Hul Final Report

8/3/2019 Hul Final Report

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A BRIEF STUDY OF

FMCG SECTOR AND COMEPITION IN FMCG SECTOR

SUBMITTED TO:

Dr. S.K.Pandey

Submitted by : Group 2

ABHILASHA RAMPAL (201004)

ANUBHAV S. GUJRAL (201020)

ARJUN CHHIKARA (201023)

BALDEEP KAUR (201029)

FALAK PURI (201039)

HARSHITA SATIJA (201050)


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Executive summary

The Indian FMCG sector is the fourth largest sector in the economy with a total

market size in excess of US$ 13.1 billion.

It has a strong MNC presence and is characterized by a well-established

distribution network, intense competition between the organized and

unorganized segments and low operational cost. Availability of key raw

materials, cheaper labour costs and presence across the entire value chain

gives India a competitive advantage.

The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4

billion in 2015.Penetration level as well as per capita consumption in most

product categories like jams, toothpaste, skin care, hair wash etc. BurgeoningIndian population, particularly the middle class and the rural segments,

presents an opportunity to makers of branded products to convert consumers

to branded products. Growth is also likely to come from consumer 'upgrading'

in the matured product categories. With 200 million people expected to shift

to processed and packaged food by 2012, India needs around US$ 28 billion of

investment in the food-processing industry.


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CHAPTER 1: INTRODUCTION

Fast moving consumer goods (FMCG) or Consumer Packaged Goods (CPG) are

products that are sold quickly and at relatively low cost. Examples include non-

durable goods such as soft drinks, toiletries, and grocery items. Though theabsolute profit made on FMCG products is relatively small, they generally sell

in large quantities, so the cumulative profit on such products can be

substantial.

FMCG products have quick shelf turnover, are relatively low cost and do not

require a lot of thought, time and financial investment to purchase and are

low involvement products. The following are the main characteristics of

FMCGs:

From the consumers' perspective: Frequent purchase Low involvement (little or no effort to choose the item - products with

strong brand loyalty are exceptions to this rule)

Low priceFrom the marketers' angle:

High volumes Low contribution margins Extensive distribution networks High stock turnover

FMCG Industry mainly deals with production, distribution & marketing of

packaged goods to all consumers. FMCG market size and growth of various

product categories are shown below:
http://en.wikipedia.org/wiki/Low_costhttp://en.wikipedia.org/wiki/Soft_drinkhttp://en.wikipedia.org/wiki/Toiletrieshttp://en.wikipedia.org/wiki/Contribution_marginhttp://en.wikipedia.org/wiki/Distribution_(business)http://en.wikipedia.org/wiki/Stock_turnoverhttp://en.wikipedia.org/wiki/Stock_turnoverhttp://en.wikipedia.org/wiki/Distribution_(business)http://en.wikipedia.org/wiki/Contribution_marginhttp://en.wikipedia.org/wiki/Toiletrieshttp://en.wikipedia.org/wiki/Soft_drinkhttp://en.wikipedia.org/wiki/Low_cost


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FMCG INDUSTRY IN INDIA

Present Scenario:FMCG industry is the fourth largest sector in the economy having a size of

US$13.1 billion. It has a strong MNC Presence and a well established

distribution network. In this sector, there is huge competition between the

organized and the unorganized sector. Moreover, a low cost of labour and easy

availability of key raw materials is vital to this sector for achieving success.

Following graph shows sales growth (in %) of FMCG industry:

Future Scenario:

The FMCG sector is set to reach a size US$ 33.4 billion in 2015. Penetration

levels in several products categories is low, hence providing futureopportunities to explore the untapped market potential.


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India is one of the largest economies in terms of purchasing power with a

middle class of 300mn with rural India providing a huge market which is still to

be tapped. Moreover large part of Indias population still resides in urban areas

which offers great opportunity for FMCG companies to grow and to increase

their market share.

Urban Rural

Population 2001-02 (mn) 53 135

Population 2009 -10 (mn) 69 153

% Distribution 28 72

Markets (Towns/ Villages) 3768 627000

Below graph shows sustainable growth rate (of approx 8%) of FMCG sector and

growth of GDP and per capita income over years in India:

From the above graph it can be seen that growth trend line has significant

upward bias and India embarking on a accelerating growth rate. Per capita

income of India has also doubled in 4 years.

