MARKETING STRATEGYOF HINDUSTAN UNILEVER

LIMITED
1) HUL’S FOCUS ON NEW PRODUCTS, DATA ANALYTICS TO
BOOST MARGINS

“India’s biggest consumer company Hindustan Unilever (HUL) would harness innovation,
new product lines, and an evident aspirational consumer switch toward premium goods to
boost volumes and margins.
One of the analyst's takeaways reached was the management's statement of using
sophisticated data analytics skilfully in demand forecasting. It will allow HUL to accelerate
growth and cut costs. HUL is expected to deploy distinct operating strategies across India in
14 clusters. The business could gain market share in those clusters by launching regional
products. Analysts point out that the company can gain more market share in this segment as
penetration levels are still in low single digits.”

“On personal care products, HUL has adopted the strategy of enhancing its exposure to
products based on natural ingredients. HUL already has brands such as Indulekha and Lever
Ayush. It plans to reposition its old soap brand Hamam in the naturals space with the launch
of the Neem, Tulsi and Aloe Vera variants. Also, Lifebuoy is launched with a ‘Turmeric’
variant. Personal care contributes 45 per cent of its total revenues and 55 per cent of its
operating profit.””

2) HUL’S NEW GROWTH STRATEGY:

“After having fought a bitter price battle for market share with its rivals, Hindustan Unilever
Ltd (HUL), Indian subsidiary of the Anglo- Dutch consumer goods company Unilever Plc, is
now working on a new growth strategy for its laundry business.

“Price cut or hike is not a long-term growth strategy. Pricing, in fact, is now passé,” insists
Sudhanshu Vats, category head, home care. “Our strategy for growth, now is focused on
product innovation, new consumer and retail trends and aggressive marketing and
promotions,” he said.

This comes even as Unilever is scouting for a potential buyer for its laundry business in the
US.

HUL says it is quite upbeat about the segment and says the laundry segment is one of its “key
growth areas. “We have done key innovations across the product portfolio and it is working
for us,” says Vats. “We successfully migrated from Rin Supreme to Surf Excel and Wheel
Smart Srimati—which was rolled out in 2006—is also on the right track.”

HUL’s market share in the laundry segment grew to around 37.8% in the quarter ended June
from 35.5% in the same period last year, according the market research firm ACNielsen.
However, this time, the increase was not at the expense of price war with its multinational
rival Procter & Gamble Co. P&G also gained 0.5 percentage points, up to a 7.6% share.
Nirma Ltd, the Ahmedabad- based manufacturer, however, saw its market share dip by 1.7%
percentage points to 13.5%.
 Wheel, a value brand that, according to Vats contributes around 50% of HUL’s laundry
segment revenues, increased its market share by 2 percentage points in the same period, with
a total share of about 18%.

According to ACNielsen, the laundry industry in India was worth Rs7,908 crore in 2006 and
rose 8.4% over 2005. HUL doesn’t report its laundry revenues separately but puts them under
the soaps and detergent category.

In 2006, HUL’s soaps and detergents segment contributed around Rs5,596 crore to the
company’s total sales of Rs12,103 crore. “Laundry has been an attractive segment in the past
and is likely to keep growing soon. The recent price war between companies led to erosion in
their profitability but now, the industry is stabilizing,” says Unmesh Sharma, an analyst at
Macquarie Securities here.

According to Vats, the laundry business is witnessing a surge in demand from cities and
HUL is focusing on Tier I and II cities to tap that demand.”

2) SUSTAINABILITY STRATEGY
“HUL have a long-standing set of values and principles that guides our behavior. These
values underpin the approach to sustainability. HUL have always been a business driven by a
strong set of values. Today those values are as important as ever. They now know that the
well-being of society and the environment is critical to their ability to grow.”
“Unilever’s vision is to double the size of its business while reducing the overall impact on
environment. This new vision recognizes that the world is changing, populations are growing
and the rise in incomes is fueling a growth in the demand for consumer products. Products
like ours rely on an increasingly constrained set of natural resources, whether it is fuel, water,
or other raw materials.
In Hindustan Unilever Limited (HUL), the principle of Corporate Responsibility (CR) is an
integral part of our commitment to all our stakeholders – consumers, customers, employees,
the environment and the society that we operate in. 

Today, India is battling multiple issues like water scarcity, poverty, and problems arising out
of low awareness of health, hygiene, and nutrition. If these issues are not addressed soon,
they will create insurmountable barriers to business growth. The company believe that
helping society prosper and ensuring a sustainable future for the planet goes hand in hand
with the goal of ensuring growth that is competitive, profitable, and sustainable for the
organization.

The contributions must be substantial and sustainable, which is why they are not just banking
on their philanthropic programs but are transforming their core business practices as well.
Even the seemingly small innovations in their brands and business processes can lead to a big
difference in society as they touch the lives of two out of every three Indians.

