

Opportunities
Can help in achieving higher
Untapped rural market 0.15 5 0.75 sales.

37 | P a g e Hindustan
Unilever Limited
Opportunity in food sector 0.05 4 May increase the margins
Increased revenues with low
Large domestic market 0.05 4
0.20 investment

Threats
ITC Entry 0.10 2 0.20 reduce the demand & margins
Increasing raw material costs 0.15 2.5 0.38 Higher finished products costs
Tax and regulatory structure 0.05 2 0.10 Hindrance to growth

Strengths

Subsidiary of Unilever group 0.10 4 0.40 Economies of scale

Strong Distribution network 0.15 5 0.75 Competitative edge point

Strong R&D 0.05 4 0.20 Higher innovation level

Weaknesses

Intense competition 0.05 2 0.20 May hamper growth

High advertising costs 0.10 2.5 0.25 May reduce revenues

TOTAL SCORES 1.00 3.18

SAFS scores show that HUL’s response to external & internal


environment is good.

FINANCIAL PERFORMANCE OF HUL


There was strong volume growth at 14 per cent which led FMCG major
Hindustan Unilever (HUL) to post a 32.1 per cent jump in net profit to Rs
566.12 crores (Rs 428.53 crores) for the quarter ended September 30, 2010,
over the same period last fiscal.

38 | P a g e Hindustan
Unilever Limited
The net profit included an exceptional gain of Rs 40 crores that the
company received through sale of property, provision for expenses related
to buyback of shares and restructuring costs.

During the quarter, HUL recorded a 10.7 per cent increase in net sales to Rs
4,680.87 crores (Rs 4,228.11 crores). Domestic Consumer Business (FMCG
and water) grew by 10.5 per cent with an 8.9 per cent growth in HPC (Home
and Personal Care) and 13.2 per cent in the foods category.

KEY FINANCIAL RATIO’S OF HUL


1. Investment Valuation Ratios
Dec Dec Dec Mar Mar
'05 '06 '07 '09 '10

Face Value 1 1 1 1 1
Dividend Per Share 5 6 9 7.5 6.5
Operating Profit Per Share (Rs) 7.19 8.18 9.54 13.6 12.82
Net Operating Profit Per Share (Rs) 50.85 55.48 63.75 94.06 81.45
Free Reserves Per Share (Rs) 9.34 11.2 5.45 8.3 10.7
Bonus in Equity Capital 59.82 59.67 60.47 60.4 60.36
(Source: Religare Technova)

Dec Dec Dec Mar Mar


'05 '06 '07 '09 '10

Earnings Per share 6.4 8.41 8.12 11.47 10.09


Book Value 10.47 12.34 6.61 9.45 11.84
Interpretation:

i. The face value of equity share of HUL is Rs.1.


ii. The EPS has declined in year 2010 compared to previous year; this
indicates HUL has earned lesser profits for shareholders in this year
compared to last year.
2. Profitability Ratios
Dec Dec Mar Mar
Dec '05 '06 '07 '09 '10

Operating Profit Margin (%) 14.14 14.74 14.95 14.46 15.74


Profit Before Interest And Tax 12.87 13.5 13.78 13.39 14.59

39 | P a g e Hindustan
Unilever Limited
Margin (%)
Gross Profit Margin (%) 15.03 15.8 15.86 13.5 14.7
Cash Profit Margin (%) 13.52 15.99 13.56 12.29 12.76
Adjusted Cash Margin (%) 12.43 13.21 12.9 12.29 12.76
Net Profit Margin (%) 12.42 14.94 12.58 12.09 12.29
Adjusted Net Profit Margin (%) 11.33 12.16 11.91 12.09 12.29
138.7 118.5 106.7
Return On Capital Employed (%) 67.66 65.89 2 9 8
122.9 121.3
Return On Net Worth (%) 61.09 68.14 7 4 85.25
116.4 113.8
Adjusted Return on Net Worth (%) 55.75 55.43 9 5 81.4
Return on Assets Excluding
Revaluations 20.91 24.45 6.61 9.45 11.84
Return on Assets Including
Revaluations 20.91 24.45 6.61 9.46 11.84
147.2 142.8 106.7
Return on Long Term Funds (%) 69.33 67.65 6 8 8
(Source: Religare Technova)

Interpretation:
• Net Profit Margin %: It has increased in 2010 compared to previous
year which shows there was improvement in HUL’s operational
efficiency.

