1

1. EXECUTIVE SUMMARY
FMCG is one sector which caters to the daily and more basic needs of consumers and
therefore dont have a chance to run out of focus. From oral care products to packed
food to detergents, soaps, mosquito coils, etc, are the various categories of products
that FMCG market makes available to lakhs of consumers across the country.
Initially, Indian buyers were a bit conservative partly due to lesser disposable income
and partly due to fewer competitive and more variety of products. But since almost a
decade, brands like Pepsodent, Pepsi, Coke, Mortein, various ITC brands, Dabur
products, P & G products, etc, have made a stern attempts in providing higher quality
products with relatively competitive prices, making Indian consumer enjoy brands
which deliver high quality and adhere to global standards. The plethora of such
brands was thrown open to Indian consumers during 1990s which witnessed a rise
and growth in the FMCG industry. But from 2000 onwards a there has been a
negative growth of this industry. The reasons are manifold; firstly, yesteryears
amenities started becoming necessities like, mobile phones, cars, branded clothes,
accessories, etc. Secondly, the disposable income of average Indian consumer rose
sharply within the past 5 year and finally, availability of various financial aides made
every reasonable and expensive purchase, easy thereby giving the Indian consumers
an unlimited exposure to experience the same. But since December04, the sales of
various brands belonging to key players and the overall FMCG industry performance
have picked up and the intense sales promotional efforts, cut throat competitive
strategies, stronger distributional efforts have helped various brands penetrate deeper
into the markets and increased sales. Today, rural Indian consumers market has by far
become the highest revenue generator for many of the FMCG product companies and
availability of a wide variety of range has allowed todays Indian consumer to analyze
and judge each product accurately and make an ideal purchase decision.
The supply chain of products in the FMCG market in India is one of the longest
supply chains an industry could really have. There are as many as 5 levels of
intermediaries involved in the entire supply chain through which a product passes
before reaching the end consumer. What has been observed is that even though these
FMCG companies are big multinationals and Indian but face a major challenge of
making their products available in the market in the right quantities and in the right
2
time. This is simply because these companies dont really have a wide network of
sales agents and other force which is required and is ideal for catering their products
to the markets. This aspect is taken over by distributors, wholesalers and retailer
whose margins on these products actually double the price of these products when a
final consumer buys it. The margins kept by these intermediaries range from 2% to
5%. The products in this industry are transported from manufacturing units via c & f
agencies or warehouse to distributors who further sell the same to wholesalers or
stockiest who finally sell it to the retailers in the market. These products are
transported either via roadways or railways within the domestic markets and normally
dont take more than a week to reach the retailers. FMCG products are normally a
high volume ball game and products have to essentially be available in the market at
all given points of time and at all given points of purchase and therefore the
distribution activities are highly volatile and dynamic. The supply of products takes
place virtually on a daily basis, in fixed quotas or otherwise, to retailers, as per their
requisitions and the anticipation of demand and the performance of products in the
recent past. All such criteria are taken into consideration before the quantum of
products being dispatched to the next level of intermediary. Since its a volume game,
manufacturers make all possible efforts to boost sales and promote their distributors to
earn more and more orders from the retailers and wholesalers. A close check is
maintained on the flow of the products on a daily, weekly, fortnightly and monthly
basis to determine the trend in the business and flow of products and consumption.
This activity also helps to find out drawbacks of the distribution system, if any, and
rectifies them within time
The research aims to study the existing marketing practices, emerging marketing
plans and understanding both companies business strategy with its profile. The main
recommendations have been made on the addressing of the advertising message to the
customers. An attempt has been made to formulate the communication in a way to
build it on a platform of the basic need for buying HUL products. In another
recommendation the suggestions towards better dealer interest in HUL products has
been given a chance.
The research is based primarily on secondary data. Data has been collected through
administered questionnaires by using online survey method.
3
2. HINDUSTAN UNILEVER
Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods
Company, touching the lives 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
Rs.10,000 cr.
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.
The mission that inspires HUL's over 15,000 employees, including over 1,300
managers, is to "add vitality to life." HUL meets everyday needs for nutrition,
hygiene, and personal care with brands that help people feel good, look good and get
more out of life. It is a mission HUL shares with its parent company, Unilever, which
holds 51.55% of the equity. The rest of the shareholding is distributed among 380,000
individual shareholders and financial institutions.

HUL's brands - like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's,
Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, Knorr-
Annapurna, Kwality Wall's are household names across the country and span many
categories - soaps, detergents, personal products, tea, coffee, branded staples, ice
cream and culinary products. They are manufactured over 40 factories across India.
The operations involve over 2,000 suppliers and associates. HUL's distribution
network comprises of about 4,000 redistribution stockists, covering 6.3 million retail
outlets reaching the entire urban population, and about 250 million rural consumers.

HUL has traditionally been a company, which incorporates latest technology in all its
operations. The Hindustan Unilever Research Centre (HLRC) was set up in 1958, and
now has facilities in Mumbai and Bangalore. HLRC and the Global Technology
Centers in India have over 200 highly qualified scientists and technologists, many
with post-doctoral experience acquired in the US and Europe.
HUL believes that an organizations worth is also in the service it renders to the
community. HUL is focusing on health & hygiene education, women empowerment,
4
and water management. It is also involved in education and rehabilitation of special or
underprivileged children, care for the destitute and HIV-positive, and rural
development. HUL has also responded in case of national calamities / adversities and
contributes through various welfare measures, most recent being the village built by
HUL in earthquake affected Gujarat, and relief & rehabilitation after the Tsunami
caused devastation in South India.
In 2001, the company embarked on an ambitious programme, Shakti. Through Shakti,
HUL is creating micro-enterprise opportunities for rural women, thereby improving
their livelihood and the standard of living in rural communities. Shakti also includes
health and hygiene education through the Shakti Vani Programme, and creating
access to relevant information through the iShakti community portal. The program
now covers 15 states in India and has over 31,000 women entrepreneurs in its fold,
reaching out to 100,000 villages and directly reaching to 150 million rural consumers.
By the end of 2010, Shakti aims to have 100,000 Shakti entrepreneurs covering
500,000 villages, touching the lives of over 600 million people.

HUL is also running rural health programmers Lifebuoy Swasthya Chetana. The
programme endeavors to induce adoption of hygienic practices among rural Indians
and aims to bring down the incidence of diarrhea. It has already touched 70 million
people in approximately 15000 villages of 8 states. The vision is to make a billion
Indians feel safe and secure.
If Hindustan Unilever straddles the Indian corporate world, it is because of being
single-minded in identifying itself with Indian aspirations and needs in every walk of
life.



3
HINDUSTAN UNILEVER LIMITED INDIAS
LARGEST FMCG COMPANY

FINANCIAL OVERVIEW



6
Purpose & principles
The corporate purpose states that to succeed requires "the highest standards of
corporate behavior towards everyone they work with, the communities they touch,
and the environment on which they have an impact."
Always working with integrity
Conducting operations with integrity and with respect for the many people,
organizations and environments their business touches has always been at the heart of
their corporate responsibility.
Positive impact
Aim to make a positive impact in many ways: through brands, commercial operations
and relationships, through voluntary contributions, and through the various other ways
in which they engage with society.
Continuous commitment
They are also committed to continuously improving the way they manage their
environmental impacts and are working towards their longer-term goal of developing
a sustainable business.
Setting out their aspirations
Their corporate purpose sets out their aspirations in running their business. It's
underpinned by their code of business Principles, which describes the operational
standards that everyone at Unilever follows, wherever they are in the world. The code
also supports their approach to governance and corporate responsibility.
Working with others
They want to work with suppliers who have values similar to their own and work to
the same standards they do. Their Business partner code, aligned to their own Code of
business principles, comprises ten principles covering business integrity and
responsibilities relating to employees, consumers and the environment.


