“To Study Customer Perception while purchasing FMCG Product with special reference to Soap of Hindustan Unilever Ltd.”
SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION
UNDER THE GUIDANCE OF Mrs. Geetu Tuteja Project Co-ordinator
SUBMITTED BY: Chandan Kumar Batch MBA III (Distance)
BHARATI VIDYAPEETH DEEMED UNIVERSITY SCHOOL OF DISTANCE EDUCATION Academic Study Center - BVIMR, New Delhi An ISO 9001:2008 Certified Institute NAAC Accredited Grade “A” University
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Student Undertaking
This is to certify certify that I Chandan Kumar Kumar had completed completed the Project titled titled
“To study study the customer customer
Perception while purchasing FMCG product with special reference to soap of Hindustan Unilever Ltd.” in (HUL) under the guidance of Mr./Ms. Geetu Tuteja in the partial fulfillment of the requirement for the award of degree of MBA from Bharati Vidyapeeth Vidyapeeth Deemed University University, SDE, Academic Study Center BVIMR, New Delhi. This is an original piece of work and I had neither copied copied nor submitted submitted it earlier elsewhere.
Chandan Kumar
(
)
Dated :
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Acknowledgement
This report is an outcome of mutual support and guidance of many person towards whom I indebted. My special thank to Mr. Yashwant Kumar Kumar to provide various facility and Mrs. Puja Jha for his guidelines in the summer training by which I can make my project in the easy way. I express my profound reference and the artful gratitude to Mrs. Geetu Tuteja to suggest me a proper guideline guideline towards the project. project.
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ABSTRACT
Hindustan Unilever Limited is India's largest Fast Moving Consumer Goods company, touching the lives of two out of three Indians. HUL's mission is to "add vitality to life" through its prese presence nce in over over 20 disti distinct nct categorie categoriess in Home Home & Person Personal al Care Care Produc Products ts and Foods Foods & Beverages. The company meets everyday needs for nutrition, hygiene, and personal care, with brands that help people feel good, look good and get more out of life. The competition in the market is very fierce nowadays with many new entrants in this segment and gaining momentum in capturing the market at a very faster rate. This can be seen with the nearest competitor Godrej gaining a market share of 9.7% by bringing in various offers and schemes. ITC has also entered into this segment with the Vivel range of soaps. It has been advert advertisi ising ng the soaps soaps with with celebr celebriti ities es like like Deepika Deepika Padukon Padukonee and Kareena Kareena Kapoor Kapoor.. By its advertiseme advertisements nts it has created created a good repo in the market and has seen a large effect effect on the sales. Also in the race are Wipro and Dabur which are doing a good job in their own segments as Sandalwood and Ayurvedic. However Hindustan Unilever (HUL) being the market leader for years has been capturing the market by bringing in various strategies like innovation and pricing. HUL, has cut prices of key soaps and detergents by 4-20%, the company’s stockists and distributors said. The prices have been cut through a combination of an increase in the weight of some packs and a reduction in the maximum retail price. For instance, the company has increased the weight of its Lifebuoy toilet soap from 115g to 120g, but kept the price unchanged at Rs15. This translates into an effective price cut of 4.2%. Lifebuoy Lifebuoy accounts for around 30% of HUL’s annual revenue revenue from soaps. According According to market research firm AC Nielsen, Lifebuoy had a market share of 18% in 2008.
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SIGNATORY PAGE
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TABLE OF CONTENTS PAGE NO. CHAPTER 1.INTRODUCTION
1-29
Company Overview Company History Product Line SWOT analysis
CHAPTER 2.RESEARCH METHODOLOGY
30-36
Objective Scope of the study Managerial usefulness of study Methodology Limitations
CHAPTER 3. CONCEPTUAL DISCUSSIONS
37-56
CHAPTER 4. DATA ANALYSIS
57-67
CHAPTER 5.CONCLUSIONS & SUGGESTIONS
68-70
APPENDICES
71
BIBILOGRAPHY
72
QUESTIONIER
73-75
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Chapter 1 INTRODUCTION TO FMCG MARKET INTRODUCTION TO INDUSTRY Fast Moving Consumer Goods (FMCG), also known as Consumer Packaged Goods (CPG), are products that have a quick turnover and relatively low cost. Consumers generally put less thought into the purchase of FMCG than they do for other products. Though the absolute profit made on FMCG products is relatively small, they generally sell in large numbers and so the cumulative profit on such products can be large. FMCG Products and Categories •
Personal Care, Oral Care, Hair Care, Skin Care, Personal Wash (soaps);
•
Cosmetics and toiletries, deodorants, perfumes, feminine hygiene, paper products;
•
Household care fabric wash including laundry soaps and synthetic detergents; household cleaners, such as dish/utensil cleaners, floor cleaners, toilet cleaners, air fresheners, insecticides and mosquito repellents, metal polish and furniture polish.
•
Food and health beverages, branded flour , branded sugarcane, bakery products such as bread, biscuits, etc., milk and dairy products, beverages such as tea, coffee, juices, bottled water etc, snack food, chocolates, etc.
•
Frequently replaced electronic products, such as audio equipments, digital cameras, Laptops, CTVs; other electronic items such as Refrigerator, washing machines, etc. coming under the category of White Goods in FMCG; 1
Sector Outlook
FMCG is the fourth largest sector in the Indian Economy with a total market size of Rs. 60,000 crores. FMCG sector generates 5% of total factory employment in the country and is creating employment for three million people, especially in small towns and rural India.
Analysis of FMCG Sector Strengths:
1. Low operational costs 2. Presence of established distribution networks in both urban and rural areas 3. Presence of well-known brands in FMCG sector Weaknesses:
1.
Lower scope of investing in technology and achieving economies of scale,
especially in small sector 2.
Low exports levels
3.
“Me-too” products, which illegally mimic the labels of the established brands.
These products narrow the scope of FMCG products in rural and semi-urban market. Opportunities:
1.
Untapped rural market
2.
Rising income levels i.e. increase in purchasing power of consumers
3.
Large domestic market
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4.
Export potential
5.
High consumer goods spending
Threats :
1.
Removal of import restrictions resulting in replacing of domestic brands
2.
Slowdown in rural demand
3.
Tax and regulatory structure
FUTURE SCENARIO
The Indian FMCG sector with a market size of US$13.1 billion is the fourth largest sector in the economy. A well-established distribution network, intense competition between the organized and unorganized segments characterizes the sector. FMCG Sector is expected to grow by over 60% by 2010. That will translate into an annual growth of 10% over a 5-year period. It has been estimated that FMCG sector will rise from around Rs 56,500 crores in 2005 to Rs 92,100 crores in 2010. Hair care, household care, male grooming, female hygiene, and the chocolates and confectionery categories are estimated to be the fastest growing segments.
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GROWTH PROSPECT
With the presence of 12.2% of the world population in the villages of India, the Indian rural FMCG market is something no one can overlook. Increased focus on farm sector will boost rural incomes, hence providing better growth prospects to the FMCG companies. Better infrastructure facilities will improve their supply chain. FMCG sector is also likely to benefit from growing demand in the market. Because of the low per capita consumption for almost all the products in the country, FMCG companies have immense possibilities for growth. And if the companies are able to change the mindset of the consumers, i.e. if they are able to take the consumers to branded products and offer new generation products, they would be able to generate higher growth in the near future. It is expected that the rural income will rise in 2007, boosting purchasing power in the countryside. However, the demand in urban areas would be the key growth driver over the long term. Also, increase in the urban population, along with increase in income levels and the availability of new categories, would help the urban areas maintain their position in terms of consumption. At present, urban India accounts for 66% of total FMCG consumption, with rural India accounting for the remaining 34%. However, rural India accounts for more than 40% consumption in major FMCG categories such as personal care, fabric care, and hot beverages. In urban areas, home and personal care category, including skin care, household care and feminine hygiene, will keep growing at relatively attractive rates. Within the foods segment, it is estimated that processed foods, bakery, and dairy are long-term growth categories in both rural and urban areas.
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THE TOP 10 COMPANIES IN FMCG SECTOR 1.
Hindustan Unilever Ltd.
2.