• The gross profit margin have increased compared to last year this
implies increased cost savings and improved buying efficiencies.
• The profit distribution ability of HUL is good with return on net
worth (RONW) being around 85% during the current year.
• Return on capital employed measures the profit, which a firm earns on
investing a unit of capital. The profit being the net result of all
operations, the return on capital expresses all efficiencies and
inefficiencies of a business. The ratio has reduced in past 3 yrs from
dec’07 to marc’10 from 138.72% to 106.78%. This indicates that the
firm’s earning has reduced on investing. This also indicates that the
management is not working that efficiently.
• The operating profit margin % has increased which indicates HUL
earns profits from its business operation and not from the other sources. It shows
the business is able to stand in the market.

40 | P a g e Hindustan
Unilever Limited
3. Liquidity and Solvency Ratios

Mar Mar
Dec '05 Dec '06 Dec '07 '09 '10

Current Ratio 0.7 0.73 0.68 0.92 0.84


Quick Ratio 0.33 0.34 0.25 0.51 0.46
Debt Equity Ratio 0.02 0.03 0.06 0.2 --
Long Term Debt Equity
Ratio -- -- -- -- --

(Source: Religare Technova)

Ratio Analysis
• Current ratio of HUL has been
less than 1 for past 5 years. This
implies that working capital of
HUL is always negative. This is
generally considered an
Current Ratio aggressive strategy i.e. to
financing its long term asset by
Liquidity
short term sources that
& increases profitability because
current liabilities are non
Solvency interest bearing items.
Ratios • The Current ratios have
decreased from previous year
which shows that HUL has
reduced its liquidity further.

Quick Ratio • There is significant difference


between Current Ratio and
Quick Ratio which indicates that
the current asset of HUL
consists of good amount of
inventory.

Debt Equity Ratio • Zero debt equity means implies


negligible financial risks for HUL.

41 | P a g e Hindustan
Unilever Limited
4. Management Efficiency Ratios

Dec Dec Mar Mar


Dec '05 '06 '07 '09 '10

Inventory Turnover Ratio 8.57 8.02 7.2 9.26 8.99


Debtors Turnover Ratio 22.12 25.42 31.41 41.83 29.24
Investments Turnover Ratio 9.97 9.27 8.2 9.26 8.99
Fixed Assets Turnover Ratio 8.47 9.3 9.8 7.81 5.35
Total Assets Turnover Ratio 5.14 4.67 10.53 9.22 7.66
Asset Turnover Ratio 5.11 5.35 5.64 7.81 5.35

Average Raw Material Holding 66.11 68.95 84.2 72.27 51.08


Average Finished Goods Held 23.6 27.53 29.81 34.18 32.05
Number of Days In Working
Capital -40.83 -36.37 -42.05 1.58 -22.62
(Source: Religare Technova)

Interpretation:

i. The total Asset Turnover ratio of 7.66 times implies that HUL
generate a sale of Rs.7.66 for one rupee investment in fixed & current
assets together.
ii. The inventory Turnover Ratio is higher as compared to 2005 in
year 2010; this indicates HUL have good inventory management.
iii. The Debtor turnover ratio has decreased in 2010 compared to
previous year; this indicates that HUL’s debt recovery system is not
efficient. And this is not good for liquidity.
iv. The Average Raw material Holding has been declining from past
two years from 84.2 to 72.27 to 51.08, this indicates that HUL’s
efficiency in turning its inventory is deteorating.
v. The yearly holding of all types of inventories is increasing.

42 | P a g e Hindustan
Unilever Limited
HUL-BUSINESS MODEL
Hindustan Unilever devised a model that broke through the income and
access barriers that keep hundreds of millions of non consumers from the
market. Reaching out to government-supported and micro financed village
self-help groups, the company identified and trained a sales force of women
who had few business skills but great entrepreneurial ambition. Termed
"Shakti Ammas" ,they represent the company and sell its home-care, health,
and hygiene products in their villages.