For example, if one household uses Surf Excel detergent, it can conserve two buckets of
water per wash. A million Indian households using Surf Excel can save enough water for
meeting the basic hygiene needs of many Indians. Thus, small individual actions multiplied
with large consumer base will make a big difference in combating the issues society faces.”
“They will further demonstrate that successful business strategies are driven by responsible
business practices. The key to this approach is developing a CR framework which integrates
the social, economic, and environmental agenda with business priorities – growing markets,
maintaining the competitive edge, enjoying goodwill in the communities the company
operate in, and building trust and an exceptional reputation. Hence, in the future, the three
cornerstones for CR integration with business at HUL will be:”

Growing markets responsibly: 

“The company will address issues related to hygiene and nutrition through product
innovations and awareness. Gathering information about the concerns expressed by
consumers, communities, and stakeholders can help them to identify opportunities for
innovation at the category, brand, and marketing plan level. They have a very strong and
trusted position in India, and they can leverage this to their competitive advantage.”

Ensuring sustainable practices in our operations:

“To secure a thriving future, they need to establish sustainable sources for raw materials.
Being a company that is heavily dependent on water, agriculture, fuels and petrochemicals,
they must plan now for a future in which water could be scarce, agriculture could be under
pressure, and fuels will be expensive. Their consumers add up to two-thirds of the Indian
population, hence addressing sustainability issues is a high priority.”

Building a good reputation through responsible leadership: 

“CR is one of the key components of reputation and trust. A good reputation can be a major
competitive advantage and can build employer brand and consumer loyalty.”

3) Engaging with our stakeholders

“Listening to others and learning from the stakeholders informs decision-making, strengthens
their relationships and helps them succeed as a business.

Stakeholder engagement for identifying issues that are material to us:

They appointed Sustainability International to conduct stakeholder engagement on our behalf.
They analyzed and assimilated the expectations of stakeholders regarding issues that matter
to them. These expectations were like the areas identified by us, where HUL's contribution
could create a significant impact.”
Scoping the areas for intervention
“While the issues are many, it is necessary to address them in a systematic manner to make a
real difference. Instead of spreading thin across all issues, we have chosen to work on five
areas to ensure a deep impact.

These areas have been arrived at using the output from our stakeholder engagement process
and areas which we are poised to address through our business.”
 4) Governance
“The company aim to have strong governance structures in place to manage our social and
environmental responsibilities carefully and thoughtfully.

Corporate Responsibility at HUL is led by the CEO and the Management Committee (MC) of
the company. The MC governs the sustainability strategy with a view of key strategic
approaches and seeks reports on impacts and efforts against clear targets.

Each of the nine cells (in the diagram shown in Sustainability strategy section) is owned by
an MC member. For the execution of the strategy there is a team of 12 Sustainability
Governing Council (SGC) members based on their respective functions.”

Sustainability Governing Council

“The Sustainability Governing Council is responsible for:

 Recommending sustainability priorities for approval by the MC and monitoring its

progress

 Recommending HUL's positions on critical issues for approval by MC

 Receiving stakeholder feedback

The role of the SGC is formalized, with a clear mandate and terms of reference outlining its
mission, purpose, membership, meeting schedule, and reporting systems.”
External commentary

“HUL shared their sustainability strategy with leading external experts from diverse
backgrounds. Below one can read their comments on the company sustainability strategy.

View of leading external experts on HUL’s sustainability strategy

 ‘The long-term strategy and roadmap provide a comprehensive approach towards meeting
future sustainability challenges, especially with respect to resources such as water and
energy.’

- Shirish Sinha, Head Climate Change & Energy Programmed, WWF

 ‘We are happy with the focus on linking the business processes with corporate responsibility.
Social impact must be central to business processes, which is brought about by HUL's
strategy. Corporate responsibility via business strategies is the way forward.’

- Ibrahim H. Rehman, Director, Social Transformation Division, TERI

 ‘The tying up of your strategic threads is excellent. Ensure that you carry it through action!’”

5) COMPETATIVE STRATEGY
“As Competition Heats Up, India’s Top Consumer-Products Company Woos Affluent
Shoppers with Global Brands Like Dove, While Cooking Up Its Foods Biz.
The middle-aged Briton strolling the aisles and checking out the products doesn’t attract
much notice from other shoppers in Mumbai’s Hyper city, the India hypermarket chain.
That’s how Douglas Baillie likes it. Baillie, the managing director of Hindustan Unilever,
India’s premier consumer-products company, wants to see how his products are stocked,
what consumers are buying, and how shoppers are reacting to competitive brands. It’s
primary market research at its most elemental, and it’s best done incognito.
Hindustan Unilever has traditionally relied on small traders and mom-and-pop corner stores
to retail its products. But India’s recent retail boom has created large stores and malls, so the
company wants to make sure it’s in with the new marketing crowd. Hence Baillie’s Hyper
city visits, and the calls he makes on the headquarters of the big retail chains.
This is quite a change for Hindustan Unilever, whose executives used to have emissaries
make obeisance at Lever house in downtown Mumbai. “I can’t imagine any head from Lever
House ever visiting other company offices like this,” says an amazed Damodar Mall, chief
executive of innovation and incubation at Pantaloon Retail, India’s largest retailer and a
former manager at Hindustan Unilever.”

6) OTHER STRATEGY
 “Grow ahead of market by leading market development activities.”
 “Leverage positive impact of growing Indian economy on consumer spending.”
 “Grow a profitable foods and top end business.”
 “Grow the bottom-line ahead of top line.”
 “Strong commitment to sustainable development.”