ITC (Indian Tobacco Company)
3.
Nestle India
4.
GCMMF (AMUL)
5.
Dabur India
6.
Asian Paints (India)
7.
Cadbury India
8.
Britannia Industries
9.
Procter & Gamble Hygiene and Health Care
10.
Marico Industries
BUDGET IMPLICATIONS ON FMCG SECTOR The Budget gives more focus on the agricultural/farm sector that will boost the rural income thus providing better growth prospects to the FMCG companies. With 12.2% of the world population living in the villages of India, the Indian rural FMCG market is something no one can overlook. Better infrastructure facilities will improve their supply chain. Also, with rising income and growing consumerism, FMCG sectors are likely to benefit. Growth potential for all the FMCG companies is huge as the per capita consumption of almost all products in the country is amongst 5
the lowest in the world. Further, if these companies can change consumer's mindset and offer new generation products, they would be able to generate higher growth in the future Products which have a quick turnover, and relatively low cost are known as Fast Moving Consumer Goods (FMCG). FMCG products are those that get replaced within a year. Examples of FMCG generally include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, tooth cleaning products, shaving products and detergents, as well as other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged food products, soft drinks, tissue paper, and chocolate bars. The Indian FMCG sector is the fourth largest in the economy and has a market size of US$13.1 billion. The middle class and the rural segments of the Indian population are the most promising market for FMCG, and give brand makers the opportunity to convert them to branded products. Most of the product categories like jams, toothpaste, skin care, shampoos, etc, in India, have low per capita consumption as well as low penetration level, but the potential for growth is huge. Typical Characteristics of FMCG products •
Individual products are of small value. But , all FMCG products put together account for a significant part of the consumer’s budget .
•
The consumer keeps limited inventory of these products and prefers to purchase them frequently, as and when required.
•
Many of these products are perishable.
•
The consumer spends little time on the purchase decision. Rarely does he / she look for technical specifications (in contrast to industrial goods). 6
•
Brand loyalties or recommendations of reliable retailer / dealer drive p urchase decision.
•
Trial of a new product i.e. brand switching is often induced by heavy advertisement , recommendations of the retailer or neighbors / friends.
•
These products cater to necessities , comforts as well as luxuries.
•
They meet the demands of the entire cross section of population.
•
Price and income elasticity of demand varies across products and consumers.
The personal care category has the largest number of brands. The FMCG (Fast Moving Consumer Goods) industry can be subdivided into Organized & Unorganized sector. The size of organized sector is about Rs660bn. It accommodates product lines such as soaps, detergents, skin care, hair care, oral care, cosmetics, disinfectants, other toiletries and processed packed food products. Unorganized FMCG, which is around 40% of the volume of Organized Industry with localized products and counterfeits, is valued at around Rs100bn. The herbal product market within FMCG is valued at Rs50bn.Organized retail market size is around Rs.530bn which have 2% beauty care products include soap, shampoo and other product.
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SOAP MARKET
During the British rule in India, Lever Brothers England introduced modern soaps by importing and marketing them in India. However, North West Soap Company created the first soap manufacturing plant in India, which was situated in the city of Meerut, in the state of Uttar Pradesh. In 1897, they started marketing cold process soaps. During World War I, the soap industry floundered, but after the war, the industry flourished all over the country. Mr. Jamshedji Tata set up India's first indigenous soap manufacturing unit when he purchased OK Coconut Oil Mills at Cochin Kerala around 1918. OK Mills crushed and marketed coconut oil for cooking and manufactured crude cold process laundry soaps that were sold locally. It was renamed The Tata Oil Mills Company and its first branded soaps appeared on the market in the early 1930s. Soap became a necessity for the moneyed class by around 1937.
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India is a vast country with a population of 1,030 million people. Household penetration of soaps is 98%. People belonging to different income levels use different brands, which fall under different segments, but all income levels use soaps, making it the second largest category in India. Rural consumers in India constitute 70% of the population. Rural demand is growing, with more and more soap brands being launched in the discount segment targeting the lower socioeconomic strata of consumers. Soaps form the largest pie of the FMCG Market with bathing & toilet soaps accounting for around 30% of the soap market. Currently, the soap industry is divided into three segments namely Premium, Popular and Economy/ Sub popular . India’s soap market is Rs 41.75 billion. Soaps are available in five million retail stores, out of which, 3.75 million retail stores are in the rural areas. Therefore,
availability of these products is not an issue. 70% of India's population resides in the rural areas; hence around 50% of the soaps are sold in the rural markets. Soaps form the largest pie of the FMCG Market with bathing & toilet soaps contributing around 30% of soap market.
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SOAP MARKET
Natural soap/Glycerin soap
Herbal soap
Market Size
Rs.280crore
Rs.227 crore
Outline for the herbal soap Herbal soap
Neem soap
Tulsi soap
Turmeric soap
Sandal soap
The Crisis of Declining Markets
Through the nineties, the FMCG markets grew at almost 15% per annum in value. Suddenly, in 2000, FMCG market growth stalled and then declined for the next four years. It is important to understand why this happened. The rapid opening up of the economy resulted in many new avenues of expenditure for the consumer’s growing income. A sharp drop in interest rates from 18% to 8% led to explosive demand for consumer durables like white goods, two-wheelers and automobiles. After all, one
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could drive out of a car showroom in a Maruti 800 with a down payment of only Rs. 2000. The home ownership market grew exponentially as the average age of a home loan borrower dropped
from 50 in 1999 to 30 in 2004. Mobile phone ownership and usage exploded due to its amazing lifestyle and convenience benefits as well as lower prices. Entertainment, Leisure and Travel sectors also boomed. The lure of new avenues of expenditure in products and services led to consumers restricting their expanse on FMCG. It is not that they bathed less often or brushed their teeth less often or indeed washed their clothes less often. But they did downtrade to lower priced substitutes from higher quality brands. For example, a consumer buying six tablets of Lux in a month went to buying three of Lux and three cheaper brands. Or a consumer buying Surf Excel for her clothes mixed it with a cheaper powder. As a result of this shift in spending patterns, the FMCG market declined in value in the last four years creating a major challenge for growth.
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HINDUSTAN UNILEVER LTD
Hindustan Unilever Limited, erstwhile Hindustan Lever Limited (also called HLL),
headquartered in Mumbai, is India's largest consumer products company, formed in 1933 as Lever Brothers India Limited . Its 41,000 employees are headed by Mr.Harish Manwani, the
non-executive chairman of the board. HLL is the market leader in Indian products such as tea, soaps, detergents, as its products have become daily household name in India. The Anglo-Dutch company Unilever owns a majority stake in Hindustan Lever Limited. Recently in February 2007, the company has been renamed to "Hindustan Unilever Limited" to provide the optimum balance between maintaining the heritage of the Company and the future benefits and synergies of global alignment with the corporate name of "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 tonnes and sales of Rs.10,000 cores. 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.
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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 comprising 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 organization’s worth is also in the service it renders to the community. HUL is focusing on health & hygiene education, women empowerment, 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
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I Shakti 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 a rural health programme – 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.
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CHRONOLOGY 1888
1895
Sunlight soap introduced in India Lifebuoy soap launched; Lever Brothers appoints agents in Mumbai, Chennai, Kolkata, and Karachi
1902
Pears soap introduced in India.
1905
Lux flakes introduced.
1925
Lever Brothers gets full control of North West Soap Company
1930
Unilever is formed on January 1 through merger of Lever Brothers and Margarine Unie.
1934
Soap manufacture begins at Sewri factory in October; North West Soap Company's Garden Reach Factory, Kolkata rented and expanded to produce Lever brands.
1935 United Traders incorporated on May 11 to market Personal Products. 1941 Agencies in Mumbai, Chennai, Kolkata and Karachi taken over; company acquires own
sales force. 1942 Unilever takes firm decision to "train Indians to take over junior and senior management
positions instead of Europeans". 1955 65% of managers are Indians. 1956 Three companies merge to form Hindustan Lever Limited, with 10% Indian equity
participation 1957 Unilever Special Committee approves research activity by Hindustan Lever.