Rethinking the Business Model

The Mumbai-based company tapped this vast market by rethinking entirely


the "four boxes" that work together to make up any business model:
customer value proposition, profit formula, key processes, and key
resources.

The customer value proposition—the product, service, or combination of the


two that helps customers solve an important problem—represented a major
departure for Hindustan Unilever (HUL). In the traditional packaged
consumer-goods business, the retailer is the customer and the product is
distributed through third parties in population centers. But in this case, the
Shakti Ammas are the customers to whom the company delivers not just
products but also a business opportunity that often doubled their incomes
and gave them greater prestige because of their role in producing social
benefits like better hygiene.

HUL also revised its profit formula, which defines the way a company
captures value and includes the revenue model, cost structure, target unit
margin, and resource velocity. Traditionally, packaged consumer-goods

43 | P a g e Hindustan
Unilever Limited
companies make profits through low per-unit cost and economies of scale.
Until it came up with its radically new approach to distribution, HUL had
thought it not possible to devise a scalable way to reach India's widely
dispersed populations in its small villages. Although the Shakti model does
produce lower margins, it makes up for it with much higher volume.

Key resources and key processes are the skills, activities, and assets
through which the company delivers value to customers and to itself. HUL's
network of partners broke with the company's longtime distribution
practices, which had previously kept its distribution system entirely in-
house. Further, the company had to conceive new ways to provide sales
training for the Shakti Ammas—who had varying levels of education—and
new ways to provide compelling brand messages to people for whom
traditional brand messages meant little.

http://www.businessweek.com/managing/content/may2010/ca2010055_760
459.htm

HUL: Project Shakti business


model
With the urban market saturated, FMCG companies are now targeting the rural markets. In spite of the
income imbalance between urban and rural India, rural holds great potential since 70% of India’s
population lives there. Due to the recent government measures like waiver of loans, national rural
employment guarantee scheme and increasing minimum support price, disposable income in rural India
has been rapidly increasing.

However, rural markets present their own sets of problems. These include poor infrastructure, dispersed
settlements, lack of education and a virtually nonexistent medium for communication. Furthermore,
retailers cannot be present in all the centers as many of them are so small that it makes them
economically unfeasible and hence for through Shakti HUL plans to offer appropriate products in an
affordable way in relatively remote locations.

Hindustan Unilever Limited (HUL) to tap this market conceived of Project Shakti. This project was started
in 2001 with the aim of increasing the company’s rural distribution reach as well as providing rural
women with income-generating opportunities. This is a case where the social goals are helping achieve
business goals.

44 | P a g e Hindustan
Unilever Limited
The recruitment of a Shakti Entrepreneur or Shakti Amma (SA) begins with the executives of HUL
identifying the uncovered village. The representative of the company meets the panchayat and the
village head and identify the woman who they believe will be suitable as a SA. After training she is asked
to put up Rs 20,000 as investment which is used to buy products for selling. The products are then sold
door-to-door or through petty shops at home. On an average a Shakti Amma makes a 10% margin on
the products she sells.

An initiative which helps support Project Shakti is the Shakti Vani programme. Under this programme,
trained communicators visit schools and village congregations to drive messages on sanitation, good
hygiene practices and women empowerment. This serves as a rural communication vehicle and helps
the SA in their sales.

The main advantage of the Shakti programme for HUL is having more feet on the ground. Shakti Ammas
are able to reach far flung areas, which were economically unviable for the company to tap on its
own, besides being a brand ambassador for the company. Moreover, the company has ready
consumers in the SAs who become users of the products besides selling them.

Although the company has been successful in the initiative and has been scaling up, it faces problems
from time to time for which it comes up with innovative solutions. For example, a problem faced by HUL
was that the SAs were more inclined to stay at home and sell rather than going from door to door since
there is a stigma attached to direct selling. Moreover, men were not liable to go to a woman’s house and
buy products. The company countered this problem by hosting Shakti Days. Here an artificial market
place was created with music and promotion and the ladies were able to sell their products in a few
hours without encountering any stigma or bias.