Key Players of FMCG Industry in India

According to the market survey done by BUSINESS TODAY the top 10

companies of FMCG sector are given below.

1. Hindustan Unilever Ltd.

2. ITC

3. Nestl India

4. GCMMF (AMUL)


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5. Dabur India

6. Asian Paints (India)

7. Cadbury India

8. Britannia Industries9. Procter & Gamble

10. Marico Industries

MARKET SHARE OF FMCG COMPANIES IN INDIA


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Rivalry among Competing Firms

In the FMCG Industry, rivalry among competitors is very fierce. There are

scarce customers because the industry is highly saturated and the companies

try to snatch competitors share of market. For this purpose market players

use all sorts of tactics and activities from intensive advertisement campaigns to

promotional stuff and price wars etc. Hence the intensity of rivalry is very high.


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Potential Entry of New Competitors:

FMCG Industry does not have any measures or methods which can control the

entry of new firms. The resistance into this industry is very low and the

structure of the industry is so complex that new firms can easily enter and also

offer tough competition due to cost effectiveness. Hence potential entry of

new firms is highly viable.

Potential Development of Substitute Products:

There are complex and never ending consumer needs and no firm can satisfy

all sorts of needs alone. There are plenty of substitute goods available in the

market that can be re-placed if consumers are not satisfied with one. The wide

range of choices and needs give a sufficient room for new product

development that can replace existing goods. This leads to higher consumers

expectation.

Bargaining Power of Suppliers:

The bargaining power of suppliers of raw materials and intermediate goods is

not very high. There is ample number of substitute suppliers available and the

raw materials are also readily available and most of the raw materials are

homogeneous which makes suppliers bargaining power low. There is no

monopoly situation on the supplier side because the suppliers are also

competing among themselves.

Bargaining Power of Consumers:

Bargaining power of consumers is very high because in FMCG industry the

switching costs of most of the goods is very low and there is no threat of

buying one product over other. Customers are never reluctant to buy or try

new things off the shelf.

1.1Relevance of StudySince FMCG industry is one of the biggest sector in INDIA, there are many

big players trying their best attract customer base and to constantly

increase their market share. This study is going to look at a few big FMCG

players and analyse the strategy they have been using and how far have

these strategies been successful.


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1.2Literature ReviewThere has been lots of published data available that deals with a particular

companys growth rate and market share. However, there is not much data

available that can be used to compare and contrast to FMCG companiesfrom each other.

1.3Purpose of StudyBased on the literature review, our group decided to look at the domestic

FMCG sector as a whole and analyse their product range and market share.

We also tries to analyse Indian Customer base and the factors that lead to

the growth of the FMCG sector

1.4Objective of StudyObjective of the study include the following:

To get a brief about the major FMCG Player in India Analyse the Indian Customer Base Factors that lead to the growth of the Domestic FMCG Sector Rivalries among the major players Analyse the brand awareness, and Preference

1.5Brief Outline of ChapterChapter 1: Introduction. This chapter Introduces that FMCG sector and its

growth pattern over the years.

Chapter 2: Methodology. This chapter deals with the research methodology

adopted. It clearly defines the universe, locale and sample size of the study.

This chapter also comprises of the techniques used while data collection,

analysis and report writing.

Chapter 3: INDIA AS A CUSTOMER BASE. This chapter analyses the Indian

Customer Base and try and recognise the factors that have led to the

growth of the FMCG sector. It also includes few major domestic FMCG

companies.


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Chapter 4: Deals with the in-depth analysis of the Indian Market Leader in

FMCG Sector, HUL.

Chapter 5: Rivalry among FMCG Companies. This chapter showcases the

rivalry among the major companies and steps taken by them to counter thecompetitors strategy.

Chapter 6:Strategic growth summary of HUL. This chapter summarises the

strategic factors that led to HULs growth as the market leader.

Chapter 7: Conclusion. This chapter concludes the report. We have tried to

highlight certain recommendation that HUL could use to counter the

competitors strategies, in this chapter.

CHAPTER 2: Methodology

In this project we have followed descriptive method of study.