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1958 Research Unit starts functioning at Mumbai Factory. 1959 Surf launched. 1967 Hindustan Lever Research Centre, opens in Mumbai 1974 Pilot plant for industrial chemicals at Taloja; informal price control on soaps withdrawn;
Liril marketed. 1982 Government allows 51% Unilever shareholding. 1992 HLL recognised by Government of India as Star Trading House in Exports.
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MANAGEMENT STRUCTURE Hindustan Unilever Limited is India's largest Fast Moving Consumer Goods (FMCG) Company. It is present in Home & Personal Care and Foods & Beverages categories. HUL and Group companies have about 16,000 employees, including 1200 managers. The fundamental principle determining the organization structure is to infuse speed and flexibility in decision-making and implementation, with empowered managers across the company's nationwide operations. For this, HUL is organized into two self-sufficient divisions Home & Personal Care & Foods - supported by certain central functions and resources to leverage economies of scale wherever relevant
HINDUSTAN UNILEVER LOGO Logo of Hindustan Unilever Is Contaning the legacy of their parent company unilever. Logo of Hindustan Unilever has also been changed with company name. This logo coincides with the announcement of new corporate identity. Name HUL was approved by shareholder at the year annual meeting on May 18 & new identity was officially announced on 25 June following government approval. New identity provides optimum balance between maintaining the heritage of the company & synergies of global alignment with the corporate name of unilever. Most importantly it retains “Hindustan” as the first word in its name to reflect the company’s continued commitment to local economy, consumers, partners, & employers New logo symbolizes the company mission of “Adding Vitality to life ” & play a very strongly in our vision of “Earning the love & respect of India by making a real difference to every Indian”. It comprises 25 different icons representing organization, its brands & idea of vitality.
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COMPANY ANALYSIS Ownership:
The company is a publicly held organization. The majority of the shares are held by the parent company Unilever limited. Shareholding Pattern (as on 31.05.2007):
The majority of shares of the company are held by 9 foreign corporate bodies. They hold 54.2% of the total shares. The names of the companies and their share %age are Unilever PLC
33.7%
Brooke Bond Group Limited
4.84%
Unilever UK & CN Holdings Limited
2.72%
Brooke Bond South India Estates Ltd
2.39%
Unilver PLC
2.31%
Unilever Overseas Holdings AG
1.81%
Brooke Bond Assam Estates Ltd
1.49% 18
Unilver Overseas Holdings AG
1.3%
Unilver Overseas Holdings BV
0.85%
The public shareholding of the company is varied and comprises of Mutal funds/UTI(3.74%), Banks(.3%), Insurance Companies(12.41), FII(12.28), Thus the total institutional public shareholding is 28.73% In non institutions, corporate bodies hold 1.83%, while 17.56% shares are held by individuals. In addition to that.46% of the shares are held by other individuals and bodies such as the director & relatives, trusts, NRI’s and clearing bodies. Hence the total public shareholding comes out to be 48.52% (Source: HLL official website)
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HUL IN THE BUSINESS: FMCG still offers enormous potential
As the largest FMCG player it was up to them to reverse the downtrading to realize its true growth potential. They could achieve this by raising the bar and becoming world class in what their brands offered and how they worked. Nothing less would do. Penetration levels in several of the categories and consumption levels in all of the categories is low by any comparison. Across the world, they are seeing a strong correlation between income levels and the size of FMCG markets. Over the next 10 years, per capita income in India is likely to touch China’s current levels. At those levels, the FMCG market will be over Rs.100,000 crores from a current value of Rs.40,000 crores. This is an opportunity that they have to seize.
Per capita Income in India has doubled in 4 years 04-07. As their incomes and standards of living improve, Indian customers’ for FMCGs are shifting towards higher lifestyle categories like skin care, hair care, deodorants, convenience foods, health foods etc.
Rural India, where penetration levels are low as compared to urban areas, has a large consuming class with 41 per cent of India's middle-class and 58% of the total disposable income. Factors like loan waiver of farmers, hike in minimum support price for crops and flood inflation has helped farmers with rise in income. The purchasing power in rural areas has increased and spending behavior is also changing which shows a high growth potential for FMCG companies here.
Better Value
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The first step was to ensure that they offer world class quality and real differentiation backed by technology to give them the advantage over low priced competition. They have invested over Rs.400 crores, or 5% of sales, in the last three years to upgrade the brands. In several cases they reduced prices to make the brands more affordable. Better quality and more affordable prices have increased the value to the consumer.They have also launched several low unit size and price packs for single use to make the brands more accessible to all income groups. For example, they are the first to introduce a branded toothpaste in a tube at Rs.5 and a branded quality shampoo in a bottle at Rs.5. Bigger Role in Consumers’ Lives
Perhaps the most significant change has been to move the brands beyond merely making functional claims to playing a bigger and deeper role in the lives of consumers. They had to move from selling a soap or a detergent to something far more important and central to the consumer’s life. How often have we heard someone say, “A soap is a soap!” Or indeed, “All detergents clean clothes as well”. In the case of Lifebuoy, Lifebuoy, it was only only when they associate associated d it with the promise promise of health and protectio protection n against against disease disease that it claimed a larger larger space in the consumer’s consumer’s mind. It moved from being a mere soap to a health essential. Today Lifebuoy, their oldest brand, has grown at over 15% for the last three years. Similarly, in the laundry market, Surf Excel went well beyond the benefit of ‘great clean’ by saving saving two bucket bucketss of water water with with every every wash. wash. Imagin Imaginee the impor importan tance ce of that that benefi benefitt to consumers in cities, who often get running water for only a couple of hours a day. Surf Excel is one of their fastest growing brands today.
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Both Lifebuoy and Surf Excel have succeeded because they are relevant to two key concerns of the Indian housewife: family health and the scarcity of water. In addition to the growing consciousness of health, consumers today are looking for ways to look good and feel good so that they can get much more out of life. In short, consumers are seeking Vitality in their lives. Their portfolio of 35 power brands is uniquely positioned to offer nutrition, hygiene and personal care benefits and thereby deliver Vitality. Technology, the Key Differentiator
Their brands and sound understanding of the local consumer are supported by a world class Resear Research ch and Develop Developmen mentt capabil capabilit ity. y. They They have have over 200 of the bright brightest est scient scientist istss and technologists based in India.
Their recent reorganization leverages the talent pool from across 16 global technology centres, of which four are in India. In all, they have over 4,000 high quality minds across Unilever working relentlessly to provide new benefits that make a real difference to the consumers. Winning with Customers
Hindustan Lever has historically had a strong bond with its customers. They have strengthened this and reinvented the way they manage their distribution channels and their customers. The sales structure has been transformed to leverage scale and build expertise in servicing Modern Trade and Rural Markets. They have also de-layered their sales force to improve the response times and service levels.
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Their Their custom customers ers are servic serviced ed on continu continuous ous replen replenish ishmen ment. t. This This is possib possible le because because of IT connectivity across the extended supply chain of about 2,000 suppliers, 80 factories and 7,000 stoc stocki kist sts. s. Th They ey have have also also combi combine ned d back backend end proc proces esse sess into into a comm common on Shar Shared ed Serv Servic icee 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. In the case of Lifebuoy, Lifebuoy, it was only only when they associate associated d it with the promise promise of health and protectio protection n against against disease disease that it claimed a larger larger space in the consumer’s consumer’s mind. It moved from being a mere soap to a health essential. Today Lifebuoy, their oldest brand, has grown at over 15% for the last three years. Similarly, in the laundry market, Surf Excel went well beyond the benefit of ‘great clean’ by saving saving two bucket bucketss of water water with with every every wash. wash. Imagin Imaginee the impor importan tance ce of that that benefi benefitt to consumers in cities, who often get running water for only a couple of hours a day. Surf Excel is one of their fastest growing brands today. Both Lifebuoy and Surf Excel have succeeded because they are relevant to two key concerns of the Indian housewife: family health and the scarcity of water. In addition to the growing consciousness of health, consumers today are looking for ways to look good and feel good so that they can get much more out of life. In short, consumers are seeking
Vitality in their lives. Their portfolio of 35 power brands is uniquely positioned to offer nutrition, hygiene and personal care benefits and thereby deliver Vitality.