This model has been the growth driver for HUL and presently about half of HUL’s FMCG sales come
from rural markets. The long term aim of the company is to have 100,000 Ammas covering 500,000
villages and reaching 600 m people. We feel that with this initiative, HUL has been successful in
maintaining its distribution reach advantage over its competitors. This programme helped to provide HUL
with a growing customer base which will benefit the company for years to come.

(OUTLOOK ARENA)

45 | P a g e Hindustan
Unilever Limited
LIFEBUOY SOAP-BUSINESS
MODEL
Product Category

Lifebuoy falls under the category of toiletry product in hygiene market.HUL


is offering a standard product of Lifebuoy soap and shampoo by
standardized packaged product.

Value Proposition:

• Lifebuoy provides total protection and positioned as “health and


hygiene” soap. The brand USP is ‘Lifebuoy provides 100% better
protection from germs as compared to ordinary soaps.’
• Have long life compared to other competitive soaps.

Market Segmentation

Lifebuoy is mainly targeted hardworking people those who relatively earn


less money but give more labor. For example I can say village people.
Lifebuoy with its distinct perfume and catchy jingle was associated with

46 | P a g e Hindustan
Unilever Limited
health and well-being, making it the world’s largest selling soap brand. Its
ads carried the message that Lifebuoy washed away germs and kept one
protected and healthy. Now a day’s lifebuoy came up with new color and
new flavor for the different target market but the main target market is still
same, lower middle class people.

Lifebuoy is now an entirely new mix with a superior formulation, fragrance,


lather profile and a contemporary shape. It offers an improved bathing
experience and skin feel. The new Lifebuoy is targeted at today’s astute
housewives who seek family health protection. It made a thoughtful shift in
positioning from being a male soap, champ of health to a family soap with a
more reliable health protection against germs for the entire family

Demographic segmentation

Age 6 to 50 +
Gender Anyone
Family Size 2,3-4,5+
Income Rs.4000+
Target Area Lower Income group
Social class Middle & lower class

Geographic Segmentation

World region Asia


Country & Developing countries like India &
cities Pakistan
Sub-urban & Semi-urban & rural
Target area
areas

Behavioral Segmentation

Total protection anti-bacterial


Benefits
soap
User status Regular user
Loyalty status Split-loyal
Usage rate Medium
Buyer
Informed & interested
readiness

Psychographic segmentation

47 | P a g e Hindustan
Unilever Limited
Attitude Health-conscious & energetic
For people who are involved
highly in Indoor as well as
Lifestyle
Outdoor oriented & sports
oriented activities
http://www.scribd.com/doc/23714565/soap-industry

Positioning

The 100 plus years old brand Lifebuoy, which was positioned purely as a
health soap targeted at a male population, has now got rid of its carbolic
nature, smells different and is positioned as a family soap. This was a
conscious move from HUL in 2002 to do away with the carbolic soap.

Rechanilised its product cycle by introducing new variants like

• Lifebuoy Active Red


• Lifebuoy Active Orange
• Lifebuoy International Plus
• Lifebuoy International Gold
• Lifebuoy Nature (Neem & Tulsi)

The re-launch of lifebuoy brand is a shift from being a masculine soap to a


family soap which is elucidated in the new packaging. Moreover, the
positioning of health will now be aggressively communicated to women in
the Indian household.

Unilever position Lifebuoy when come in red colors as a brand of low income
group. They choose their segment and position their brand according to the
needs and wants of the segments. This segment wanted long life of the
soap and the chemical formula of Lifebuoy enables it to have long life.

Competitive Strategy

Focused cost leadership strategy & price differentiation strategy followed in


case of lifebuoy soap.

As per there market positioning strategy they follow the cost leadership
strategy where the business focuses on selling existing lifebuoy variant
products into existing markets to loyal customers. These stratgeicies seeks

48 | P a g e Hindustan
Unilever Limited
to achieve increased market share which is currently 17% – & this can be
achieved by a combination of competitive pricing strategies, advertising,
sales promotion and perhaps more resources dedicated to personal selling.

While the soap market is declining by 15 to 20 per cent Lifebuoy will still try
and manage a double digit growth as an extension to the seamlessly knit
competitive strategies.

Value chain Existing strategy:

Hindustan Unilever limited uses a lot of distributors and retailers to supply


its products in each market where the final customer might reasonably look
for it. While appointing a distributor for a particular area, management uses
its own judgment to select such a person that has a potential to operate
effectively.