Research instrument

Here project analysis is made by collecting secondary data from different

websites, journals, etc. Secondary datas are pre published and research

datas collected from different websites, journals, newspapers, company

research papers.

These documents and data are very useful for the theoretical, conceptual

and organizational background analysis. Detailed analysis of datas is made

by plotting different graphs and tables which can be easily understandable.

Then by observing these graphs we have made our conclusions and

recommendations.


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CHAPTER 3: INDIA AS A CUSTOMER BASE


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Above graph shows per capita income of INDIANS through out Yr2000-2008. As

over the years per capita income increases, the buying power of consumers

also increases which led to the consumers buying more FMCG products. This

has created and will create opportunities for FMCG companies.

Above graphs shows increased per capita disposable income from Yr2002-2007

It can be observed that the Indian middle class is prospering with around 70

million households earning anywhere between Rs80,000 and Rs18 lakh per

0

200

400

600

800

1000

1200

2000 2001 2002 2003 2004 2005 2006 2007 2008

Percapita income(Rs)

Percapita income(Rs)

424

461

494 505

551

599

0

100

200

300

400

500

600

700

2002 2003 2004 2005 2006 2007Percapita disposible income


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annum. These comprise 34 per cent of the slightly over 200 million middle

class households. The behavior of the consumer is also changing as the Indian

consumer is no longer price obsessed. This can be substantiated from the

increased percentage of disposable income as part of the total income. Indian

consumer goods market is expected to reach $400billion by 2010 .Higher

disposable incomes insinuates to the fact that there is money left over for dailyproducts even after spending on durables.

FMCG Tricks

Main reasons for the revival in the FMCG space is that the wallet share of the

consumer which was being diverted to inspirational products is now coming

back to FMCG products. Indian consumer now indulge in spending sprees even

when shopping for daily use products because of the variety and convenience

being offered these days.

A brief introduction about major FMCG companies and their investments in

India :

1. Dabur India Limited (Dabur) Dabur has entered into the malted food drink market with the launch of a

new health drink Dabur Chyawan Junior. The company expected to capture

a market share of 10 per cent of the Rs. 1,900 crores in malted food drinkmarket over the next two years.

Dabur has acquired 72.15 per cent of Fem Care Pharma Ltd (FCPL), a leading

player in the womens skin care products market, for Rs 203.7 Crores in an all-

cash deal. The Company is expected to create synergy by this deal.

Dabur got approval from Government of Himachal Pradesh to set up another

medicine manufacturing unit. The project has an expected investment of Rs.

130 Crores.

2. Colgate-Palmolive (India) LimitedColgate Palmolive (India) Ltd, which is currently holding 75 per cent of the

share capital of SS Oral Hygiene Products Private Ltd, Hyderabad, has acquired

the remaining 25 per cent share capital from the local shareholders at an

aggregate price of Rs 77.70 lakh. Consequently, SS Oral Hygiene Products has

become a wholly owned subsidiary of the company.

3.

Nestle India Limited


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Nestle is planning to invest Rs 6 billion in India in 2009 for expansion of its

business in the country. The company has allotted an investment of Rs 3 billion

in the Indian market in 2008, doubles the investment in 2009 as part of its

business strategy. Nestle International is reinvesting and expanding in India

and Nestle India will have all the financial resources to expand and grow from

the parent company. Nestle India reported a good increase in its standalone net profit for the

second quarter. During the quarter, the profit of the company rose 26.54% to

Rs 1,210.90 million from Rs 956.90 million in the same quarter, last year. The

company posted earnings of Rs 12.56 a share during the quarter, registering

26.61% growth over prior year period. Net sales for the quarter rose 23.45% to

Rs 10,356.30 million, while total income for the quarter rose 23.78% to Rs

10,423.40 million, when compared with the prior year period.

4. HINDUSTAN UNILEVERHindustan Unilever ltd. Is a leading FMCG company in India and from last three

consecutive years has shown accelerated growth in FMCG portfolio. Customers

in India are also spending more in FMCG as their standard of living is growing.

HUL has placed itself successfully in the position of market leader in FMCG

products. Though there was some downfall in sales and profit of the company

in the beginning of this decade but after that HUL has shown considerable rise

in both sales and profit. The future of the company is also looking bright as

FMCG market in India is still expanding and so we can safely conclude that HULwill be able to secure its number one position in FMCG product.