7
Corporate Social Responsibility
HULs corporate responsibility strategy seeks to address HUL's most significant
sustainability impacts of hygiene, nutrition, enhancement of livelihoods, reduction of
greenhouse gases and water footprint by integrating these objectives into brands,
people and processes.
! Provided income-generating opportunities to 45,000 Shakti entrepreneurs
in rural areas across 15 states in 100,000 villages through Project Shakti
! Lifebuoy Swasthya Chetna has touched 12crore people in more than 50676
villages across India since 2002
! Pureit is available in more than 1500 towns nationally and already covers
over 3 million households across India.
! Exceeded the target of reducing CO2 emissions from manufacturing
operations by 25% on a base of 2004
! Twenty Eight of their manufacturing sites are zero water discharge sites.
HULs Export:
It was 1962; the reality of India then was very different from what it is today. India's
economy then suffered from foreign exchange shortage. Hindustan Unilever
voluntarily decided to take up Exports to support the country's economy.
Today, HUL is India's largest exporter of branded Fast Moving Consumer Goods. It
has been recognized by the Government of India, as a Golden Super Star Trading
House. Over time, HUL has developed appropriate capabilities to be globally
competitive in cost and quality for a viable Exports business.
Focus areas:
HUL's Exports focuses on two broad areas. It is a sourcing base for Unilever brands
in Home & Personal Care (HPC) and Tea for supplies to other Unilever companies. It
also focuses on becoming a preferred supplier to both non-Unilever and Unilever
clients in three categories in which India, as a country, has competitive advantage -
Marine Products, Castor and its Derivatives and Rice. HUL enjoys international
8
recognition within Unilever and outside for its quality, reliability and speed of
customer service. HUL's Exports geography comprises, at present, countries in Asia,
Australia, Africa, North America and Europe.

HULs Export Portfolio:
HPC:
The categories are soaps, skin care products and oral care products. The brands are
Lux, Lifebuoy, Pears, Fair & Lovely, Dove, Vaseline, Close-Up, Pepsodent, Signal.
HUL is the only source of Pears soap across the world.
TEA:
The categories are branded packet tea, and instant tea for Unilever's ready-to-drink tea
business. The branded teas are Brooke Bond, Brooke Bond Red label, Brooke Bond
Taj Mahal, Lipton, Lipton Yellow Label, Lipton Green Label, Lipton Brisk, Lipton 3-
in-1 premix, Chinese Rickshaw.
Marine products:
HUL offers a comprehensive portfolio, ranging from Surimi, Crabsticks to Shrimps
and several value-added products. Among its customers is Icelandic, the world's third
largest seafood company. In addition, HUL has also become a part of Unilever's
supply chain in sea foods for Europe too. HLL's Marine Products brands are Ocean
Diamond, Ocean Excellence, Shogun, Hima, Gold Seal, Tara and Prima.
Rice:
The categories are Basmati Rice and Basmati Rice-based ready-to-eat rice meals. The
brands are Gold Seal Indus Valley, Rozana and Annapurna.
Casto :
9
The categories are Castor Oil, Castor-oil based products, like hydrogenated castor oil,
12 - Hydroxyl Stearic Acid, Ricinoleic Acid (used in grease and lubricant industry,
paints and surface coatings, cosmetics, emulsifiers), and Specialty Castor Oils (USP
grade, BP grade, DAB 10) etc used in pharmaceutical preparations. HUL's Castor
brand is Topsoil.
Today, Exports is a substantial business in HUL, accounting for about 12% of the
company's turnover. HUL believes that its competitive advantages of cost
competitiveness, process competitiveness and economies of scale both at the company
and country level, hold it in good stead. They position the company to become one of
the hubs for sourcing by Unilever companies in HPC and Tea, and also
simultaneously become a preferred partner to global customers in Marine Products.
Direct Selling:
Product Range
Lever home range
Male grooming
Oral Care
Ayurveda
Personal Wash
Foods

Reach - 1400 towns (Largest in India) Consultant base - 330,000




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3. DISTRIBUTION NETWORK OF HUL
3.1 Evolution over Time

The HULs distribution network has evolved with time. The first phase of the HUL
distribution network had wholesalers placing bulk orders directly with the company.
Large retailers also placed direct orders, which comprised almost 30 per cent of the
total orders collected. The company salesman grouped all these orders and placed an
indent with the Head Office. Goods were sent to these markets, with the company
salesman as the consignee. The salesman then collected and distributed the products
to the respective wholesalers, against cash payment, and the money was remitted to
the company.
The focus of the second phase, which spanned the decades of the 40s, was to provide
desired products and quality service to the company's customers. In order to achieve
this, one wholesaler in each market was appointed as a "Registered Wholesaler," a
stock point for the company's products in that market. The company salesman still
covered the market, canvassing for orders from the rest of the trade. He then
distributed stocks from the Registered Wholesaler through distribution units
maintained by the company. The Registered Wholesaler system, therefore, increased
the distribution reach of the company to a larger number of customers.
The highlight of the third phase was the concept of "Redistribution Stockist" (RS)
who replaced the RWs. The RS was required to provide the distribution units to the
company salesman. The second characteristic of this period was the establishment of
the "Company Depots" system. This system helped in transshipment, bulk breaking,
and as a stockpoint to minimise stock-outs at the RS level. In the recent past, a
significant change has been the replacement of the Company Depot by a system of
third party Carrying and Forwarding Agents (C&FAs). The C&FAs act as buffer
stock-points to ensure that stock-outs did not take place. The C&FA system has also
resulted in cost savings in terms of direct transportation and reduced time lag in
delivery. The most important benefit has been improved customer service to the RS.
The role performed by the Redistribution Stockists includes: Financing stocks,
providing warehousing facilities, providing manpower, providing service to retailers,
11
implementing promotional activities, extending indirect coverage, reporting sales and
stock data, demand simulation and screening for transit damages.
3.2 Detailed overview:
The distribution network of HUL is one of the key strengths that help it to supply
most products to almost any place in the country from Srinagar to Kanyakumari. This
includes, maintaining favorable trade relations, providing innovative incentives to
retailers and organizing demand generation activities among a host of other things.
Each business of HUL portfolio has customized the network to meet its objectives.
The most obvious function of providing the logistics support is to get the companys
product to the end customer.

Distribution System of HUL:
HUL's products are distributed through a network of 4,000 redistribution stockists,
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 stockists 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 self!service stores and
supermarkets. Around 2,000 suppliers and associates serve HULs 40 manufacturing
plants which are decentralized across 2 million square miles of territory.

12
(Schematic of HULs Distribution Network)

Distribution at the Villages:
The company has brought all markets with populations of below 50,000 under one
rural sales organisation.The team comprises an exclusive sales force and exclusive
redistribution stockists.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 sub!stockists.
HUL approached the rural market with two criteria - the accessibility and viability. To
service this segment, HUL appointed a Redistribution stockist who was responsible
for all outlets and all business within his particular town. In the 25% of the accessible
markets with low business potential, HUL assigned a sub stockist who was
responsible to access all the villages at least once in a fortnight and send stocks to
those markets. This sub-stockist distributes the company's products to outlets in
adjacent smaller villages using transportation suitable to interconnecting roads, like
cycles, scooters or the age-old bullock cart. Thus, Hindustan Unilever is trying to
circumvent the barrier of motorable roads.

13
(Rural Distribution Model of HUL)

The company simultaneously uses the wholesale channel, suitably incentivising them
to distribute company products. The most common form of trading remains the
grassroots buy and sell mode. This enables HUL to influence the retailers stocks and
quantities sold through credit extension and trade discounts. HUL launched this
Indirect Coverage (IDC) in 1960s.Under the Indirect Coverage (IDC) method,
company vans were replaced by vans belonging to Redistribution Stockists, which
serviced a select group of neighbouring markets.
Distribution at the Urban centres:
Distribution of goods from the manufacturing site to C & F agents take place through
either the trucks or rail roads depending on the time factor for delivery and cost of
transportation. Generally the manufacturing site is located such that it covers a bigger
geographical segment of India. From the C & F agents, the goods are transported to
RSs by means of trucks and the products finally make the last mile based on the
local popular and cheap mode of transport.










14
3.3 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 micro-credit, women
from SHGs become direct-to-home distributors in rural markets.
The model consists of groups of (15-20) villagers below the poverty line (Rs.750 per
month) taking micro-credit from banks, and using that to buy their products, which we
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 6-10 villages in the population strata of 1,000-2,000. The
Shakti entrepreneurs are given HUL products on a `cash and carry basis








13
The following two diagrams show the Project Shakti model as initiated by HUL.




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3.4 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 to
villages with less than 2000 people with the help of rural sub-stockists/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 15-20 rural sub-stockists attached to him. Each of these
sub-stockists / star sellers is located in a rural market. The sub-stockists then perform
the role of driving distribution in neighboring villages using unconventional means of
transport such as tractor 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 full-line 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.


