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MARKETING PLANNINGAND STRATEGY MARKETING AND SRATEGY OF HULDETERGENTS

11/25/2011

Presented to: Presented By:

Ms. Shruti Gupta Naman Agrawal

Neelam Joshi

Nikhil Mishra

Nitika Gupta

Nirjhar Agrawal

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HINDUSTAN UNILEVER India's largest Fast Moving Consumer Goods company with 100 factories across India. In 1931,first Indian subsidiary, Hindustan Vanaspati Manufacturing Company, followed by Lever Brothers

India Limited (1933) and United Traders Limited (1935). HUL formed in November 1956; TheAnglo-Dutch company Unilever owns a majority stake in Hindustan Unilever Limited. one of thecountry's largest exporters and recognised as a Golden Super Star Trading House.

HUL works to create a better future every day and helps people feel good, look good and get moreout of life with brands and services that are good for them and good for others.

With over 35 brands spanning 20 distinct categories such as soaps, detergents, shampoos, skincare, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water

purifiers, the Company is a part of the everyday life of millions of consumers across India. Its portfolio includes leading household brands such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair &

Lovely, Ponds, Vaseline, Lakm, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, BrookeBond, Bru, Knorr, Kissan, Kwality Walls and Pureit.

The Company has over 16,000 employees and has an annual turnover of around Rs.19, 401 crores(financial year 2010 - 2011). HUL is a subsidiary of Unilever, one of the worlds leading suppliersof fast moving consumer goods with strong local roots in more than 100 countries across the globewith annual sales of about 44 billion in 2011. Unilever has about 52% shareholding in HUL.

EXECUTIVE SUMMARY

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VISION

PRODUCT LINES AND PRODUCT MIX

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PRODUCT SEGMENTATION OF HUL

BUSINESS MODEL OF HUL:

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PESTEL Analysis

Political/Legal:

Indian governments policies of lifting of the quantitative restrictions,

reduction in excise duties and

automatic foreign investment has

fostered HULs growth.

Removal of the regulatory framework

has allowed HUL to explore every

product and segment, without

constraints on production capacity.

Center for Monitoring Indian

Economy (2010).

http://www.cmie.com/ [Accessed

12/05/2010]

Economic:

Detergents segment of HUL has about 36%market share in that segment (FY 08-09). This

segment accounts for at least 40% of the total

revenue. HULs market share in detergents

segment has declined in the last two years, due to

heavy competition.

An increase is spending pattern has been

witnessed in Indian FMCG market especially in

the detergent market.

Center for Monitoring Indian Economy (2010).

http://www.cmie.com/ [Accessed 12/05/2010]

Financial Times (2010) http://www.ft.com/

[Accessed on 13/05/2010]

http://www.ft.com/http://www.ft.com/

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Ecological/Physical environment:

HUL has contributed significantly in

saving water through technology.

Educating people on Rain water harvesting, soil conservation and

reduction of greenhouse gases.

A carbon reduction supply-chain

project has enabled (HUL) to be

awarded carbon credits.

(Refer Appendix C for information

on Corporate social responsibilities)

Annual report 2008-09 HUL.

http://www.hul.co.in/ [Accessed

13/05/2010]

Social/Cultural:

The size of the detergent market in India is

estimated to at Rs.12, 000 Crores. Detergent

segment is characterized by high degree of competition and high level of penetration. With

rapid urbanization in India, emergence of small

pack size and sachets, the demand for the

detergents is flourishing. With the use of hard

water for washing and scarcity of water it is

imperative that HUL produces products that suit

the water type in India.

Technological:HUL has research centers in Bangalore and Mumbai which has more than 200 scientists and

technologists. Addressing the washing needs of consumers is a key challenge for the laundry

Research group. How to minimize water usage while washing? How to impart stain repellent

treatment to garments? These are the questions which have been answered by HUL R&D team.

SWOT ANALYIS

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Strength:

Strong brand portfolio, price , quantity & variety.

Innovative aspects.

Presence of established distribution networks in both rural and urban areas like 3400distributers.

Strong R&D of the company.

Highly skilled human resource.

Corporate Social Responsibility (CSR )

Weakness:

Strong Competitors.

High advertising cost.

Changing consumption pattern.

Low exports level.

49% of HUVR's sales come from detergent and personal wash.

BSG MATRIX OF HUL:

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STAR

Hair care & Skin Care

Premiums Soap & Deos

Laundry

Water Pure It

QUESTION MARK

Processed foods

Color cosmetics

COW

Mass soap

Beverages

Oral care

Laundry

DOG

Sea food export

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MICRO ENVIORNMENT

Microenvironment as according to (Jobber, 2010) consists of factors in the firms immediate

environment which affects its capabilities to operate effectively.

The useful framework that is utilized when undertaking this analysis is Porters Five forces

model. This analysis is carried out at the level of Detergent SBU of HUL.

Suppliers:

HUL has a very strong supplier base. Supplier power is considerable in case of detergent segment

of HUL as there is a lot of costing involved when switching suppliers. As HUL provides a large

amount of its business to the suppliers, these suppliers are beholden to HUL. As said earlier, the

supply power is limited.