HUL has also started project SHAKTI that has provided it direct reach to rural

market. This may be considered a revolutionary step since the urban market is

reaching its saturation level and there is a huge scope exploring rural market.

This will also be helpful not only increasing its market share but also fight

competition.

Market share trends


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Sales growth trends:

FMCG Sales Growth Trends


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Total sales growth came in at 14% -highest in last eight months. Volume-

growth acceleration across most categories is the trigger for this sharp pick-

up in growth. This is against the run of play, given food inflation is still high

and it is too early for the normal monsoon outlook to make an impact. We

would wait and watch how the trend moves over next couple of months.We maintain our view of a strong recovery in growth in 2HCY10, led by

price hikes, higher volume growth as food inflation subsides and a normal

monsoon supporting rural growth.

Company Sales Growth Trend

Sales growth (%) in April 2010 Most

companies show a healthy rebound

Godrej 20.4

P&G 18.4

Nestle 14.0

Colgate 12.9

Dabur 7.6

Tata Tea

6.8HUL 3.8

Marico 3.2


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Shampoos Market Share Trend

HUL gained 50bps maintaining a largely positive trend of last one year. P&G

lost 40bp and Dabur lost 20bps in April. HUL (170bps) has gained market

shares since April09 with Dabur losing 70bp and P&G losing 150bp.

Toothpaste Market Share Trend

Colgate continued its volatile movement of market shares with a 20bp gain

in April. During this run of Market share gains, it has managed a 140bps

Market share rise since April09. Dabur gained 10bp and its last 12month

gains are an impressive 90bps. HUL reversed its gains of Mar with a 40bpsdecline in April. Its longer-term performance has been disappointing with


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220bps decline since April09. Lack of mass end brand continues to hurt

HUL in a category that is showing signs of down trading.

Chapter 4: HULSince HUL is the market leader in FMCG sector, so it is relevant to study HUL

along with its major competitors

Facts about HUL:

HULs products touches two out of three Indian everydayReach 80% HouseholdsDirect Coverage of 1mln outlets2000 Suppliers and Associates71 Manufacturing locations15000 Employees1100 managersShelf availability 84% outlets in India

Product Line


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A) HOME AND PERSONAL CARE:

1) Personal wash

Lux Breeze

Lifebuoy Dove

Liril PearsHamam Rexona

2) Laundry 3) Skin Care

Surf Excel Fair and lovely

Rin Ponds

Wheel Aviance

4) Hair care 5) Oral care

Sunsilk naturals Pepsodent

Clinic Close up

6) Deodorants 7)Colour Cosmetics

Axe Lakme

Rexona

8)Ayurvedic Personal and health care:Ayush

B) FOODS

1) Tea 2) Coffee 3) Foods 4) Ice cream

Brooke Bond Brooke Bond Bru Kissan Kwality walls

Lipton Knor

Annapurna

C) WATER PURIFIER

Pureit


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Segment Sub-Segment Brand Comment

Household Care

Fabric Wash

Market Share: 38%

Surf

Patented Technology, Premium

Segment

Rin Largest Selling detergent bar

Sunlight

Unilevers oldest, first brand WB,

Kerala

Wheel Largest Selling Indian detergent

Dish Wash

Market Share: 58% Vim

First & largest selling dish washer

bar

Surface Cleaning Domex

Personal Wash

Market Share: 52%

Lifebuoy Worlds largest selling Soap

Lux Global brand

Dove

Global Brand: Premium, Skin

friendly

Pears Premium Segment

Breeze Basic Segment

Liril

Focuses on young female

population

Hamam South Indian Regional Brand TN

Personal Products

Hair care

Market Share: 47%

Clinic Shampoo

Indias largest selling shampoo

(D,ND)

Dove

Global Brand: Premium, Hair

friendly

Sunsilk Largest beauty shampoo brand

Ayush Herbal - Doing well in South India

Skincare

Market Share: 52%

Ponds Global brand, First mover (1947)

Fair & Lovely

Patented Formulation, Asian

brand

Lakme Skin Care

Bought from Tatas, Salon

Business


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Vaseline

Global brand, Monopoly in Indian

Petro-Jelly

Aviance

Customized Personal care

Solutions


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Segment Sub-Segment Brand Comment