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The People & Organisation
They have restructured the company, integrating eight Profit Centres into two Divisions – Home and Personal Care (HPC) and Foods. The result is a simpler and leaner organisation, less hierarchical with fewer levels and greater empowerment. This has eliminated complexity and speeded up decision making. Today the company is far more youthful in attitude and spirit. There is greater openness and transparency. The Transformation: Investment in the Future
To ensure that Hindustan Lever remains competitive in the long-term, they have made significant investments in product quality, pricing and marketing. As mentioned earlier, the investment in product quality alone has been in excess of Rs. 400 crores, or 5% of our sales. In addition there has been the cost of defending their market position. Recently an international competitor attacked their laundry business led by a price reduction of as much as 50%. They acted with speed and determination leveraging all their past experience in India and internationally. They have been able to fully protect their market leadership and share, albeit sacrificing short-term profit. They made this necessary trade-off as market share is the best means of sustaining future profit. Over time, their stronger market positions will surely lead to greater long-term profit. Despite these significant investments to strengthen the long-term competitiveness and the costs of defending the strong market position, they still remain one of the most profitable companies in the country.
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MARKET SHARE OF HUL: HUL has a dominant market share across different segments in FMCG sector. HUL has been able to sustain highest sales revenues in the sector through its products across all the price points (entry level, mid and top end of market), better brand positioning, aggressive brand management and restructuring of product portfolios. But over the long term (Dec'02 - Sep'08), company has lost considerable share in some categories.The loss can be attributed to the fact that HUL has its products across all segments of FMCG sector but its competitors are focussing on niche products.
In Q3CY08,HUL has seen a market share loss in most of the categories barring detergents, tea and coffee. Part of the market share loss is attributable to changing market structure i.e. top end growing at a faster pace, where HUL does not have a market share similar to what it has at the mass segment.
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Hindustan Unilever Ltd has been in market leader in the soaps segment for many years.It has a market share of 54.3%.To be the market leader HUL has to perform many acts and has to please the customers by passing on the benefits to them. During the times of high inflationary pressures, Hindustan Unilever has surprised the Industry dropping prices of three of its soap brands – Lux ,Hamam and rexona. The industry was expecting HUL to hike prices so that they could follow suit. Holding on to the price line by sacrificing margins is becoming difficult for most FMCG companies reeling under rising input costs. The price reduction by HUL is being termed as a post- budget measure to please consumers. The excise duty on soaps was reduced by a margin of 2-14% in the union budget for 2008-09. The industry had, however, ruled out price cut and had termed the excise relief as miniscule. But, HUL, being the market leader in toilet soaps, has decided to pass on the excise benefits to consumers by reducing prices of Lux, Hamam and Rexona. The price of Lux (100gm) has come down from Rs 17 to Rs 16 and that of Lux’s 45gm SKU (stock keeping unit) is down from Rs 6 to Rs 5. In the case of Hamam and Rexona, price change has taken place in the 100gm SKU. "The price changes were made effective from early March 2008. This is consequent to the excise duty reduction announced in the union budget for home & personal care products from 16% to 14%, along with changes in abatements. Since the benefit is small at a unit level for each SKU in the Health and personal care portfolio, the overall benefit is being passed through price reductions on select popular SKUs in the skin cleansing category as mentioned above
(Source: Times of India)
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HUL IN THE SOAP SEGMENT : In 2000, 75% of their sales came from FMCG businesses. The rest came from several nonFMCG businesses which were not profitable, and did not offer prospects for long-term leadership. Besides, they were a drain on the core FMCG business, both in terms of resource and focus. They decided to disengage from all non-FMCG or commodity businesses. In all, we have divested and discontinued 15 businesses including Animal Feeds, Speciality Chemicals, Nickel Catalyst, Adhesives, Thermometers, Seeds, Mushrooms etc. with sales of Rs.1,750 crores as in 1999. Today they are a focused on FMCG company with our branded business accounting for over 90% of sales, consisting of 35 brands across 20 categories. These will be their main engines of growth, with higher levels of resource concentration, be it technology, people talent or media spend.
( Source :Wikinvest.com)
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Soaps and Detergents business contributes highest (46%) towards revenues followed by Personal care products (26%). Despite being highest revenue generator soaps and detergents business is not the most profitable segment. Personal care contributes highest (46.2%) towards the EBIT which is due to high margins and low penetration of the market.
Portfolio of Strong Brands
Their main challenge was to reverse the downtrading in the categories and re-establish the relevance of their brands in the mind of the consumer. In 2000, they had 110 brands, many undifferentiated and lacking scale. They chose to focus on 35 power brands covering all consumer appeal and price segments. They are already seeing the benefits. Six brands – Brooke Bond, Lifebuoy, Lux, Fair & Lovely, Rin and Wheel – have emerged as mega brands in the last five years, each with sales of more than Rs.500 crores.
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CHAPTER 2 RESEARCH METHODOLOGY
OBJECTIVES OF THE STUDY •
•
•
To check the taste & preference of customer while purchasing soaps with special reference to HUL To study the important factors which customers consider most important while purchasing soaps. To do a comparative analysis of various brands of HUL.
SCOPE OF THE STUDY
The study is limited to National capital region of Delhi. It focuses mainly on HUL Soaps. Only one parameter of marketing-product has been covered in study. HUL will be in a position to know how to overcome the hurdles of acquiring the whole market share of India.
RESEARCH METHODOLOGY
Marketing research is the process collecting and analyzing marketing information and ultimately arrived at certain conclusion Management in any organization need information about potential marketing plans and to change in the market place. Marketing research includes all the activities that enable an organization to obtain the information. This research is very important in strategy formation and feed back of any organizational plan. There are many type of research some are conceptual, empirical, descriptive, explorative etc. each
research
type
is
being
used
for
various
purpose.
In
this
research
I have used descriptive research, I try to describe what are the factors, which affect the business plan of AMUL’S Chocolate.
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Research design is the plan, structure and strategy of investigation conceived so as to obtained to research problem and control variances. It is the specification of methods and procedures for acquiring the information needed. It is overall operational pattern or framework of the project that stipulated what information is to be collected and from which source and by what procedure.
TYPE OF RESEARCH DESIGN: - Different types of research design have emerged on
account of the different perspectives from which a research study can be viewed. There are three fundamental categories that we used frequently are given below. 1. EXPLORATORY RESEACH: - In the case of exploratory research, the focus is on the
discovery of ideas. An exploratory study is generally based on the secondary data that are readily available. It does not have formal and rigid as the researcher may have to change his focus or direction, depending on new idea and relationships among variables. An exploratory research is in nature of a preliminary investigation. 2. DESCRIPTIVE RESEARCH: - The objective of such a study is to answer the “who,
what, when, where and how.” Of the subject under investigation, descriptive studies are well structured and tend to be rigid and its approach can not be changed every now and then.
It
is
therefore,
necessary
that
the
researcher
give sufficient thought to farming research question and deciding the types of data to be collected and procedure to be used for this purpose. 3. CASUAL RESEARCH: - A causal research investigates is cause and effect relationship
between two or more variables. The causal research design is based on reason along welltested line. We use inductive logic for confirming hypothesis with the help of future evidence.
TYPE OF RESEARCH CARRIED OUT: -
In my project work I used exploratory research.
SAMPLE SIZE
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I have used a sample size of 75 people which comprises of 30 housewives, 25 working ladies and 20 college girls.
DATA COLLECTION METHODOLOGY
DATA COLLECTION:To achieve the objectives, the primary as well as secondary source of data are used.. Primary source includes the retailers and company’s officials through questionnaires. Secondary source of data includes the past records of company. The data were collected through the following methodical techniques in the present project work. 1. Through questionnaires 2. Through interview 3. Through observation
QUESTIONNAIRES :-
Questionnaires consist of question printed or type in definite order on a form or set of form. It was questionnaire format firms tested on small sample then was modified and developed according to the environmental situation and other affecting factors. Each questionnaire is framed with systematic and modern technique to make useful in achieving the objectives up to a maximum possible limit. There are two types of questionnaires, the first one is standard questionnaire and the second is un-standard questionnaire. The authority or expert sets the standard questionnaire. In the other hand un-structured questionnaire is set according to objective of the study by researcher. In this research work I used un-structured questionnaire with my best ability and under the guidance of my institutes faculties and the project guide of the organization. After floor acing the questionnaire, the respondents (retailers and customers) were personally contacted. Each respondent was requested to answers the question with appropriate answer 32
genuinely. All the questions were made very clear to them. The questionnaires were duly filled with the responses of all the respondents in the current project work.