Hindustan Lever Network (HLN)
17
It is the company's arm in the Direct Selling channel, one of the fastest growing in
India today. It already has about several lakh consultants - all independent
entrepreneurs, trained and guided by HLN's expert managers. HLN has already spread
to over 1500 towns and cities, covering 80% of the urban population, backed by 42
offices and 240 service centres across the country. It presents a range of customised
offerings in Home & Personal Care and Foods.
The New Compensation plan for HLN partners provides new exciting ways of earning
substantial income in addition to offering rewards like revenue sharing through the
innovative concept of pools"
Mother Depot and Just in Time System
In order to rationalise the logistics and planning task, an innovative step has been the
formation of the Mother Depot and Just in Time System (MD-JIT). Certain C&FAs
were selected across the country to act as mother depots. Each of them has a
minimum number of JIT depots attached for stock requirements. All brands and packs
required for the set of markets, which the MD and JITs service in a given area are sent
to the mother depot by all manufacturing units. The JITs draw their requirements from
the MD on a weekly or bi-weekly basis.
Leveraging Information technology
HUL customers are serviced on continuous replenishment. This is possible because of
IT connectivity across the extended supply chain of about 2,000 suppliers, 80
factories and 7,000 stockists. This sophisticated network with its voice and data
communication facilities has linked more than 200 locations all over the country,
including the head office, branch offices, factories, depots and the key redistribution
stockists. We have also combined backend processes into a common Shared Service
infrastructure, which supports the units across the country. All these initiatives
together have enhanced operational efficiencies, improved the service to the
customers and have brought us closer to the marketplace.


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3.5 RS Net Initiative:
The RS Net initiative, launched in 2001, aims at connecting Redistribution Stockists
(RSs) through an Internet based system. It now covers stockists of the Home &
Personal Care business and Foods & Beverages in close to 1200 towns and cities.
Together they account for about 80% of the company's turnover. RS Net is one of the
largest B2B e-commerce initiatives ever undertaken in India. It provides linkages with
the RSs own transaction systems, enables monitoring of stocks and secondary sales
and optimises RSs orders and inventories on a daily basis through online interaction
on orders, dispatches, information sharing and monitoring. The IT-powered system
has been implemented to supply stocks to redistribution stockists on a continuous
replenishment basis. Today, the sales system gets to know every day what HUL
stockists have sold to almost a million outlets across the country. Information on
secondary sales is now available on RS Net every day.
RS Net is part of Project Leap. Project Leap begins with the supplier runs through the
factories and depots and reaches up to the RSs. This ensures HULs growth by
ensuring that the right product is available at the right place in the right quantities and
at the right time in the most cost-effective manner. Leap also aims at reducing
inventories and improving efficiencies right through the extended supply chain.
RS Net has come as a force multiplier for HUL Way, the company's action-plan to not
only maximise the number of outlets reached but also to achieve leadership in every
outlet. RS Net has enabled stockists to place orders on a Continuous Replenishment
System. This in turn has unshackled the field force to solely focus on secondary sales
from the stockists to retailers and market activation. It has also enabled RSs to
provide improved service to retail outlets. Simultaneously, HUL is servicing the rural
market, key urban outlets, and the modern trade as a single concern.




19
3.6 Project Leap:
In 2000, HUL identified improved supply chain management as a critical business
priority and launched a comprehensive initiative, Project Leap, tasked with
increasing supplier/distributor responsiveness, reducing inventory buffers, and
optimizing planning and scheduling. HUL chose the Adexa iCollaboration suite for
facilitating centralized monitoring of the SCM, live customer /supplier collaboration,
and integrating demand and distribution planning with production scheduling. With
the aggregated view of data provided by the iCollaboration suite, HUL was able to
combine sales and distribution efforts on the diverse product lines, which resulted in
significant savings on the cost side for inventories and distribution. HUL updates
inventory positions, shipments and customer orders on a daily basis with these
software packages and can get a pulse on the market real time.











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3.7 Channel Design:
Hindustan Lever Limited (HUL) has two types of channel selling -
i. Regular (traditional) retail channel,
ii. Direct Selling Channel in the name of Hindustan Lever Network (HLN).
HUL has a well-entrenched high distribution model which comprises of C&FAs,
Redistribution Stockists, wholesalers and retailers (as shown earlier). Hindustan
Unilever's distribution network is recognized as one of its key strengths. Its focuses
on Product availability, Brand communication, and higher levels of brand experience
.


Initiatives taken to improve the Distribution Network:

HUL has taken the following initiatives to improve its distribution network:
Setting up of a full-scale sales organisation comprising key account management
and activation to impact, fully engage and service modern retailers as they
emerge.
Servicing Channel partners and customers with continuous daily replenishment.
Leveraging scale and building expertise to service Modern Trade and Rural
Markets.
Delayering of sales force to improve response times and service levels.
Revamping of its sales organisation in the rural markets to fully meet the
emerging needs and increased purchasing power of the rural population. HULs
21
distribution network in rural India already directly covers about 50,000 villages,
reaching about 250 million consumers through about 6,000 sub stockists.
Implementation of supply chain system that connects stockists across the
country, and also includes a back-end system connecting suppliers, all company
sites and stretching right up to stockists. IT tools have been deployed for
connectivity across the extended supply chains. Backend processes have been
combined into a common Shared Service infrastructure.
Launching of Project Shakti through which the company is able to extend its
operations in villages. HUL has also included several NGOs and state
governments as the initiative helps rural women to improve their financial
position.
Launching of HUL Network to leverage the channel of direct selling by
presenting customised offerings in 11 home and personal care and food
categories. Started in 2003, it already has a base of 300,000 consultants across
the country.
Starting of franchised Lakme Beauty Salons and Ayush Therapy centers to offer
standardised services, in line with the strategy to leverage the equity of its
brands through relevant services.
Finding out Innovative ways to reach out to its consumers, particularly in rural
areas by leveraging non-conventional media like wall paintings, cinema vans,
weekly markets (haats), fairs and festivals.
Initiating the concept of Super Value Stores (SVS) in urban areas to partner
traditional stores to provide a range of services ranging from managing their
inventory to setting up POS (point of sale) banners. In addition to this, to boost
up traditional retail in the face increasing in-roads made by large, modern
retailing chains like Spencers, Reliance Fresh etc (where HUL is squeezed
harder for discounts), HUL started restructuring some of the selected SVSs into
the form of self-service retail shops a la modern retails. This is to protect &
maintain the competitive advantage that HUL has over its biggest competitors in
the other markets (e.g., P&G), with its very deep distribution reach through
traditional retail.
Launching the Unicare scheme with upmarket pharmacies and retailers to sale
its premium brands.
22
Undertaking several initiatives for traditional channels in order to improve its
capabilities at the front-end by developing skills for stockists' sales force. Under
'Project Dronacharya', the FMCG major continuously imparted training to over
10,000 stockist salesmen.
Launching of several promotional schemes for existing wholesalers and
distributors. For instance, it has started the Vijeta - Rishta Jeet Ka scheme last
year to provide a platform for the wholesaler and HUL to grow the business by
earning points and redeeming them.

3.8 Field Force Management:
The working cycle of a typical HUL field force member is from 21st of every month
to the 20th of the next month. During this period he is given various targets that helps
to achieve company objectives and gives him a chance to prove his performance
relative to other.
To start with the field force member is given a particular area and his responsibility is
to cater to all the retailers in that area. While deciding the area for each member of the
field force, the company makes sure that the operating area of each field member
doesn't overlap with his other colleagues. There are various methods used by the
company to incentivize the field force - Monetary and Non Monetary.
In HUL, the field force is evaluated using QOC (Quality of Contribution). It consists
of 4 components -
1. Secondary Sale (Max points = 2.5)
2. Eco (Max points = 0.5)
3. Focus (Max points = 0.5)
4. FCS (Max Points = 0.5)
23


Secondary Sale - Based on the operating area, each member is given a specific target
in terms of value (e.g., Rs. 15 lacs) for the operating month (21
st
20
th
of next month).
If he achieves 100% of the target he gets 2.5 points, if he achieves 95% target he gets
1.5 points. These points are used to add to the total QOC score as well as linked to
monetary incentive.
ECO / Width pack Target This is used for the penetration/reach of certain products
in the existing market. The following is a typical ECO target assigned to a field force
agent:
Lux International 105 outlets x 1 SKU
Pears Soap - 135 outlets x 1 SKU
Rin - 104 outlets x 1SKU
Breeze Soap - 100 outlets x 1 SKU
The outlets mentioned are within the operating area of the person and 1 SKU = Rs.
27/-. Based on this the Field person calculates number of packs he should sell to the
retailers. The concerned agent receives this target around 25
th
of each month and has
to complete this target within the 5
th
day of next month. Upon completion he gets
additional 0.5 points added to his QOC score along with monetary incentive
associated with it. However if this is not met within 5
th
, he looses the opportunity.
24
Focus / Depth Pack target This is mainly used to increase the sales volume of
certain products. A typical Focus target is given below:
Lux International Rs 20,640 /- @ Rs 6/- per unit
Life Buoy - Rs 70,220 /- @ Rs 10/- per unit
Wheel - Rs 99,000 /- @ Rs 10/- per unit
Breeze Soap - Rs 27,000 /- @ Rs 10 /- per unit
This target needs to be achieved within 20
th
of next month. Upon achieving the target
the field person is awarded 0.5 points which is then added to his overall QOC score.
Field Capability Score (FCS) ! In this component, the field force persons are required
to ensure that the scheduled visit/outlet billing is such that at least 15 items are
demanded per order. If this is achieved the retailer gets a discount of 1% on the billed
amount and on the other hand the field person gets an additional score of 0.5 which is
added to his QOC score. Each scheduled visit per outlet is one per week. For example
if there are 100 outlets within the operating area of a field person then the number of
visit per week is 100 and total number of visit per month = 100x4 = 400.
The sales person is required to achieve 90% success rate to get 0.5 points for his QOC
score and at least 65% for a satisfactory performance.