Personal

Products

Toothpaste

Market

Share: 30%

Close-up, Pepsodent

Indias first Gel,

Youth brand

Second largest

selling

toothpaste

Toothbrush

Deodorants

Market

Share: 32% Axe, Rexona

Clear leader in

deodorant

segment

Colour

Cosmetics Lakme

Natural

Colorants

Infant Care Huggies

Feminine

Care Kortex

Late entrant -

Smaller Player

Food &

Beverages

Processed

Foods

Kissan

Jam Squeeze,

Ketchup

Knorr

Soups & Ready

to Cook

Annapurna Salt, Flour

Beverages

Tea

Market Share: 23%

3 Roses

Mindsharp, Taj,

Brooke Bond,

Lipton -

Coffee

Market Share: 45% Bru

Ice Cream &

Bakery

Products Gelato, Quality Walls

Brain Food Amaze

Demographic

advantage of

India


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SWOT ANALYSIS

STRENGTH

Variety of products Distribution Network Brand image Quality Management Innovation and R&D strength

WEAKNESS

Not able to compete with local competitor in the rural market Not focus on upper class population Pricing policy is not good

OPPORTUNITIES

Huge Market Increasing per capital income Increasing consumption pattern

Pure-it

Creating new

markets

Beauty and

Wellness

Lakme Beauty Salons

Moving from

products to

Services inPremium

segments

Ayush Therapy

Centres

Moving from

products to

Services in

Premium

segments


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Potential for making more impact of brand image. Coming in technology e.g. in water purifiers

THREATS

From High Class Competitor Proctor & Gamble Pantene Dabur Babool Dabourlal Dent Manjan Reckitt Benckiser Dettol Palmolive Colgate, Nirma


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HULS DATA : THE COMPARATIVE DATA OF % MARKET SHARE OF HUL AND

ITS COMPETITOR INQUARTER ENDED JUN08

Below data relating to HULs growth, penetration provides a clear

understanding of the nuances of the companys presence in the FMCG sector.

The comparative data of %market share of HUL and its competitors gives an

idea to position HUL as the market leader in almost all the segments in India.

Above graph shows percentage Market share of HUL and its competitor in

different categories of FMCG products.

0

10

20

30

40

50

60

70

80

HUL(MARKET SHARE %)

COMPETITOR (MARKET SHARE

%)


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CHAPTER 5: RIVALRY AMONG FMCG COMPANIES

COMPETITION IN THE FMCG MARKET

Five main competitive strategies are:

Overall low cost leadership strategy

Best cost provider's strategy

Broad differentiation strategy

Focused low cost strategy

Focused differentiation strategy

Here competitive strategy varies from sector to sector and company tocompany. Thus, it is not easy to predict a single or to find a single strategy for

the whole sector. When we come on to FMCG Sector main strategies lay

behind market strategies, cost, and quality strategies. Here in this report you

are going to get information about such type of strategies of FMCG giants.

Competitive Strategies and Comparison with ITC

HUL (Hindustan Unilever Ltd.)

This Company is earlier known as Hindustan Lever Ltd. This is India's largest

FMCG sector company with all type of household products available with it. It

has Home & Personal Care products, and also food and Water Purifier available

with it. According to Brand Equity, HUL has largest no of brands in most trusted

brands list 16 of HUL's brands featured in AC-Nielson Brand Equity list of 100

most trusted brands in 2008 in an annual survey. For the entire year ending

March - 2009 net turnover of company is Rs. 20'239.33 Crore which is 47.99%

higher than 31st December 2007's Rs. 13675.43 Crore driven mainly by

domestic FMCG's with net profit stood at Rs. 2'496.45 Crore.

ITC Limited

This Company was earlier known as Imperial Tobacco Company of India Ltd. It

is Currently headed by Yogesh Chander Deveshwar. Company mainly operates

in the industry like Tobacco, Foods, Hotels, Stationary and Greeting Cards with

the major products constitutes Cigarettes, packed foods, hotels, and apparels.