INTERVIEW METHOD: -
There is a fact to face interaction with most of the samples they were directly questioned and according personal and professional problem were collected from them for question are asked to the responded to flourish the questionnaire effectively and efficiently. In this project work I have made interview with almost respondent to know some extra data or fact, which was used in this project work. After using this method I tried to find the competitors policy and there strength after this method I was able to conclude all facts with competitors point of view.
OBSERVATION METHOD:-
During the project work, I contact the retailers and consumers particularly and find their opinion about the Amul Chocolate. In the observation method the research himself collects necessary information by observing the phenomena under this method. Observation may be conducted on in the natural field or in the form of experiment. After observation the data carefully noted in the questionnaire format. I used uncontrolled observation in this observation takes place in the natural setting. Retailer and customer are free to express their felling about the product and the company. The observation method give me an idea about the satisfaction level of customer and retailer in the other hand there precious knowledge about the market situation make me understand the business difficulties which help me a lot to carry out my project in a significant and effective manner.
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SAMPLE DESIGN :- The sampling designs are mainly of two types non-probability sample
designs and probability sample design.
RANDOM SAMPLING :- a random sample gives every unit of population a known and non probability of being selected. Since random sampling implies equal probability to every unit in the population; it is necessary that the selection of the sample must be free from human judgment.
SYSTEMATIC SAMPLING: - In this method first a sampling fraction is calculated as N/n where N is total no. of units in the population and “n” is the size of sample..
STRATIFIED RANDOM SAMPLING :- A stratified random sampling is divided into mutually exclusive and mutually exhaustive strata or sub group and then a simple random sample is selected with in each of the strata or sub group.
CLUSTER SAMPLING :- cluster sampling implies that instead of selecting individual units from the population entire groups or clusters are selected random.
QUOTA SAMPLING :- quota sampling involves the fixation of certain quotas, which are to be fulfilled by the interviewers, since quota sampling is not based on random selection it is not possible
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TYPES OF DATA Two types of data:-
•
PRIMARY DATA
•
SECONDARY DATA
PRIMARY DATA:-
Primary data is that kind of data which is collected by the investigator himself for the purpose of the specific study. The data such collected is original in character. The advantage of third method of collection is the authenticity. A set of question s were put together in the form of questionnaire with …. Question. The method of sampling was the random method as it is unbiased.
SECONDARY DATA:-
When an investigator uses the data that has been already collected by others is called secondary data. The secondary data could be collected from Journals, Reports and Various Publications. The advantages of secondary data can be economical, both in the term of money and time spent. The researcher of the reporter also did the same and collected secondary from various internet sites like Google.com.altavista.com and many more. The researchers of the reporter also visited various libraries for collection of the introduction part.
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LIMITATIONS OF RESEARCH
Although all efforts were taken to make the result of survey as accurate as possible the survey had the following constraints:
•
Retailers are not willing to give answers of the questions due to their busy schedules.
•
Retailers hide the facts especially in the sales figure.
•
A few retailers were not cooperating during the project survey. It was quite difficult to collect necessary data.
•
Due to the time constraint and other imperative workload during the training period it could not be made possible to explore more areas of concern pertaining to project study.
•
The employee of HUL were very hesitant and reluctant to give all information which was vital for my project work because some information were confidential in nature.
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Chapter 3 Conceptual Discussion 4P’s of HUL
PRODUCT THE BRANDS OF HUL : LUX :
Since 1929, Lux in step with the changing trends and evolving beauty needs of the consumers, offers an exciting range of soaps and Body Washes with unique elements to make bathing time more pleasurable. One can choose from a range of skincare benefits like firming, fairness and moisturizing.
Lux stands for the promise of beauty and glamour as one of India's most trusted personal care brands. Lux Believes in passion for beauty .It continues to be a favourite with generations of users for the experience of a sensuous and luxurious bath. Lux believes that femininity shouldn’t be denied.
DOVE :
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Dove soap, which was launched by Unilever in 1957, has been available in India since 1995. It provides a refreshingly real alternative for women who recognise that beauty is not simply about how you look, it is about how you feel. Globally, Dove has been extended to many other countries. Since the 1980s, for example, Unilever has launched a moisturising bodywash, deodorants, body lotions, facial cleansers and shampoos and conditioners, providing a comprehensive range of solutions to bring out true inner beauty.
LIRIL :
For 28 years, freshness has been clearly identified with one name – Liril. Liril expressions have always set trends whether it is a bathing beauty in a waterfall or "Oof Yu Maa!" The energy and excitement levels associated with the brand have to be experienced to be believed with changing times. Liril has donned many avatars; Presently, Liril Soft Aloe Vera & Lime, Liril Icy Cool and Liril Orange splash are making waves.
LIFEBUOY :
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Lifebuoy’s vision is, “Making a billion Indians feel safe and secure by meeting all their health and hygiene needs”. True to its vision, the world's largest selling soap, offers a compelling health benefit to the entire family. Launched in 1895, Lifebuoy, for over 100 years, has been synonymous with health and value. The honest & hard working soap, with its distinctive perfume and popular jingle, has carried the Lifebuoy message of health across the length and breadth of the country.
The relaunch of the soap in 2002, 2004 & again in 2006 have been turning points in its history. The new mix includes a new formulation and a repositioning to make it more relevant to both new and existing consumers. Apart from Lifebuoy total, it has also strongly built its other core variants like Lifebuoy deofresh – targeted at freshness, Lifebuoy nature – containing all the goodness of nature and Lifebuoy care – for sensitive skin. Lifebuoy also offers specific health benefits through specialised productformats like Lifebuoy HandWash & Lifebuoy Clearskin, which provides treatment and protection against acne
PEARS :
Introduced in India in 1902, Pears soap has equal. It is gentle enough, even for baby's skin. Pears is manufactured like any other soap, but unlike in conventional soaps, 39
the glycerine is retained within the soap. That is the cause if its unique transparency. Today Pears is available in three variants - the traditional amber variant, a green variant for oil control and a blue variant for germ protection.
HAMAM :
Launched in 1934, Hamam has always been a reliable option for consumers over years. The brand has withstood the test of time and has given the consumers the confidence and assurance of being a soap that is safe on skin.
REXONA:
Rexona is one of India's pioneer brands in family soaps. Launched in 1947, it was positioned as a natural skin care soap to give silky, glowing skin. The brand has been constantly improved to keep up with expectation of the consumers. In 2005, the brand was relaunched with a new modern look and packaging and contains coconut and cucumber.
BREEZE : 40
Breeze Scent Magic is the soap which fulfills the aspirations of women of rural India. Breeze has offered them 'beauty at an affordable price', making them look and feel beautiful.Breeze comes in 4 exotic fragrances – Rose, Sandal, Lime and Rajnigandha. All this at a very affordable price for the masses.
PRICE HUL caters to different income groups by focusing on the prices. They have priced the products in a way that it becomes accessible by people of all categories and classes. Recently. Hindustan Unilever has cut the prices of its Lifebuoy brand by increasing the grammage of the soap.
Also they have come up with small packs of lux at a price of Rs 10.This has increased the sales to a large extent as it has a good circulation among the students, lower class and the lower middle class groups. They have their different soaps for different purposes and the pricings also vary accordingly .They have small packs for most of the variants which have worked quite well.These pricing strategy has helped the company to be the leader in the market and reap the benefits of growth and penetration.