Non Monetary Methods
The other purpose of the QOC scores is to highlight the performance of the field
person among his peers. Based on the QOC various awards are distributed to the field
persons at the end of every month. These awards are also known as MOC Star
awards. MOC stands for Monthly operating Cycle.
If QOC score > 4.5 The person is eligible for 7 star award
If QOC score > 4 The person is eligible for 5 star award
If QOC score > 3.5 The person is eligible for 3 star award

In the event of exceptional performance, management representatives from the
regional office come to the zonal office to distribute the awards. The photograph of
the award winners is displayed in the office as a source of inspiration for other sales
person.
Target Setting Mechanism and monitoring
23
The regional office monitors the performance of various zones. A thorough analysis is
done at the end of each month and based on that the weak products are identified or
those for which the demand has weakened. This is the basis of setting ECO and
FOCUS targets for the field persons. Each field person is given a palmtop wherein he
can feed the entries on the spot where the transaction is done. This solves basically the
two purposes -
a) The field person is freed from the tedious task of maintaining cumbersome records
and can then concentrate on the job (thus IT is replacing some of the field force or
other channel members),
b) The sold item is immediately updated in the company information system.
26
4. SWOT ANALYSIS OF HUL
Strengths:
Distinctly placed products providing reach to every segment of society.
Integrated supply chain and well spread manufacturing units
Distribution structure with wide reach, high quality coverage The launch of
project Shakti has helped HUL to create brand awareness and extensive reach
in rural India.
Access to Unilever global technology, capability and sharing of best practices
from other Unilever companies.
Well placed to take advantage of growth in rural India and lower strata of the
society through Shakti.
It can be a leader in exports by positioning itself as a sourcing hub for Unilever
companies in various countries.

Weaknesses:
Price positioning in some categories allows for low price competition like
Amul captured Kwalitys market.
Limited success in changing eating habits of people.
Competitors focusing on a particular product and eating up HULs share, like
Nirma focusing on soaps and detergents.

Opportunities:
Growing consumer base due to increasing income levels and new consumers
from lower strata of the society
Untapped market in branded Ayurvedic medicines and other such consumer
products.
Opportunity in Food sector: changing consumer tastes
Expansion of horizons towards more and more countries


Threats:
27
Unfavourable raw material prices due to inflation, reducing profitability.
Heavy onslaught of competition in the core categories from emerging players
like ITC will result in higher advertising expenditure
Spurious/counterfeit products in rural areas and small towns.














28
5. PROCTER & GAMBLE
The Procter & Gamble Company (P&G) boasts boatloads of brands. The world's #1
maker of household products courts market share and billion-dollar names. It's
divided into three global units: health and well being, beauty, and household care. The
company also makes pet food and water filters and produces soap operas. Some 25 of
P&G's brands are billion-dollar sellers, including Fusion, Always/Whisper, Braun,
Bounty, Charmin, Crest, Downy/Lenor, Gillette, Iams, Olay, Pampers, Pantene,
Pringles, Tide, and Wella, among others. P&G shed its coffee brands in late 2008.
Being the acquisitive type, with Clairol and Wella as notable conquests, P&G's
biggest buy in company history was Gillette in late 2005.
P&G at a glance:
GBU

Reportable
Segment
Key Products Billion-Dollar
Brands
Net Sales
by GBU
(in
billions)
(1)
BEAUTY Beauty Cosmetics, Deodorants, Hair
Care, Personal
Cleansing, Prestige
Fragrances, Skin Care
Head & Shoulders,
Olay,
Pantene, Wella
$26.3
Grooming Blades and Razors, Electric
Hair Removal Devices,
Face and Shave Products,
Home Appliances
Braun, Fusion,
Gillette, Mach3
HEALTH AND
WELL-BEING
Health Care Feminine Care, Oral Care,
Personal Health Care,
Pharmaceuticals
Actonel, Always,
Crest, Oral-B
$16.7
Snacks and Pet
Care
Pet Food, Snacks Iams, Pringles
HOUSEHOLD
CARE
Fabric Care and
Home Care
Air Care, Batteries, Dish
Care, Fabric Care,
Ariel, Dawn,
Downy, Duracell,
$37.3
29
Surface Care Gain, Tide
Baby Care and
Family Care
Baby Wipes, Bath Tissue,
Diapers,
Facial Tissue, Paper Towels
Bounty, Charmin,
Pampers

P&G Purpose:
They will provide branded products and services of superior quality and value that
improve the lives of the world's consumers. As a result, consumers will reward us
with leadership sales, profit, and value creation, allowing their people, their
shareholders, and the communities in which they live and work to prosper.
P&G Values:
P&G is its people and the values by which they live. They attract and recruit the finest
people in the world. They build their organization from within, promoting and
rewarding people without regard to any difference unrelated to performance. They act
on the conviction that the men and women of Procter & Gamble will always be their
most important asset.
Leadership:
They are all leaders in their area of responsibility, with a deep commitment to
deliver leadership results.
They have a clear vision of where they are going.
They focus their resources to achieve leadership objectives and strategies.
They develop the capability to deliver their strategies and eliminate
organizational barriers.
Ownership:
They accept personal accountability to meet their business needs, improve
their systems, and help others improve their effectiveness.
They all act like owners, treating the Company's assets as their own and
behaving with the Company's long-term success in mind.
30
Integrity:
They always try to do the right thing.
They are honest and straightforward with each other.
They operate within the letter and spirit of the law.
They uphold the values and principles of P&G in every action and decision.
They are data-based and intellectually honest in advocating proposals,
including recognizing risks.
Passion for winning:
They are determined to be the best at doing what matters most.
They have a healthy dissatisfaction with the status quo.
They have a compelling desire to improve and to win in the marketplace.
Trust:
They respect their P&G colleagues, customers, and consumers, and treat them
as they want to be treated.
They have confidence in each other's capabilities and intentions.
They believe that people work best when there is a foundation of trust.