HUL uses an intensive distribution strategy for lifebuoy soap while at


the same brand but in shampoos category it introduces only extensive
strategy. HUL did not fight for the better shelf space for lifebuoy soap
rather. Lifebuoy is targeting middle and low income consumers so shelf
space is not important their main focus is on intensive distribution and ideal
price with some innovation.

In the intensive distribution of lifebuoy it is kept with wholesaler and


retailers in the areas where rate of consumption is usually very greater than
that of the other areas where comparatively rate of consumption is not so
attractive.

Lifebuoy is available at every outlet and at every big, medium and even at
very small stores.

While deciding about the selection of Channel HUL considered the customer
buying patterns and the nature of the lifebuoy target market.

(Scribd.com)

49 | P a g e Hindustan
Unilever Limited
http://www.scribd.com/doc/33596240/HUL-Market-Strategies-for-Life-Buoy-
Soap

MARKETING MIX OF LIFEBUOY


Product

• At the very first HUL has launched the red brick lifebuoy with its own
unique fragrance.
• It has been repositioned itself in 2002 marking a new turning point in
history from carbolic to Total Fatty Material soap and been positioned
as family soap with variants like Lifebuoy Gold, Green.
• The new Lifebuoy range now includes Lifebuoy Active Red(125gm,
100 gm and 60 gm) and Lifebuoy Active Orange (100gm).
• Lifebuoy Active Orange offers the consumer a differentiated health
perfume while offering the health benefit of Lifebuoy.
• At the upper end of the market, Lifebuoy offers specific health
benefits through Lifebuoy International (Plus and Gold).
• Lifebuoy International Plus offers protection against germs which
cause body odour.

• Lifebuoy International Gold helps protect against germs which cause


skin blemishes.
• Now Lifebuoy stood for - perfume, formulation, size and shape.

50 | P a g e Hindustan
Unilever Limited
• Lifebuoy has also launched Total, Lifebuoy DeoFresh, Lifebuoy Nature
and Lifebuoy Gold Care.
• The latest one is launched, called Lifebuoy Skin Guard.
• Lifebuoy has also launched soap with neem and tulsi.
• The soap for total family protection, Offers clinically proven, long
lasting protection from infection causing germs.
• Recently it has launched talcum powder under the brand name of
lifebuoy.

Price

Lifebuoy DeoFresh has been introduced especially for young adults who lead
active life. Lifebuoy Total is for all those mothers with active kids who
constantly fear hygiene threats from germs leading to stress and anxiety for
the mothers and is available at Rs 12 for 125g, Rs 10 for 100g and Rs 5 for
55g.
Lifebuoy Nature, on the other hand, comes with neem and tulsi and is
available at Rs 10 for 100g.
Lifebuoy Gold Care is specifically designed for sensitive skin and is available
at Rs 10 for 100g.

Promotion
Company has done a strong promotion for its brand product lifebuoy. It uses
to launch so many health programmes in so many countries to make people
aware of health. And many Advertisements across various countries like:

51 | P a g e Hindustan
Unilever Limited
• Lifebuoy – You Eat What You Touch

http://theinspirationroom.com/daily/2009/lifebuoy-handwash-animals/

52 | P a g e Hindustan
Unilever Limited
• 2Nd

Ad’s from rural India Campaigns

53 | P a g e Hindustan
Unilever Limited
54 | P a g e Hindustan
Unilever Limited
Earlier 70’s Ad

Place

Today Lifebuoy is mainly sold in Asia and parts of Africa. It is market leader
in every Asian market where it is sold by its health care programmee it
covers many villages. Basically if we talk about India 70% of the population
lives in villages, so company sees a great opportunity in
villages & trying to cover that. It basically covers 2 teirs cities & rural areas.
It has made his strategy like that in every small or big shop customer will be
able to find out the product.

(Slideshare.com)

55 | P a g e Hindustan
Unilever Limited
Recommendations
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 HUL’s 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 HUL’s 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:

56 | P a g e Hindustan
Unilever Limited
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, I 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.