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PLACE HUL DISTRIBUTION MODEL :
To meet the ever-changing needs of the consumer, HUL has set up a distribution network that ensures availability of all their products, in all outlets, at all items. This includes, maintaining favorable trade relations, providing, innovative incentives to retailers and organizing demand generation activities among host of other things. HUL has followed a strategy of building its distribution channels in a transitional manner; and in different successive phases of the evolution of its distribution system, has penetrated well into the rural market. Phase I
The first phase of the HUL distribution network had wholesalers placing bulk orders directly with the company. Large retailers also place direct orders, which comprised almost 30 percent 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. Phase II
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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 would then distribute stocks from the Registered Wholesaler through distribution units maintained by the company. The Registered Wholesaler was given a margin of 1 per cent to cover the cost of warehousing and financing the stocks held by him. The Registered Wholesaler system, therefore, increased the distribution reach of the company to a larger number of customers.
Phase III
The highlight of the third phase was the concept of “Redistribution Stockiest” (RS) who replaced the REGISTERED WHOLESALERSs. The REDISTRIBUTION STOCKIST was required to provide the distribution units to the company salesman. The REDISTRIBUTION STOCKIST financed his stocks and provided warehousing facilities to store them. The REDISTRIBUTION STOCKIST also undertook demand stimulation activities on behalf of the company. The second characteristic of this period was the changes brought in as the company realised that the REDISTRIBUTION STOCKIST would be able to provide customer service only if he was serviced well. This knowledge led to the establishment of the “Company Depots” system. This system helped in transshipment, bulk breaking, and acted as a stock point to minimise stock-outs at the REDISTRIBUTION STOCKIST level.
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In the recent past, .significant change has been the replacement of the Company Depot by a system of third party; the 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 REDISTRIBUTION STOCKIST. Operation Bharat — HUL’s Rural Distribution Effort
HLL implemented a major direct consumer programme called Project Bharat, which covered 2.2 crore homes. Each home was given a box, at a special price of Rs.15, comprising a low unit price pack of hair-care (Clinic shampoo), dental (Pepsodent toothpaste), skin-care (Fair & Lovely) and body-care (Pond’s Dream flower talc) products along with educational leaflets , audio-visual demonstrations, film songs and mythological serials interspersed with ads of Lever product. Close to 160 vans and over thousand promoters (sales staff of the distributors or some other private operators) were pressed into Operation. The cost came upto roughly Rs.13 crore. Each van, equipped with a TV arid VCR, had six ‘promoters’. The project helped eliminate barriers to trial, and strengthened salience of both particular categories and brands.
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Operation Streamline
In 1998, HUL launched Operation Streamline to extend their distribution. Operation Streamline is one of the major initiatives undertaken by HUL in recent times to penetrate the rural markets. In the case of Operation Streamline, the goods are distributed from the C &F Agents to the Redistributors, who in turn pass it on to the Star Sellers. Being a cross-functional initiative, the Star Seller sells everything from detergents to personal products, etc. Operation Streamline opened up a new distribution channel beyond the territories that were covered by HUL’s 7,500 odd distributors. In less than two years, it has doubled’ the company’s reach in rural India. Lever’s distribution network now covers 60 per cent of the villages with population greater than 2,000, and having motor able roads. Example:- Penetration levels for its Fair & Lovely cream shot up nearly three times in just three months of launch of project. Interestingly, there appears to be a convergence around the prescription that HUL has created to crack opens the rural markets. For the additional 30,000 villages that HUL wanted to reach, it created a super stockiest; substockiest structure. The super-stockiest in the bigger towns service these sub-stockiest, who are paid 1-2 per cent more margins that the retailers. This is to cover the sub-stockest’s costs in servicing retailers in his area. Since the distributor cannot cover these retailers regularly, these sub-stockiest are essentially stock points. Then, once dealers do the necessary demand creation exercises and as such off takes increases. Operation Harvest
The reach of conventional media and, therefore, awareness of different products in rural markets in weak. It was also not always feasible for the distribution Stockiest to cover all these markets due to high costs involved. Yet, these markets are important since growth opportunities are high. The company decided to initiate mobile van operations in a focused manner to create both 45
awareness and point of purchase access. Operation harvest endeavored to supplement the role of conventional media in rural India and, in the process, forge relationships and loyalty with rural consumers. Operation Harvest also involved conducting product awareness programmes on vans. There are 1.2 million urban retail outlets, and another 3.6 million shops in rural areas. Depending on their business objectives, marketer’s use varying definitions for what is rural. Whatever be the
case, to extend their reach, marketers begin by ‘seeding’ the new territory, mostly through a brand awareness exercise. As HUL demonstrated with Operation Harvest, this exercise is best done through van operations. During this exercise, vans from HUL and its distributors did the rounds of 30,000 villages giving promotional packs, showing products ads and identifying key retail and distribution points. Cinema Van Operations
The Redistribution Stockiest typically funds these. Cinema Van Operations have films and audio cassettes with song and dance sequences from popular films, also comprising advertisements of HUL products. But over a period of time, van operations (usually run by the distributor or a third party) have also been used to regularly service retailers in these smaller markets rather than only making contract with the end consumer. These successive ‘Operations’ have enabled the company far deeper penetration levels than other companies. HUL recognised early in its rural distribution initiative that market share would be created only when demand is built up through awareness, trial and consistent availability. The company literally had to build up’ the market village by village in its rural initiative. Cost-effective distribution solutions were as first attempted by HUL, and many other companies are veering around to that option today. It has been working well for HUL, so others are beginning to experiment with it. 46
HUL’s project Shakti
A woman from a SHG selected as a Shakti entrepreneur receives stocks at her doorstep from the HUL rural distributor and sells direct to consumers as well as to retailers in the village. Each Shakti entrepreneur services 6-10 villages in the population strata of 1,000-2,000 people. A Shakti entrepreneur sets off with 4-5 chief brands from the HUL portfolio - Lifebuoy, Wheel, Pepsodent, Annapurna salt and Clinic Plus. These are the core brands that they layer it with whatever else is in demand like talcum powder or Vaseline during winters. The Shakti model trains women from SHGs to distribute HUL products of daily consumption such as detergents, toilet soaps and shampoos - the latter's penetration being only 30 per cent in
rural areas. The women avail of micro-credit through banks. The established Shakti dealers are now selling Rs 10,000-Rs15,000 worth of products a month and making a gross profit of Rs 700Rs1,000 a month. Each Shakti dealer covers 6-10 villages which have a population of less 2,000. The company is creating demand for its products by having its Shakti dealers educating consumers on aspects like health and hygiene. The Shakti brand endorsers are under-privileged rural women trained to manage businesses. Shakti is a win-win initiative that creates livelihoods and a social initiative that improves the standard of life and catalyses affluence in rural India. What makes Shakti uniquely scalable and sustainable is that it contributes not only to HUL but also to the larger interests of the community.
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I-Shakti
I-Shakti kiosks have been set up in 8 villages in Andhra Pradesh, and have been functional since August 2003. The kiosks have received an overwhelming response from the local populace. During the launch of these kiosks, important village members like the sarpanch, schoolteacher and doctor are invited to help reinforce relationships with the villagers. The kiosks remain open from 9 a.m. to 7 p.m., six days of the week. To enable access to the services, users have to register themselves first and obtain the unique registration number. An id card with the registration number is provided for use every time they visit the kiosk. The kiosks offer information chiefly in the form of audio-visuals in the following areas health and hygiene, E-Governance, education, agriculture, employment, legal services and veterinary services. The information provided in the above areas is called from the best available resources, taking additional care to ensure that information, especially in areas like agriculture, is locally relevant and includes inputs from home-grown experts. These experts are also available on request, to help provide solutions to problems raised by users through a query mailing system. A farmer from the village can obtain a quick solution to a pest problem with his crops. People can also send queries on health and hygiene to a local doctor for a speedy response. Villagers can avail of discount coupons from the kiosk for medical treatment from doctors operating in local areas. 'Ishakti’ has also tied up with Azim Premji Foundation to deliver innovative educational modules to students of classes VIII-XII through the kiosk. Local school teachers have also been involved in the process. A similar partnership is in place with Tata Adult Literacy for adult education.