Potential Entrants:

Given the capital investment required to enter the detergent market in India, with the pricing of the

products being very low, threat of potential entrants is low. With a lot of local brands in the market

and names like Nirma, P&G, the detergent market has become extremely competitive and

crowded. For the new entrant to position its products on the shelves of retailers alongside Surf

Excel, Rin, Henko and Rin would be a real challenge.

Buyers:

Buying power of retailers of HUL when it comes to detergent market is very high as they are able

to negotiate on price. Buying power of consumers is low as the consumers are fragmented and they

do not have a great influence on the price as well as the product. Buyer loyalty is considerably less

when it comes to Mass market detergents, as the consumers of that segment are price sensitive.Consumers in the premium and mid priced segment are very loyal to the brand.

Substitutes:

There is a strong threat from substitutes from the local market especially in the rural market. Even

though within the detergent market, brand succeeds in building up a competitive market the threats

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from substitutes are high such that the pricing power of HUL brands are eroded. Government

regulations for local brands are very conducive to set up the business in India.

For e.g. Local detergent brands like Ghari, RMC, etc.

Competitive Rivalry:

Consumers of detergents have enormous amount of choices. The brand loyalty in detergent

segment is very poor. Price wars among competitors of HUL like P&G, Nirma is fierce . The

competitive rivalry in the detergent segment is very high. Price wars are regular affairs which is

beneficial from a customer perspective. Due to this the companies are forced to bring down their

operational costs to survive in this hostile atmosphere.

Indian Detergent Market

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STRATEGIC ISSUES ANALYSIS

HULs current marketing objective is to improve the market share, which has gone down in the

last two years through high marketing spend and bringing down the packaging cost of detergents.

Marketing segmentation

Marketing segmentation as stated by (Ferrell, O.C and Hartline, D. 2007) is the process of dividing

the total market for a particular product or product category into relatively homogenous segments.

In the discussion that follows, we look more closely at segmentation in detergent markets byexamining the different factors that can be used to divide the market. As table 4.1 illustrates, thesefactors fall into one of these categories: Behavioral segmentation, Demographic segmentation,Psychographic segmentation and Geographic segmentation.

Common segmentation variables used in Consumer markets.

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Category Variables Examples

Behavioral segmentation

Benefits sought Quality, Value, Convenience,

Product usageHeavy , Medium and Light,

Non usersOccasions /Situations Daily use

Price sensitivePrice sensitive, Valueconscious, Status conscious

Demographicsegmentation

Age 18-60Gender Male/Female

IncomeLow income, Mid income,High income

Occupation

White collared, technical,

Professional, Managers,Laborers, Homemakers,Retired, Unemployed

EducationHigh school, College graduate,Graduate

Social classUpper class, Middle class,Lower class, Poverty level

GenerationGeneration Y,X Baby

boomers, Laggards

Psychographicsegmentation

Personality

Outgoing, Shy, Materialistic,Anxious, Civic minded,Venturesome

LifestyleOutdoor Enthusiast, Homely,Workaholic, Family centered

Motives Cleaning

Geographic segmentationRegional North, South, East, WestPopulation Urban, Sub urban ,Rural

Competitive Advantage:

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HULs Competitive advantage lies in its strong and efficient distribution network. Its culture tocontinuously innovate for product betterment keeps them ahead of competition. Their high marketsspend that enables their products gets a greater reach. HUL operates at zero working capital. The

key is constant efforts to reduce capital investments by outsourcing manufacturing, streamliningsupply chains and paying close attention to distributors performance*. Developing new channelslike Rural marketing (for eg. Shakthi Ammas) and direct selling. Most importantly their productsare low priced and good value for money and strong commitment towards improving thecommunity.

Core competencies

HUL has a wide range of quality products designed to meet the needs of the consumers. It has

country wide reputation and presence. All their detergents are conservatively priced. They have an

innovative style and low cost packaging. HUL has an excellent distribution network which enables

greater reach. Their main focus is on providing value to customers through continuous product

innovation and to be known as socially responsible company. HUL has a very good brand name in

the market which they have used to their advantage to maintain their market share.

Product life cycle of HUL

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HUL detergents are in between the growth and maturity stage. The marketing mix elements have

been planned keeping the product life cycle in mind. Detergent features should be such that it is

differentiated from the rest of the competition. Pricing should be lower because of intense

competition. The distribution channels needs to be very effective with investment on IT, so as to

increase the efficiency. Promotions are aimed at a larger target audience with focus on product

differentiation. With right promotions in the right place, HUL can reap the benefits

Ansoff Matrix

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PRODUCTS

M A R K E T S

Existing New

E x i s t i n g

Market Penetration New Product DevelopmentQuality products for Washing

machines

Design detergents specially for woollen clothes

Reduction in Prices Design detergents specially for color clothingCustomer focus Develop an Insta-whitening system

N e w

Market Development DiversificationDevelop a market in Liquid

detergent segment

Diversify the products into liquid detergent

segmentConduct demonstrations to

observe the needs of Customer and

educate them on the products

Segmentation of detergents offered by HUL

Premium Mid-Priced Mass Market

Surf Automatic-Front Load Surf Excel Blue Wheel Regular

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Surf Automatic- Top Load Surf Excel Quick Wash Rin Advance

Products are designed keeping in mind the nature of water in India and the scarcity of it. New

technology wherein less water is consumed while washing clothes makes HUL products fare better. Detergents have micro granules which can penetrate into the fabric easily and remove the

dirt and stains easily. They are available in small sachets also. Currently a lot of promotions are

splashed in the media to educate the audience about the products.