Business Growth
Folgers Sale
On June 4, 2008, P&G sold its Folgers coffee unit to J.M. Smucker Co for $2.95
billion. As part of the deal, P&G shareholders will receive a 53.5 percent stake in
Smuckers and the company will assume $350 million of Folger's debt..
Gillette Acquisition
Procter & Gamble acquired Gillette in 2005 for over $50 billion in its largest
acquisition to date. In 2004, the last full year before the acquisition, Gillette generated
over $10 billion in sales, about $6 billion of which came from razors and Duracell and
Braun products and the remainder sourced from the Oral-B brand, which was moved
31
into the Health & Well-Being segment. A key piece of the acquisition beyond
Gillette's product lines was its distribution network and supply chain. Gillette's
distribution network and supply chain in emerging markets had been extremely
successful for Gillette and, once acquired, has worked to complement P&G's own
distribution network.
Trends and Forces
Different product price points provide some insulation against recession
Household staples are somewhat protected from the US recession and global
economic downturn. However, in a recession consumers often turn to cheaper private
label or store brands instead of "brand name" products from P&G. To combat private
label encroachment, P&G offers at least two product forms in many product
categories. For example, the company has seen increases sales in Luvs from Pampers
diapers and an increase in Gain detergent sales from Tide. In addition, P&G offers
"Basic" versions of its Charmin toilet paper and Bounty paper towels. The company's
broad offerings, combined with the necessity of household items, provide a degree of
insulation against recession.
Retail Consolidation
The rise of a handful of powerful low-priced retailers has negatively impacted
consumer products companies. A handful of big retailers have captured a large share
of the market. For example, from 1999 to 2004, the top 10 food retailers in the US
increased their share of food retail sales from 53.4% to 58.9%. These large retailers
have shifted the balance of power within the supply chain. For example, the
company's largest customer, Wal-Mart, accounted for 15% of net sales in 2006, 2007,
and 2008. Wal-Mart has exerted its power over other suppliers to their detriment in
the past, such as forcing record companies to produce clean-label CDs and pulling
adult magazines. A decision by Wal-Mart not to sell a particular P&G consumer
product would prevent P&G from reaching its entire target market. In addition, many
retailers have pushed their own higher margin private label brands in competition with
P&G.
Rise of Private Labels
32
In the past decade, P&G has faced stiff competition from private label brands or
"store brands" of large retailers such as Wal-Mart, Target, and supermarket chains.
Private label products often sell at lower price points and earn higher margins because
the retailers can control the cost of their production. For example, Wal-Mart offers
5,500 products through its "Great Value" brand, which has increasingly sold as
consumers feel the recession squeeze on their disposable income. From 2003 to 2008,
sales of Target's private label products rose an average of 15% annually.
Large retailers are close to the consumers, have the point of sale data on consumer
behavior and are in better position to understand consumer behavior. These strengths
contribute to better private label product development, which directly compete with
P&G products. Retailers also promote their own brands as they earn higher margins
on them. P&G has addressed this issue by continuously investing in Research &
Development and introducing new products as well as offering different versions of
its own products at different price points.
Social Responsibility:
At P&G, Social Responsibility stems from their Corporate PVP (Purpose, Values,
Principles). Social Projects are in keeping with P&Gs credo of Business With a
Purpose. P&G has always demonstrated its commitment to the community not just
through the quality of its products and services, but also through socially responsible
initiatives for the community. They believe in building the community in which they
live and operate by supporting its ongoing development.
PROJECT SHIKSHA:
P&G with CRY & Sony launches Shiksha to help educate Underprivileged
Children
Each time you buy a P&G product, you help support one days education of one
child
India not only has the worlds largest number of children but also the worlds largest
number of children who are unable to access education. With a mission to make a
difference to this alarming situation, Procter & Gamble (P&G) has joined hands with
Indias premier child rights organisation Child Relief and You (CRY) and Sony
33
Entertainment Television to launch Shiksha, a program to help educate
underprivileged children across India. Under Shiksha, P&G and Sony will appeal to
their consumers and viewers to support the cause and make it easy for them to do so -
all an individual has to do is purchase a large pack of either Tide, Ariel, Pantene,
Head & Shoulders, Rejoice, Vicks VapoRub or Pampers during April, May and
June 2005, and he/she will help support one days education of one child per pack
purchased.
Irrespective of the sale of its brands from Shiksha, P&G has committed a minimum of
Rs. 1 crore to CRY, which will be allocated by CRY to projects with a focus on
education, spread across India; Delhi, Barrackpore (West Bengal), Ongole and
Chilkaluripet (Andhra Pradesh), Bellary (Karnataka), Salem (Tamil Nadu), Bolangir
(Orissa), and Osmanabad, Wardha, Navi Mumbai, Borivali (Maharashtra).

GUJARAT EARTHQUAKE RELIEF:
P&G in partnership with Swayam Shikshan Prayog (SSP) opened ftheir Community
Resource Centers for the earthquake victims in the Chakasari, Paggivand, Hanjiya and
Jodhpar vands (hamlets) of Rapar Taluka, Kutch District, Gujarat. The Community
Centers provide basic education for children; training on building earthquake-resistant
shelters and has supported the formation of 22 Women's Savings Groups which
contribute towards an income-generating fund, for future entrepreneurial activity. The
P&G-SSP project positively impacts 25 villages, 3750 families and 22,500 people and
helped mobilize womens groups and communities in Gujarat for their long-term
sustainable development. Credit fund will be provided as a revolving fund to self-help
groups.
The operational cost for each Centre is Rs, 25,000 met by P&G. The centers have
been built from a Gujarat Earthquake Relief Fund created after the earthquake of 26th
January 2001 by employees of P&G India, Brussels, Japan, Canada, among others and
the Company contribution. P&G employees also made contributions directly to the
Red Cross Society for other rehabilitation work in Gujarat.
34
In addition, P&G is currently working on forming womens micro-credit groups to
ensure the sustainability of these community centers and to further empower these
women and increasing the number of community centers from four to seven.

PROJECT POSHAN:
P&G and UNICEF launched Project Poshan to combat malnutrition in India. India has
40% of the worlds malnourished children. POSHAN targeted three key projects: an
Adolescent Girls Initiative to educate girls in Mumbai slums on health problems and
improve their lives with Anemia prevention through IFA tablets; a Womens
Parenting Network in Chennai to provide information on care during pregnancy; and
Day care projects in Jaipur, which focused on increased food intake and micro-
nutrients. Once again, P&G raised Rs. 50 lakhs by contributing Re. 1/- from sales of
large size packs of Ariel, Whisper, Head & Shoulders and Pantene sold in the months
of May, June and July 2000.

PROJECT PEACE:
P&G launched PEACE a unique Environmental Education Program for children in
schools across Bombay and Thane representing a cross-section of economic
backgrounds. Children were exposed to a fascinating account of the Indian
environmental scenario. The Multiplicity of Eco-Systems in India, Air Around Us,
Water, Solid Waste and Adopting Conservation in their Lifestyles were the topics
dealt with using interesting media like music, games, project-work, slides, video
films, group discussions, etc.

33
6. DISTRIBUTION CHANNEL OF P&G
Procter & Gamble, a world leader in consumer packaged goods, sells nearly 300
brands in more than 160 countries. It has sales of $40 billion a year and 130
manufacturing sites around the world.
P&G measures consumer satisfaction at two levels, which it calls the two moments
of truth. The first moment of truth occurs when the consumer reaches the shelf and
finds that the desired product is, or is not, available. This is a critical moment, because
if the product is not immediately available, the consumer usually moves on to buy a
rival product. The second moment of truth depends on the buyers satisfaction when
consuming the product.
Detailed consumer surveys in July 2000 told P&G that in 55% of cases (75% for
promotional items), consumers were not satisfied when they looked on the shelf for
the products they wanted. The exact product variant, in the size and packaging the
shopper sought, was available less than half the time.
Something had to be done. Responsibility for having the product on the shelf every
time a shopper wants it used to be seen as purely a matter for the retailer. If retailers
got their forecasts wrong and ordered the wrong volumes, the manufacturer was not
aware of the problem, or at least not concerned about it. But, at the end of the day,
both the manufacturer and the retailer were losing. P&G was ahead of the pack in
realizing the significance of this, though other manufacturers are now also focusing
on the end consumer, which is one reason why the industry is seeing so many new
CPFR (collaborative planning, forecasting and replenishment) and VMI (vendor-
managed inventory) programs.
Top managers in P&G began to realize that the companys supply network needed to
be re-engineered so that it was genuinely responsive to consumer demand. This was
especially important for promotional items, because of the cost of merchandising and
promotional activities, and the long-term negative impact of stock-outs on consumers.
After customers have been unable to buy the desired product and have switched to
alternatives, it becomes hard to persuade them to return to buying the initial product
when they go shopping again. P&G decided that sophisticated demand chain
management, establishing direct connections between sales and supply chain business
36
processes, could be the key to maintaining its leading position in the consumer
packaged goods industry. As a result, a multi-level initiative was launched, which
P&G calls its consumer-driven supply network (CDSN) program.
6.1 Problems for P&G and Suppliers:
For the major consumer packaged goods manufacturers, the strategies that are
currently being pursued by the worlds most competitive retail chains are changing
the game in two important ways.
As consumers come to expect a greater assortment of product options,
retailers are responding with greater product differentiation, driving up
service level expectations.
Cash requirements are creating pressure for shorter order-to-delivery cycles
and a move towards flow-through distribution networks. These trends are
already beginning to eliminate the safety stocks that used to be held in
reserve in the retail supply network.
This situation creates several new problems that P&G and other manufacturers need
to come to terms with.
Reaction times across the supply network have been compressed.
Current processes cannot move fast enough to deliver what retailers
need.
Supply decisions require timely, detailed information that is not usually
available today.
Optimizing supply chain performance demands a radical new look at the way the
partners in the supply network collaborate, involving retailers, manufacturers and
service providers. P&Gs aim has been to create adaptive, responsive supply networks
that will link together sales and supply processes, inside and outside the organization,
to improve product availability. This will allow it to develop demand chain
management capabilities, especially for promotions. Promotional items are the highest
priority, because of the large amounts of money involved in marketing programs. If
manufacturers cannot deliver the product, they lose all the growth that should be
generated by their marketing promotions, however much demand is stoked up.
New thinking, new techniques, and new technology
37
P&Gs vision of a consumer-driven supply network has two essential elements.
o Building collaborative supply chains at several levels (local market and
global markets, for example).
o Ensuring that manufacturing sites serving both local and global supply
networks are highly responsive to changes in demand, based on real-time
data from the stores.