For the entire year ending Mar-2009 the turnover of company is at Rs. 15388

Crore which is 10.3% higher than previous year's Rs. 13947.53 Crore, driven

mainly by robust 20% growth in non cigarette FMCG business with net profitstood at Rs. 3324 Crore.


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Analysis of Both Companies

HUL & ITC are major companies in FMCG market in India. When we compare

both companies on the basis of their strategies i.e. , their competitive

strategies in the present market. When we look at the present segment

breakup for both of the companies then we came to know that their differentproducts vary too much in the market.

Now below shows a comparative analysis of both the companies under some

heads:

Product portfolios:

Hindustan Unilever (HUL) is the largest pure-play FMCG Company in the

country and has one of the widest portfolio of products sold via a strong

distribution channel. It owns and markets some of the most popular brands in

the country across various categories, including soaps, detergents, shampoos,

tea and face creams.

ITC is not a pure-play FMCG company, since cigarettes is its primary business. It

is diversifying into non-tobacco. FMCG segments like foods, personal care,

paper products, hotels and agri-business to reduce its exposure to cigarettes.

Performance

After stagnating between 1999 and '04, the company is back on the growth

track. In the past three years, till 2008 HUL's net sales have witnessed a CAGR

of 11%, while net profit has posted a CAGR of 17%. Despite diversification,ITC's reliance on cigarettes is still huge. The tobacco business contributes 40%

to its revenues, and accounts for over 80% of its profit. This cash-generating

business has enabled it to take ambitious, but expensive bets in new segments

and deliver modest profit growth.

Overall Strategy:

HUL always believes in customer friendly products with major emphasis on low

cost overall without compromising on the quality of the product. They are

leveraging the capabilities and scale of the parent company and focusing onthe value of execution. The entire product portfolio is also being tweaked to

include premium offerings such as Pond's Age Miracle and dove shampoo in

skin and hair care. HUL introduced Project Shakti to penetrate the rural

market.

ITC is focusing on delivering value at competitive prices. Its tremendous reach

through extensive distribution chain has been a competitive advantage.

Additionally, the company's e-choupal model for direct procurement is well

known under which ITC partners with over 100,000 farmers for spices and


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wheat procurement and an even larger number for oilseeds. This kind of rural

pedigree is hard to beat.

Growth Drivers

HUL has been launching new products and brand extensions, with investments

being made towards brand-building and increasing its market share. HUL isalso streamlining its various business operations, in line with the One Unilever'

philosophy adopted by the Unilever group worldwide. Introduction of

premium products and addition of new consumers via market expansion will

be HUL's growth drivers.

ITC's backward integration to ensure that its products pass efficiently from the

farms to consumers has helped it to cut down supply and procurement costs.

ITC's non-cigarette FMCG business leverages the large distribution network the

company has developed by selling cigarettes over the years. A rich product

mix, along with ramp-up of investments in its new sectors, will be instrumental

in charting ITC's growth path.

Risk for both the companies

Being an MNC operating in India, HUL is more conservative in its strategies

than its Indian counterparts. Moreover, given increasing competition, it faces

the risk of being overtaken by domestic players in various categories.

Prolonged inflation may lead to margin contraction, in case HUL is not able to

pass on this burden to consumers. The company's large size also poses aproblem, since it does not give HUL the agility to address the competition it

faces from national and regional players.

ITC Increased regulatory clamps on tobacco, along with rising tax burden, pose

a business risk for ITC. So, it has started an ambitious diversification plan,

which has its own set of risks. With its foray into the conventional FMCG space,

ITC has entered the high-clutter branded products market. This will burden its

resources in terms of ad spend and brand-building. Creating brand recall and

building market share in new products are ITC's key challenges. Export ban and

rising crop prices pose a threat for its agri-business, taxing its margins.

HUL AND P&G

Procter & Gamble was founded in 1837 by William Procter, a British citizen

who immigrated to the United States. The company first sold candles. Procter

& Gamble Co. (P&G, NYSE: PG ) is a Fortune 500 American multinational

corporation headquartered in Downtown Cincinnati, Ohio that manufactures a

wide range of consumer goods. As of mid 2010, P&G is the 6th most profitable

corporation in the world, and the 5th largest corporation in the United States


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by market capitalization, surpassed only by Apple, Exxon Mobil, Microsoft, and

Wal-Mart. It is 6th in Fortune's Most Admired Companies 2010 list.