Place

HUL products are made easily available through the efficient distribution system. The detergentsare available in the Local grocery stores, Super markets and there is a door to door sale.

Pricing

Detergent Brands 500 gm 1 kg 2 kgSurf Excel Quick wash 70 130 260

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Surf ExcelAutomatic 82 164 320 Rin Advanced 28 55 125

Wheel Regular 20 38 72 Tide Naturals 35 70 135 Nirma 45 87 165 Henko 48 90 169 Ariel 78 152 300

Various channels through which HUL promotes its detergents

Print Media- HUL advertises in leadingdailies like Times of India and Indian expresswhich has a wide reach.

Television- Advertisements of Detergentsare aired in prime time to get theattention of women.

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Demo campaigns- Demo campaigns are doneregularly with sales people going to householdand give a demo to the consumers so that theconsumers can have a firsthand experience andthey believe what they see.

Hoardings- Hoarding advertisements aredone usually during a new productlaunch or a reduction in price. For e.g.when the prices of Surf excel was cut by5%, huge hoardings were put in

prominent places across all cities.Live shows- TV shows like Wheel Shrimatiwhich is aired in prime time on Nationalchannel, the target audience being women waswell received.

Radio- Radio Jingles are aired which promote detergents.

Internet-Online promotions are conductedregularly on respective detergents websites.

Rural Marketing- Rural campaigns suchas Shakthi Amma have enabled HULto get such deep penetration into the ruralmarket.

SWOT analysis

Strengths

Presence of established distributionnetworks in both urban and rural

Weakness

Focus on building a power brand so priced higher than others and

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areas

Attractive packaging and availablein small quantities

High brand value

High spend on product innovation

neglecting other brands

Gave unwanted publicity to Tide inthe ad war between Rin and Tide

Sticking to old strategies for longtime

Opportunities

Large Consumer base

Forecast of Detergent market togrow in India

Per capita consumption is High

High consumer goods spending

Threats

Emergence of Rural brands whichare cheaper

Imitation or Me-Too versions of detergents

Price reduction by competitors

Strategic objectives for HUL detergent division

Build

Invest of new product development like

Liquid detergentsInvest on product innovation

Hold

Selective investment on new methods of

packaging

Harvest

HUL has traditionally followed theHarvest method, wherein more emphasiswas on maximizing profit margins, salesand market share was allowed to fall

Divest

Non performing brands such as Breeze isdropped from the Indian market

Problematic Areas in Research

HUL is such a big brand that it is one of the most discussed companies in Management

studies, so when I started researching about HUL, i was a little skeptical about choosing HUL. But

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later I realized I could contribute a new perspective to the HUL marketing plan. Although the

response to the survey was encouraging, it took constant follow ups with the respondents.

Compiling the responses was very time consuming and a tedious process. The reason that I started

early on the project helped me, as i never faced a time crunch. Since HUL is a listed company in

India and is one of the most discussed company, huge chunks of data was available on the internet

like the annual reports, newspaper articles, Case studies. To go through them, understand the write

ups and precisely use the information in the report was a very challenging task.

What went right?

As stated earlier since HUL is a listed company in India getting relevant data like Annual

reports very relatively easier, compiling these data and arriving at PESTL analysis was easier. By

speaking to few friends who work for HUL in different departments and understanding the work culture, marketing initiatives was very useful experience and this has helped me to present certain

facsssts with more depth. Based on the product life cycle and the macro and micro environments

the marketing mix decisions and SWOT has been derived.

Role of Marketer

Being in a Sales and marketing position for over two years has helped me visualize the

plan with relative ease. Since marketing is the most important aspect of business as it has a direct

impact on the companys profitability and sales, role of the marketer is very challenging. It

requires constant interaction with customers as well people within the organization. Collecting the

information from the customers and compiling the data in a way most suitable for the people

concerned in the organization for e.g. R&D department is a vital function of a marketer.

One of the things which have changed over the years is the perception of people that a

company is not just a seller of products but also have responsibility to be more socially

responsible. Being socially responsible means an organization shows concern for the people andenvironment in which it transacts business. It also means that these values are communicated and

enforced by everyone in the organization. In addition to insuring these values exist within the

organization and its business partners, social responsibility may also manifest itself in the support

of social causes that help society. For instance, marketers may sponsor charity events or produce

cause-related advertising.

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Marketers who are pursuing a socially responsible agenda should bear in mind that such

efforts do not automatically translate into increased revenue or even an improved public image.

However, organizations that consistently exhibit socially responsible tendencies may eventually

gain a strong reputation that could pay dividends in the form of increased customer loyalty.