Main requirements for successful network collaboration:
P&G has identified the main requirements for successful network collaboration under
four headings:
The potential to move large volumes of data fast: Data should be handled
automatically, without needing to be transformed or translated on arrival.
An adaptive, dynamic approach that uses new business applications to
monitor, alert, evaluate and, where appropriate, trigger action.
The ability to establish connections quickly on demand, if necessary
within hours.
Enhanced back-up and recovery strategies for all the systems involved:
The technical challenges cannot be ignored, because batch processing
windows soon narrow right down. This is especially critical if these
harmonized business applications are going to be deployed on a global scale.
P&G is working with its IT suppliers to develop additional functionality and to
resolve the scalability problems inherent in most new applications. But it has also
learned the value of assembling and making a firm commitment to a small group of
technology partners for such an ambitious global project.




38
6.2 BASIC DISTRIBUTION CHANNEL OF P&G:

Operations & suppliers:
P&Gs Sustainability work goes beyond the core of their manufacturing operations,
extending to a holistic end-to-end view of opportunities. They deliver strong results
across the supply chain, ranging from manufacturing to finished product logistics,
and they engage their suppliers throughout the process.
a) Manufacturing:
Between the procurement of raw materials and the creation of a product, they
strive to reduce waste, water, energy, and CO
2
through systemic conservation
efforts. They apply smart eco-design through innovative construction process
improvements. And, they re-use where feasible, giving new life to what was once
waste.
b) Finished Product Logistics:
In the logistics stage, they reduce waste in customization by applying more
sustainable designs. They optimize transportation efficiency through a
comprehensive multi-mode approach, and now go further by leveraging common
intermodal containers across different modes of transportation.
39
c) Supplier Engagement:
They collaborate closely with suppliers across the entire supply chain. Their new
Supplier Sustainability Board includes members from over 20 leading global
suppliers and is charged with guiding the development of supplier-related
Sustainability activities and goals.
Transportation:
For decades, P&G has transported product in a multi-modal fashion, that is, using
multiple forms of transport. But today, theyre shifting toward intermodal
transportation, which uses shipping containers that transfer smoothly from one mode
to another.
An intermodal approach optimizes the transportation process. And by shifting away
from trucks and planes to boats and trains, it saves fuel and reduces CO
2
emissions.
Examples:
1. Western Europe: More Trains, More Gains
An intermodal program in Western Europe increases the use of trains in its
distribution network. Before the effort, more than 90% of Western Europes
finished product traveled on trucks, covering over 2 million kilometers of roads.
The intermodal program aims to increase rail transportation from 10% to 30% by
2015, reducing CO
2
emissions without any trade-offs in customer service or cost.
Pilot programs in Belgium and France have been operating since July 2008, and
each has removed up to 5,000 trucks per year from the roads. The pilots have
reduced CO
2
emissions by more than 4,000 metric tons per yearan amount
equal to the CO
2
produced by lighting more than 15,000 homes annually.

2. North America: Trucks and Trains Save Diesel
A transport program in North America, P&Gs first to incorporate an intermodal
component combining trucks and trains, has reduced transportation costs and
improved Sustainability across the region. Use of intermodal transport has
increased by 30% saving 11 million liters of diesel fuel. Overall miles in North
America have reduced by 12% since the 2007/2008 fiscal year, while the same
volume of product has been delivered.
40
7. SWOT ANALYSIS OF P&G



Strength
! Leading Market Position
! Diversified and innovative
product Portfolio
! Strong Finances in past years
Weakness
! Quality control Problem
! Decreased Revenues in their
Northeast Asian Market
Opportunity
! Developing Markets
! Demographic trends across the
world
Threats
! Competitors
! Rising cost of energy prices
! Economic slowdown in the US
and
Eurozone
! New Regulations
41
8. RESEARCH METHODOLOGY
Research methodology deals with the various methods of research. The purpose of the
research methodology is to describe the research procedure used in the research.
Research methodology overall includes the research design, data collection method
etc. Research Methodology helps in carrying out the project report by analyzing the
various research findings collected through the data collection methods.
Research design
Research design is an important and the vital part of the research. Research design
provides an excellent framework for the research plan of action. The function of the
Research design is to ensure that the required data is in accordance; research design is
a blue print for the research study, which guides research in collecting and analysis
the data.
For this research project exploratory method is used which often relies on secondary
research such as reviewing available literature and/or data, or qualitative approaches
such as informal discussions with consumers, employees, management or
competitors, and more formal approaches through in-depth interviews, focus groups,
projective methods, case studies or pilot studies. The Internet allows for research
methods that are more interactive in nature
Data collection method:
The data collected for the research is Secondary data i.e. from internet, books,
magazine etc. The questionnaire is been filled manually and sent to the different
consumers and retailers , and responses are awaited.
Research instrument
The instrument use for data collection is structured questionnaire. Question is open
and close ended depending upon the information that needed to be elicited. I am also
using the scaling technique to assess the attitude of the customer.


42
Sampling plan
Keeping all the constraints in mind, I took a sample size of approx. 30 consumers and
15 retailers .The sampling procedure is systematic sampling. Systematic
sampling relies on arranging the target population according to some ordering scheme
and then selecting elements at regular intervals through that ordered list. Systematic
sampling involves a random start and then proceeds with the selection of every kth
element from then onwards. In this case, k is (population size/sample size).
Scope
The Indian FMCG market currently appears to be at a crossroads, and HUL are
attempting to change customer perceptions of their brands and where specific buying
motivations appear to be replacing generalities.
This meanwhile is quite unlike the west where buyers consider aesthetics, comfort
and safety, not necessarily in that order, before finalizing a purchase. Its smarter to
think about emotions and attitudes, if marketers are to do a better job of marrying
what a HUL offers to the consumers image of the offerings. Another important
outcome of the research is the believability of the claims. Most of the claims are
realistic and easy to understand. Most of the people dont understand the quality
claims by HUL.
The mindset of the Indian consumer is such that he is delighted if he buys a pen a
little cheaper than his neighbour. Things are, however, slowly changing and
customers at the upper end of the market are now ready to pay more for more. I hope
that this approach will soon enter the new era, maybe not with the same intensity.
Success will largely be determined to the extent a company can differentiate itself in
terms of intangibles that go with a Product. Thus, success could well hinge on the
best of bundle of services that HUL provides. HUL grew from zero to the 2,268
Million $, mark and the number One FMCG company in India this year. Looking at
the present scenario it can be said that though there is lot of competition in the market
but HUL is picking up well. The landmark achievement comes in 74 years in India
after clinching its first overseas sale.
43
Limitations
Everything in this world has its own advantages and disadvantages, which shows
nothing is perfect. Some of the limitations are as follows:
1. Low participation: Obviously many respondents have not participated in this and
have also created some problems which simply shows that they were not
interested.
2. Biasness: Sometimes interested customers were also biased so the collected
figures involve both positive and negative figures.
3. It does not cover all the aspects of the company.
4. Subjective: This project only tells you what it is all about.


44
9. FINDINGS, DATA ANALYSIS AND
CONCLUSION
On the basis of research, it was found that there is a nominal difference in the
efficiency of Hindustan Unilever limited Vis--vis Procter and Gamble Ltd. I have
reached to this conclusion on the basis of following findings. They are as follows.
PRODUCT LINE
As From the study, I concluded that Hindustan Unilever limited has more brands in its
basket then Procter and Gamble so it is more close to common man and touching his
or her daily life in a more comprehensive manner.
PRODUCT SATISFACTION
Most of the people (90%) are using the product of HUL and are very satisfied while
only 10% consumers are not satisfied.


HUL Brand Awareness
HUL spends largest spender of money on advertisement in the India. Last year, HUL
spent Rs. 650 crore on advertisements.
0 20 40 60 80 100
?es
no
"#$ %&' '()*+ ,-./( 0#&1'23 4*1 45(&
(46(7$1
Are you uslng PuL's producL and
also saused
43

Procter & Gamble
It does not have strong distribution channel in India. In India, 76% population is
residing in rural areas and their distribution channel is very weak in rural India and
consumers are not aware about the products of P&G.
DEALERS: Both the companies use this type of selection criteria to select the dealers
in any particular area.