REFERENCES

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Unilever Limited
Content Reference List

• Hindustan Unilever Limited. Archived from the original on 2008-08-


Company 02, Retrieved on 08-15-2010 from
Profile : http://web.archive.org/web/20080802090951/http://hul.co.in/knowus/
present_stature.asp

• Retrieved on 26 September from


http://trak.in/tags/business/2010/09/01/top-50-most-trusted-brands-
india/

History • Retrieved on 26 September 2010 from


http://www.hul.co.in/aboutus/ourhistory/
• Archived on Scribd 2010. Retrieved on 12 September 2010 from
Mission http://www.scribd.com/doc/37102748/hul

(Companies official website)


Vision
• Retrieved on 24-sep-2010 from
http://www.hul.co.in/aboutus/ourvision/

• Archived on Scribd.com n.d, Retrieved on Aug 31, 2010 from -


Values http://www.scribd.com/doc36686641//hul

• Organizational Structure : Retrieved on 26-sep-2010 from


http://www.hul.co.in/aboutus/companystructure/

• Awards & Recognitions : Retrieved on 27-Sep-2010 from


Manageme http://www.hul.co.in/aboutus/sustanbilityreports/awards
nt
• Corporate Social Responsibility : Retrieved on 27-sep-2010 from
Annual Report 2010, ‘CSR’ p.38 & Sustainability Report 2010, p.10

• Hindustan Unilever Limited. Archived from the company website on


25-sep-2010. Retrieved on 08-15-2010 from

Product i. http://www.hul.co.in/brands/foodbrands/
Profile ii. http://www.hul.co.in/brands/homecarebrands/?
WT.LHNAV=Home_care_brands

iii. http://www.hul.co.in/brands/personalcarebrands/?
WT.LHNAV=Personal_care_brands

58 | P a g e Hindustan
Unilever Limited
• Human Resource: Annual Report 2010, ‘Human Resource’, pg.34.
Retrieved September 26, 2010, from
http://www.hul.co.in/Images/AnnualReport0910_tcm114-225889.pdf

• Information Technology: Annual Report 2010, ‘IT, pg.36. Retrieved


September 26, 2010, from
Current http://www.hul.co.in/Images/AnnualReport0910_tcm114-225889.pdf
Performan
ce • Marketing : Archived on Livemintonlinenewspaper Retrieved on
27-sep-2010 from http://business.rediff.com/report/2010/jul/29/huls-
marketing-mantra-4m.htm

• Operations: Annual Report 2010, ‘Supply Chain, pg.12. Retrieved


September 26, 2010, from
http://www.hul.co.in/Images/AnnualReport0910_tcm114-225889.pdf

• Finance: Annual Report 2010, ‘Finance & Accounting, pg.35.


Retrieved September 26, 2010, from
http://www.hul.co.in/Images/AnnualReport0910_tcm114-225889.pdf

• Strengths : Archived on scribd.com.Retreived on 27-sep-2010


fromhttp://www.hul.co.in/Images/AnnualReport0910_tcm114-
225889.pdf

• Weakness: Archived on Businessweek.com. Retrieved on 27-sep-


2010 from
http://www.businessweek.com/globalbiz/content/jun2009/gb2009061
2_706157.htmmainstream consumers.
SWOT
Analysis • Opportunities: Archived on authorstream.com. Retrieved on 27-sep-
2010 from
http://www.authorstream.com/Presentation/vickyvishalshah-486442-
hul/

• Threats :

i. http://profit.ndtv.com/news/show/hindustan-unilever-hikes-price-
of-lifebuoy-soap-cuts-lux-pack-size-91476?cp

ii. http://timesofindia.indiatimes.com/business/india-business/Price-
war-HUL-reduces-tags-of-select-laundry-
packs/articleshow/5529324.cms#ixzz10k2r6Mie

iii. http://www.slideshare.net/hardikldrp/swot-analysis-of-fmcg-

59 | P a g e Hindustan
Unilever Limited
industry

Competito
r Analysis
• All 6 Ratio’s : Source : Religare Technova, Archived from the
Ratio moneycontrol.com, Retrieved on 26-9-2010 from
Analysis http://www.moneycontrol.com/financials/hindustanunilever/ratios/HU

60 | P a g e Hindustan
Unilever Limited

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