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GO TO MARKET (GTM) :
HUL,the country’s largest household and personal care products maker by sales is increasing its so-called go to market (GTM) initiative, introduced in Mumbai last year, in an attempt to refurbish its national distribution network and streamline its supply chain. Reportedly, the project has been a success in Mumbai, where it was began in June, and will be brought forth in 42 cities and towns across India by the end of 2009. HUL’s GTM initiative in Mumbai was aimed at rationalizing its distribution network, make it more proficient, deliver stocks to retailers faster and reduce inventory on their product shelves. It farmed out the task of stock deliveries to logistics provider Mahindra Logistics as part of the Mumbai project. The GTM initiative has been internally labeled by parent firm Unilever Plc. as one of its 10 most important initiatives said the senior HUL executive, as well as an executive with a firm that does business with HUL. Both of them declined to be named as they were not authorized to comment on the company’s operations. A top management team from Unilever, including outgoing chief executive officer Patrick Cescau, his successor Paul Polman, and HUL chief executive officer Nitin Paranjpe, are believed to have assessed the success of the pilot plan last month and given in-principle approval to take the project to key cities in Tamil Nadu, Karnataka, Gujarat and Madhya Pradesh. Unilever has said it is looking at global savings of €1.5 billion (Rs9,855 crore) yearly by 2010 through the restructuring operations. The HUL executive and the HUL business associate added that the company is restructuring other aspects of its operations as part of the GTM project and that it would cut back on losses and in-transit theft. The consolidation is focussed at giving the distributors, who typically operate on a 4% profit margin, a bigger share of the pie at a time when they are being wooed by other sectors. HUL had revenues of Rs13,913.40 crore in 2007, like its parent company, HUL follows a calendar year for declaring results and sells some of the country’s most recognized brands such as Surf Excel detergent powder, Lux soaps, Ponds and Dove skin care products. As part of its effort to streamline distribution, HUL has also started outsourcing most of the sales team to 49
professional staffing firms. Traditionally, bookings from retailers were the responsibility of the distributor’s sales team. Presently, about 2,400 distributors across the country employ 9,000 salesmen to take weekly orders from a million retail outlets. Enlisting Mahindra Logistics led to a system being put in place that has cut seven-day inventory to one day. Orders are logged in the evening by distributors’ staff and delivered by the company the next evening to the distributor. Mahindra Logistics delivers stocks to retailers the next morning. Essentially this frees distributors’ resources that are otherwise tied up in stocking excess inventory and preventing losses due to in-transit damage. Consumers get fresher stock from retailers. Reportedly, the system also ensures that products that suffer on a retailer’s shelves are not supplied, eliminating losses from expired stock. The shift from dependence on the unorganized sector to an external logistics supplier will also decrease loss due to pilferage. The GTM pilot in Mumbai, meanwhile, could make HUL distributors more visible to retailers because sales people are required to now visit retailers regularly instead of waiting for orders to come in.
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PROMOTIONS The personal care products are most advertised product range in print and television media. In India the top advertiser of this category is HUL. These advertisements usually feature women. The reason for this is the fact that in most households women is the main decision maker when it comes to shopping. So the target segment is the women for these advertisements. Some of the most advertised soaps belong to the stable of HUL.. The main mediums are entertainment channels and the movie channels.
Hindustan Unilever is very aggressive in its promotions. For its Lux brand which is one of the largest selling in the segment, HUL has always promoted with celebrities since its early days which has created an image of beauty and beautiful skin among the general people. However the 51
ad once used Shahrukh Khan in one of its commercials which created a wrong impact on the brand and sales went down. This happened because people could not associate a male with a Lux. However the advertisement was changed and the sales picked up again.
Liril through its freshness advertisements have also created a feeling of freshness in the minds of the people .Similarly lifebuoy as a brand for cleaning and safety. Through the fierce spending on advertisements, HUL has captured the minds of the common man so much so that when one thinks of a soap ,one thinks a Lux or a Liril etc.
MAJOR COMPETITORS IN THE SOAP SEGMENT :
1) Godej Consumer Products Ltd : It is the nearest competitor of HUL in the soap segment with a market share of 9.7%. Started in 1897 as a locks manufacturing company, the Godrej Group is today one of the most accomplished and diversified business houses in India. Godrej's success has been driven by the company's commitment to delivering innovation and excellence. Through the consistent application of this commitment and a century of ethical business conduct, Godrej has earned an unparalleled reputation for trust and reliability. In 1930, Godrej became the first company in the world to develop the technology to manufacture soap with vegetable oils; that spirit of innovation has continued throughout the organization's history. Today Godrej is delivering consumers exciting innovations across a spectrum of businesses.
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Godrej Consumer Products Ltd.(GCPL) is a major player in the Indian FMCG market with leadership in personal, hair, household and fabric care segments. The company employs 950 people and has three state-of-the-art manufacturing facilities at Malanpur (M.P.) Guwahati (Assam) and Baddi ( H.P.). They are among the largest marketer of toilet soaps in the country with leading brands such as CINTHOL , FAIRGLOW , GODREJ NO 1 . Their FAIRGLOW brand, India's first Fairness soap, has created marketing history as one of the most successful innovations.
2) ITC – In line with ITC's aspiration to be India's premier FMCG company, recognised for its world-class quality and enduring consumer trust, ITC forayed into the Personal Care business in July 2005. In the short period since its entry, ITC has already launched an array of brands, each of which offers a unique and superior value proposition to discerning consumers. Anchored on extensive consumer research and product development, ITC's personal care portfolio brings world-class products with clearly differentiated benefits to quality-seeking consumers. ITC's Personal Care portfolio under the 'Essenza Di Wills', 'Fiama Di Wills', 'Vivel Di Wills' 'Vivel UltraPro', 'Vivel' and 'Superia' brands has received encouraging consumer response and
is being progressively extended nationally. ITC's state-of-the-art manufacturing facility meets stringent requirements of hygiene and benchmarked manufacturing practices. Contemporary technology and the latest manufacturing 53
processes have combined to produce distinctly superior products which rank high on quality and consumer appeal. Extensive insights gained by ITC through its numerous consumer engagements have provided the platform for its R&D and Product Development teams to develop superior, differentiated products that meet the consumer's stated and innate needs. The product formulations use internationally recognised safe ingredients, subjected to the highest standards of safety and performance.
3)Wipro - Wipro foresaw the need for a Shikakai soap way back in 1986 and Wipro Shikakai soap was launched then in a record time of 4 weeks - from conception to the final product roll out. Today Wipro Shikakai soap is the largest selling Shikakai soap in the country. As per India Today’s survey “soaps” are the largest products used for cleaning of hair with 40% households using soap on hair. Traditionally, naturally occurring Shikakai fruits were used for cleansing hair and are known for their do good properties of promoting hair growth and preventing dandruff. Wipro Shikakai soap combines the market need for a hair soap enriched with the goodness of natural Shikakai. Wipro Shikakai has the goodness of naturally occurring Shikakai in the form of a water soluble extract making it easy to use and wash off. The soap therefore helped solve the problems of using natural Shikakai which is water insoluble and has operational issues in terms of collecting, drying and grinding the pods.
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Santoor is the flagship brand in the Wipro Consumer Care & Lighting stable and the 2nd largest brand of soap in India in the popular segment of the category. The brand enjoys two decades of trust since its launch in 1986 and has grown to be counted amongst the top brands in the Country in an intensively competitive market. Millions of women across the country have discovered the secret of younger looking skin with Santoor. It is a truly unique soap that combines the goodness of natural ingredients - Sandal, Turmeric and natural Skin Softeners. Sandal provides a cooling and soothing effect that softens skin, while turmeric controls formation of skin darkening pigments like melanin, to give skin a radiant glow. Natural Skin Softeners make skin soft and supple. The end result, skin that is so healthy and beautiful, it lies about your actual age! Amongst the first brands in the Country to launch an offering with the twin ingredient benefits of Sandal and Turmeric, Santoor has over the years moved from a purely natural ingredient based appeal, to one of the most preferred beauty soaps of the day. Today, Santoor is one of the fastest growing soap brands in India. Santoor is available in three variants – Santoor (Sandal & Turmeric ), Santoor White (Sandal & Almond milk) and Santoor Chandan which is a premium soap manufactured with extracts of Sandalwood oil – a favourite of discerning consumers
4) DABUR Dabur India Limited has marked its presence with some very significant achievements and today commands a market leadership status. Our story of success is based on dedication to nature, corporate and process hygiene, dynamic leadership and commitment to our partners and 55
stakeholders. The results of our policies and initiatives speak for themselves.