10
73
10
3
,&8 1)1 %&' 9$4# 4:&'3 ,-. ; )3(
0#&1'23(
newspaper
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oLhers
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-.,"/,$*0 .1
*#"*' 234335'
235
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894335' 895
!"#$"%&'
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46

Conclusion: Dealers of HUL are satisfied by the companies support in there sales
because the company provides them with various schemes and discounts, whereas
satisfaction of P&G dealers lies in good promotional activities, advertisement and the
flexibility that the company provides them. According to the senior officials of P&G
it was found that its a volume based company, hence all the above stated parameters
helps the dealer to attract more and more customers.
MODE OF TRANSPORTATION
Hindustan Unilever limited: HUL uses modified trucks and rails to deliver the
products from various production sites to the dealers. They are using new state of the
art technology so that they can even track every single bottle of shampoo. HUL and
the dealer share transportation cost.
Procter and Gamble: P&G is also using road and railway transportation system to
deliver product from various production sites to the dealers. They are also using latest
Information Technology to track their consignment whose backend is managed by
Infosys. Each dealer has to keep the Good Receipt Note (GRN) number and report of
the whole items of delivered products. Transportation cost is paid by P&G.

70
13
10
3 0
<$5)=$#% &> 39$ 0#&1'23(
LxcellenL
Above Average
Average
8elow Average
LxLremely oor
47
Conclusion: Both P&G and HUL uses advanced tracking technology to track the
goods and both companies use railways and roadways for transporting their products.
In HUL transportation HUL and the dealer share cost, where as at P&G,
transportation cost is paid by P&G.
FLEXIBILITY
Hindustan Unilever limited: As far as flexibility is concerned; their group found that
HUL provides more flexibility in terms of delivery of produce. HUL has there own
warehouses in every state and if the dealer orders more, he is supplied with the
products in time.
Procter and Gamble: As far as flexibility is concerned; their group found that P&G
does not provide more flexibility in terms of delivery of produce and in taking order
from dealers.


Conclusion: their group has found that Dealers of HUL are more satisfied than the
dealers of P&G and therefore HUL is a step ahead in terms of flexibility of placing
orders and accepting orders from the dealers.

0
10
20
30
40
30
60
70
PuL operauons
more exlble
&C operauons
more exlble
?5$@):)5)3% )* &0$#4)&*(
llexlblllLy ln operalons
48
DISTRIBUTION CHANNEL STRUCTURE
Hindustan Unilever limited: Hindustan Unilever limited channel structures consist
of whole seller, mass retailers, rural and modern trade. Their new approach to
distribution is holistic and seeks a three way convergence of product availability
brand communication and brand experience. They are reinventing distribution
creating new channels and redefining the way current channels are serviced. They are
building new capabilities in training the large number of people involved in these
initiatives.
Procter and gamble: Procter and gambles channel structure also have whole sellers,
mass retailers. They are revamping the companys distribution system using efficient
consumer response {E C R} principles. The new distribution system has given the
company considerable cost and process efficiencies while significantly availability
and visibility of the companys product in the stores.

Conclusion: HUL has more effective and efficient distribution network as compared
to P & G, which increases the availability and presence of HUL product. HUL is also
given emphasis on penetrating the rural market as theyll.

0 20 40 60 80
PuL more eecuve & emclenL
&C more eecuve & emclenL
<)(3#):'6&* 294**$5
ulsLrlbuuon channel
49
DEALING WITH UNSOLD AND DAMAGED MERCHANDISE
Hindustan Unilever Limited: It depends on the condition and type of the product. If
company feels that it is not the fault of the dealer then company would return it,
unsold products are mostly taken back by HUL.
Procter & Gamble: P & G replaces the damaged product with the new one, it means
that the damaged product are replaced by new product.

Conclusion: I found that both the companies take back the unsold product however P
& G is more flexible in returning the damaged product as compared to the HUL.
Hence P & G is more flexible here.
PERFORMANCE APPRAISAL SYSTEM
Hindustan Unilever Limited: The performance appraisal system in Hindustan
Unilever Limited is done under the supervisory of the Appraisal supervisor. The
supervisor keeps track of the performance of the employees and based on their
performance he choose the right method of performance appraisal. the main method
of performance appraisal that have been adopted by Hindustan Unilever limited are
360 degree appraisal and supervisory appraisal methods. it is done as an early exercise
and performance appraisal parameter is the past performance of the employees.
Procter And Gamble: the performance appraisal system in Procter and gamble is
also done under the supervisory officer and almost same methods are used as in the
Hindustan Unilever limited.
30
70
-*(&51 ; <4A4+$1 0#&1'23(
PuL's replacemenL pollcy
ls more exlble
&C's replacemenL pollcy
ls more exlble
30
Conclusion: There is hardly any difference in the performance appraisal methods in
both the companies. Both the companies are taking almost the same measures and
same parameters for performance appraisal, however both the companies were not
willing to disclose any changes brought in performance appraisal system during the
past five years. Both of the companies said that there have been change in some areas
and which has shown positive results, but not willing to give any reasons and what
changes have been brought.
TARGETS:
Hindustan Unilever Limited: HUL has different channel members with specified
targets and they are intended to increase sales, HUL has also made changes in channel
members during 2003-2008 to increase sales of the company. Every channel member
has to fulfill there given targets, channel members expect the company of ROI. Every
channel member gets credit period of two weeks. There was also change in
performance appraisal system during 2003-2008 to improve sales. HUL has also made
changes in commercial terms intended to increase the sales in different channels and
also to increase profit margins to company.

Procter & Gamble: P&G also has different channel members with specified targets
and they are intended to increase sales .P&G also made changes in channel members
during 2003-2008 to increase sales of the company. The channel members expect ROI
60
20
20
0
,-./( B45$( C4#+$3(
llexlblllLy more
CredlL llmlL more
uealer's Margln more
31
depending on there knowledge and on there performance to. Channel members get
credit period of 30 days. Payment terms of P&G are also flexible to the channel
members and P&G also has flexible payment terms P&G also offers many discounts
to these channel members. P&G has made many changes to there commercial terms
during 2003-2008 to increase sales.


Conclusion: Both HUL and P&G are flexible to channel members, but HUL runs
some monopoly over the market by offering a credit period of only two weeks where
as P&G offers credit period of 30 days. HUL also sets targets to there channel
members and provides very less margins to dealers compared to P&G.
SALES FUNCTIONING:
Hindustan Unilever Limited: HUL is emphasizing on rural areas through project
Shakti these days and sales also have been increased and HUL does not have any
sales outlets HUL assigns sales territory to there sales persons according to there skill
and experience and assigns targets to them. Appraisal supervisor does performance
appraisal of sales force and it is done through 360-degree appraisal method, parameter
used is performance of the sales personnel. HUL adopts on the job and off the job
training system to there sales force it is emphasized on improving skill and experience
of the sales personnel. Sales personnel are motivated through incentives and
promotions.
30
33
33
D;E/( B45$( C4#+$3(
llexlblllLy more
CredlL llmlL more
uealer's Margln more
32
Procter and Gamble: P&G has increased the number of outlets in the country and
the population in the area also increased and there is no effect on sales. P&G sets
targets to there sales force on the basis of increase or decrease in demand and also
according to the previous sales, sales territories are assigned according to the
capabilities of the sales personnel, responsibility of the sales personnel is to clarify the
doubts of the customer and make sales of the product. Performance appraisal of sales
force is done by the manager by doing meeting with them parameters of appraisal is
increase or decrease in sales it is done on monthly basis. P&G trains their sales force
by on the job training and training process is emphasized on skill and experience,
P&G has also brought many changes in the training system that has affected its sales
too. P&G motivates their sales force by providing them with targets and incentives.

Conclusion: Both P&G and HUL trains their sales force and has a good performance
appraisal system, P&G does appraisal on a monthly basis depending on increase and
decrease of sales where as HUL does it once in a year.