Leading consumer goods company in India with a turnover of Rs.2233.72 Crore (FY07)
2 major strategic business units (SBU) - Consumer Care Division (CCD) and Consumer Health Division (CHD)
3 Subsidiary Group companies - Dabur Foods, Dabur Nepal and Dabur International and 3 step down subsidiaries of Dabur International - Asian Consumer Care in Bangladesh, African Consumer Care in Nigeria and Dabur Egypt.
13 ultra-modern manufacturing units spread around the globe
Products marketed in over 50 countries
Wide and deep market penetration with 47 C&F agents , more than 5000 distributors and over 1.5 million retail outlets all over India
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Chapter 4 DATA PRESENTATION AND ANALYSIS In this chapter, the data has been collected and an analysis has been shown. For the data collection I have used a sample size of 75 people which comprises of 30 housewives, 25 working ladies and 20 college girls.
1. Which soap of HUL do you use? Lux
Liril
Pears
Dove
Hamam
Rexona
Breeze
Lifebuoy
31
19
25
11
36
27
17
42
57
2. What makes you purchase the particular brand of soap?
Easy availability
Advertisements
Schemes and offers
Visibility in the shop
31
19
16
4
58
3. What comes to your mind while purchasing a soap?
Packaging of the soap
Celebrity in the advertisement
Value for money
Free sample used.
37
19
13
6
59
4. What factors do you consider most important while purchasing soaps? Rank these factors from 1-8. Price
Availabilit y
Fragrance
Packaging
Schemes
Natural Ingredients
4
5
3
8
7
2
60
Brand Nourishmen name t to Skin 6
1
5. How do you rate the brand on the following parameters?
Excellent 31
Fragrance Lather Packaging 1 Availability 31 Shape 31 Freshness 31 Price Color 31 Variety 31 Nourishment
Very Good
Good
31 21
9
29
31
61
Fair
2
Poor
62
63
64
65
66
6. Using the soap makes you feel……………….
•
•
Fresh Nourished
•
Clean and satisfied
•
Revitalized
•
Confident
•
Safe
67
7. What all you can recall about your favorite soap advertisement? •
Lux:
The people talked about the celebrity in the advertisements. They were confused
about the variants but knew the celebrities well. •
Liril: People associated it with the waterfall and the lively and happy girl bathing in it, the green soap.
•
Dove:
They remembered the comparison shown in the skin by using Dove and other
soap, the symbol of dove. •
Lifebuoy: People said the germ killing soap, little boy and his mother in the ad, hygienic soap.
•
Pears: They associated the little girl and her mom ,the transparent soap, college girl getting rid of pimples and soap for oily skin.
•
Breeze
: They remember the smell of flowers like roses and jasmine.
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8 . Do you use any other brand. If yes, why? Medicinal qualities
37
Availability of
Usage since
Kids spoke the
variants
childhood.
name often.
11
7
20
9. Would you like to suggest any changes for the soap?
•
Price – Specially for Lux and Dove.
•
Size
•
Offers – As in Dettol and Johnson & Johnson
•
Variants – Should be available in different forms like liquid soap,face wash.
•
Fragrances -Some Natural fragrance like Chandan – Sandal should be introduced.
– Should be 100 gms at least
69
Chapter 5 Conclusion and Recommendations
CONCLUSION CRISIL expects the FMCG sector to touch INR 1, 40,000 crores by 2015 (US$33.4 billion). An increase in disposable income, across rural and urban consumers, has led many rural consumers to shift from traditional unorganized unbranded products to branded FMCG products and urban fraternity to splurge on value added and lifestyle products. This is supported by improving reach to remote markets, organized retailing and favorable Indian economy & demographics. The transformation of Hindustan Lever limited to a HUL(Hindustan Unilever Ltd), has helped to successfully face this trend. It has started doing so by substantially strengthening their brands and building capabilities. The have worked on the 4p’s ie product, price ,place and promotion. This has already begun to yield benefits and they are returning to growth. Volume growth is being followed by value growth, which in turn is bringing profit growth. India is one of the most exciting markets offering great potential. Over the next 10 years, the per capita income in India is likely to double. In FMCG, there is an opportunity to catalyze penetration, increase usage, and upgrade consumers. As a result, the FMCG market is expected to grow to over Rs.100,000 crores from its current base of Rs.40,000 crores. The new Hindustan Unilever sees an exciting opportunity for growth. Today, these are stronger and more relevant to the consumer than ever. The people are energized by the scale of the opportunity and determined to seize it. The scale of the business and operations gives them the resources needed. They are the leaders in the toilet soap segment with a market share of 52% which is much higher to their nearest rival Godrej which has a market share of 9.2%. Hindustan Unilever Ltd (HUL) depends heavily on advertising its brands and continued product innovation to maintain and expand their market position.They always makes fresh game plan which includes product innovation and high-voltage ad campaigns Their spending in the advertisements is huge. The company, which spent Rs1,273 crore on advertising and promotion in fiscal 2006-07, and around 60% of this on TV, believes such shows will help its brands 70
connect better with customers. They have recently introduced actor Priyanka Chopra as the new face of Lux and HUL’s new launches include, Lux Crystal Shine, Lifebuoy Skingaurd and Breeze Morning Muskan.
Innovation seems to be the main theme of the Indian soap opera .The company’s core focus is on introducing innovative meaningful products at the right price. The effective distribution channels which are followed up by innovation will definitely make the company grow to new heights. For example the programmes like Shakti, i-shakti , GTM started by the company in Mumbai has shown positive results. They always concentrate on different Culture, lifestyles, tastes, preferences budgets & economic development of the country. This strategy helped Unilever to be the number one soap brand. The segmentation, positioning and targeting for various soap brands of the company has been done so perfectly that it has catered to the masses a different image for each brand of soap. In each home there is a soap, from the basket of Hindustan Unilever. HUL also attempt to gain credibility in local markets and thereby build tacit endorsement for their products through the sponsorship of activities, conferences and campaigns, undertaken by local professional bodies, funding and disaster relief funds, donations, e tc. They are delivering good services and the changes they brought in the products are well taken by the customers, by this they are generating sustainable profitable growth.
71
RECOMMENDATIONS
•
The company should focus more on the pricing of the soaps as people are price sensitive in purchasing their necessities to a certain extent .
•
The company should also come out with 100gms packs for every soap .
•
It should also try out offers such as a small pack of pears face wash free with a purchase of three pieces of pears soap.
•
Hamam being a neem soap can be promoted as a medicinal soap .The company should tie up with various chemist soaps for its sales by giving them certain offers.
•
The company should also work on the visibility in the departmental stores and other retail outlets by taking a larger space in the shelves. The company should also make some arrangement for highlighting the fresh arrival of the soaps.
•
Availability being the most important factor while purchasing a soap, the company should also focus more on the distribution channels. It should also make its products available at the small pan shops in the localities.
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BIBLIOGRAPHY Magazines •
Business Today
•
Investors India
•
Business World
•
Economic Times
•
Business Standard
WEBSITES •
www.hll.com
•
www.fmcg.com
•
www.economictimes.com
•
www.marketwatch.com
•
www.hll.com
•
www.hllshakti.com
73
APPENDICES QUESTIONNAIRE 1.
Which soap of HUL do you use? Lux
2.
3.
4.
Liril
Pears
Dove
Hamam
Rexona
Breeze
Lifebuoy
What makes you purchase the particular brand of soap? o
Easy availability
o
Advertisements
o
Schemes and offers
o
Visibility in the shop
What comes to your mind while purchasing a soap ? o
Packaging of the soap
o
Celebrity in the advertisement
o
Value for money
o
Free sample used.
What factors do you consider most important while purchasing soaps? Rank these factors from 1-8. •
Price
•
Availability
•
Fragrance
•
Packaging
•
Schemes
•
•
Natural Ingredients Brand name 74