30
70
B45$( ?'*26&*)*+
PuL has sales Lralnlng, good
appralsal sysLem, demand base
sales LargeL
&C has sales Lralnlng, good
appralsal sysLem, demand base
sales LargeL
33
10. RECOMMENDATIONS
Both the companies have good market share in India and it keeps on increasing. Both
the companies i.e. HUL and P&G should open exclusive shops. HUL is already
having exclusive shops in Mumbai called SANGAM STORE. But it is only in India
so it should be increased. The employee should be given uniforms in which the name
of the company should be printed, by doing this the salesmen get motivated. These
shops should be opened for 24 hours. They should offer 24 hours free home delivery
system. The delivery vehicle should be attractive the name of the company should be
printed in that so that it becomes the sources of advertisement.
The companies should emphasis on their advertisement; it should fit the brand since it
adversely affects the opinion of the customer and it results in decrease in sales.
Both companies should emphasize their business in rural areas. They should penetrate
their business in the rural areas. 73% of the Indian population lives in rural areas.
There is huge market there and very less market has been penetrated. Both these
companies should concentrate on rural areas. P&G has been hardly been seen in the
rural areas. So they should increase their presence.
They should increase their CSR activities in northern India. At present they are
currently doing their CSR in southern India. So they should increase their activities in
north India also.
Recommendations to Improve the Distribution Network of HUL:
Servicing Channel partners and customers with continuous daily replenishment.
Leveraging scale and building expertise to service Modern Trade and Rural
Markets.
Delivering of sales force to improve response times and service levels.
Undertaking several initiatives for traditional channels in order to improve its
capabilities at the front end by developing skills for stockists' sales force.
Launching of several promotional schemes for existing wholesalers and
distributors. For instance, it has started the Vijeta- Rishta Jeet Ka scheme last
34
year to provide a platform for the wholesaler and HUL to grow the business by
earning points and redeeming them.

Recommendations to Improve the Distribution Network of P&G :
Secure management support before you start redesigning your supply network.
Dont let politics condemn the initiative to failure. Collaboration inside the
organization is usually every bit as difficult as external collaboration with
trading partners. Different functions and departments need to develop true
internal collaboration to make a seamless consumer driven supply network
possible.
Leverage the value IT can bring in connecting demand and supply side business
processes. Senior managers will not need much prompting to recognize the
waste of marketing resources that occurs when consumers arrive at an empty
shelf. Convincing them that investment in IT and a faster, more flexible supply
chain can solve the problem may take longer.
Simplify your applications architecture to allow collaborative business processes
and cope with changes in network alliances. It is crucial to design a flexible,
harmonized business applications architecture for collaborative business
processes. Dont wait for perfection, but invest in understanding technology
and its potential impact on your business. It is important that new operations
can be added or detached quickly (in less than six months) when the inevitable
acquisitions and divestitures occur. Limit the number of systems used to avoid
being overwhelmed by interfacing issues that add little to the bottom line.
Remember that Webifying your internal systems will merely expose their
inadequacies to a bigger audience. Since this audience is exactly the group of
external partners you need as close and confident collaborators, do not
advertise your weaknesses. You cannot make advanced near-real-time
collaboration work without secure and efficient internal systems.

33
11. ANNEXURE

COMPARATIVE STUDY OF DISTRIBUTION CHANNEL OF HUL AND
PROCTER & GAMBLE IN RURAL MARKET
Customer Survey Questionnaire
Disclaimer: The data collected by the following questionnaire is purely for academic
purpose; and not for any further commercial or personal use.

Name Age 15 - 20 years ___
21- 25 years ___
26 - 30 years ___
31 - 35 years ___
36 - 40 years ___
41- 50 years ___

Place Proffesion Salary
Contact

Q1. How many members are there in your family?

Q2. Have you ever heard of HUL (Hindustan Unilever Limited)?
YES ___ NO ___
Have you ever heard of P&G ( Proctor & Gamble)?
YES ___ NO ___





36
Q3. Are you using any of following products?

____ ____
____ ____
____ ____
____ ____
____ ____
____ ____
____ ____
____ ____

Q4. If yes, then are you satisfied?
YES NO CANT SAY
37
Q5. If No, then reason being
Poor quality High prices
No services Others
Q6. Which brand do you use in the following categories
Personal Wash
BRAND PACKAGING
15gms 25 gms 50gms 85gms 100gms
LUX
DOVE
BREEZE
LIRL
BREEZE
LIFEBOUY
Laundry

BRAND PACKAGING
50gms 150gms 250gms 500gms 1 Kgs 5Kgs
SURF EXCEL
WHEEL
TIDE
NIRMA
ARIEL
DAWN
38
Skin Care

BRAND PACKAGING
50gms 75gms 125gms 250gms
Fair n Lovely cream
Ponds cream
Olay cream
Lakme moisturizer

Oral Care
BRAND PACKAGING
50gms 75gms 125gms 250gms
Pepsodent
Close Up
Crest

Deodorants
BRAND
AXE
REXONA
LAKME



39
Color Cosmetics
BRAND
LAKME
OTHERS

Q7. What Recommendations or suggestions would you like to give for Improvement of
their products?



60
COMPARATIVE STUDY OF DISTRIBUTION CHANNEL OF HUL AND
PROCTER & GAMBLE IN RURAL MARKET
Retailer Survey Questionnaire

Disclaimer: The data collected by the following questionnaire is purely for academic
purpose; and not for any further commercial or personal use.

NAME: ___________________ NAME OF THE SHOP____________________
VILLAGE_____________ TEHSIL_________________ DISTRICT_____________
CONTACT DETAILS ___________________

1. Do you keep products of HUL and P&G in your shop? ( please tick mark on the
appropriate answer)

a).Yes b) No
(If the answer is yes then go to question number: 3)
2. Why dont you keep the products of HUL and P&G in your shop or why did you
stop keeping its products?
Yes No
a). Erratic supply ! !
b). Lack of demand ! !
c). Low margin ! !
d). No supplier ! !
e). Dont know about the company ! !

61
3. From whom do you purchase your product?
1). Distributor
2). Dealer
3). Agency
4). Wholesaler

4. How do you rate the delivery process by the dealer?
1. Excellent
2. Above Average
3. Average
4. Below Average
5. Extremely Poor

5. How many dealers are there in the district?
a).One
b) Two.
c) Three.
d) More than three.

6. Which vehicle do they mainly use for delivery?
1). Two wheeler
a). Scooters__ b) Motorbike__
2) Three wheeler
3) Ftheir wheeler
a) Van__ b) truck__ c) others__

7. What are the other schemes and incentives offered by them?




62
8. Which of the following products do you keep?
Personal Wash
BRANDS PACKAGING PRICE SALES ( per week)
Lux 50gms
85gms
100gms
Rs. 15/-
Rs. 25/-
Rs.35/-

Hamaam 50gms
85gms
100gms
Rs. 7/-
Rs. 15/-
Rs.20/-

Dove 50gms
85gms
100gms
Rs. 30/-
Rs. 45/-
Rs.60/-

Lirl 50gms
85gms
100gms
Rs. 15/-
Rs. 25/-
Rs.35/-

Breeze 50gms
85gms
100gms
Rs. 10/-
Rs. 20/-
Rs.30/-

Laundry
BRANDS PACKAGING PRICE SALES ( per week)
Surf excel 250gms
500gms
1 kgs
Rs. 45/-
Rs. 75/-
Rs.150/-

Wheel 250gms
500gms
1 kgs
Rs. 10/-
Rs. 25/-
Rs. 50/-

Tide 250gms
500gms
1 kgs
Rs. 15/-
Rs. 25/-
Rs.50/-

Dawn 250gms
500gms
1 kgs
Rs. 35/-
Rs. 75/-
Rs.150/-

Rin powder 250gms
500gms
1 kgs
Rs. 10/-
Rs. 22/-
Rs.40/-

63
Skin Care
BRANDS PACKAGING PRICE SALES ( per week)
Fair n lovely cream 125 ml
250 ml
500 ml
Rs. 45/-
Rs. 75/-
Rs.150/-

Ponds white cream 125 ml
250 ml
500 ml
Rs. 120/-
Rs. 245/-
Rs. 450/-

Lakme fruit
moisturizer
125 ml
250 ml
500 ml
Rs. 150/-
Rs. 250/-
Rs.500/-


Oral Care
BRANDS PACKAGING PRICE SALES ( per week)
Pepsodent 50gms
75gms
100gms
Rs. 35/-
Rs. 45/-
Rs.70/-

Close up 50gms
75gms
100gms
Rs. 30/-
Rs. 40/-
Rs.70/-

Crest toothpaste 50gms
75gms
100gms
Rs. 50/-
Rs. 75/-
Rs. 90/-


Deodorants

Axe ________ Lakme ________
Rexona ________

Colour Cosmetics

Lakme ________ Others ________


64
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63
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