P&G is credited with many business innovations including brand management

and the soap opera.

According to the Nielsen Company, in 2007 P&G spent more on U.S.

advertising than any other company; the $2.62 billion spent by P&G is almosttwice as much as that spent by General Motors, the next company on the

Nielsen list.

P&G was named 2008 Advertiser of the Year by Cannes International

Advertising Festival.

Proctor & Gamble is a leading member of the U.S. Global Leadership Coalition,

a Washington D.C.-based coalition of over 400 major companies and NGOs

that advocates for a larger International Affairs Budget, which funds American

diplomatic and development efforts abroad.

Major products of P&G

Coconut-based cleaning and food

products

Laundry and personal cleansing

products

Purico Tide

Star DariCreme

Perla Primex

Sunshine Safeguard

Camay ArielMayon Gain

PMC Bonus

Victor Daz

Ola Lava

Agro Mr. Clean

Fresco Prell

Health care Crest

Vicks Zest

Fibresure MonclerThermacare Ivory

Pepto Bismol Laundry, personal care and hair care

Hair care and laundry categories Secret

Pampers Safeguard

Whisper Ascend

Rejoice Ariel

Tide Old Spice

Max Factor Zest

Vidal Sassoon ClairolIvory Nice n Easy


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Pantene Wella

Dishwashing, fabric care and food

categories

Camay

Joy

Mr. Clean

DownyAlldays

Pringles

STRATEGIES OF P&G

P&G focuses on five core strengths required to win in the consumer products

industry. We are designed to lead in each of these areas.

Consumer Understanding

No company in the world has invested more in consumer and market research

than P&G. They interact with more than five million consumers each year in

nearly 60 countries around the world. P&G invest more than $350 million a

year in consumer understanding. This results in insights that tell us where the


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innovation opportunities are and how to serve and communicate with

consumers.

Innovation

P&G is the innovation leader in this industry. Virtually all the organic sales

growth delivered in the past nine years has come from new brands and new orimproved product innovation. They continually strengthen their innovation

capability and pipeline by investing two times more, on average, than its major

competitors. In addition, they multiply their internal innovation capability with

a global network of innovation partners outside P&G.

Brand-Building

P&G is the brand-building leader of this industry. It has built the strongest

portfolio of brands in the industry with 22 billion-dollar brands and 20 half-

billion-dollar brands. Eleven of the billion-dollar brands are the #1 global

market share leaders of their categories. The majority of the balances are #2.

Go-to-Market Capabilities

It has established industry-leading go-to-market capabilities. P&G is

consistently ranked by leading retailers in industry surveys as a preferred

supplier and as the industry leader in a wide range of capabilities including

clearest company strategy, brands most important to retailers, strong business

fundamentals and innovative marketing programs.

Scale

Over the decades, we have also established significant scale advantages as a

total company and in individual categories, countries and retail channels.

P&Gs scale advantage is driven as much by knowledge-sharing, common

systems and processes, and best practices as it is by size and scope. These

scale benefits enable us to deliver consistently superior consumer and

shareholder value.

P&G follows Connect + Develop strategy which enables to bring innovations tolife faster, more economically and more sustainably.

Chapter6: Strategic growth summary of HUL

HUL prioritized opportunities which build upon the existing assets and

capabilities. It avoided spreading their management thinly. For example: HUL

first made its sales and distribution channel & supply chain management in


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manufacturing and selling wheat flour and utilized it into the selling breads

produced by wheat flour.

HUL is more focused on the innovations Example: In 1995 launched KISSAN

ANNAPURNA staple foods with the message staple food including iodized

salt .Serving Rural population: In 2000 the 32% of the sales were from ruralsector but in 2010 it is more than 50%. It follows direct communication from

the customers. It believes in expanding the portfolio. Each category has a

different set of supply chain, production and consumer decision making

process issuing associated with it.

Strategies - market entry:

(Kissan Annapurna iodized salt)

In 1995 HUL launched Kissan Annapurna iodized salt at that time only10% of 6.5 million ton of salts were branded and refined HUL identified

it and launched the KISSAN ANNAPURNA SALT.

Firstly it launched in the few cities of the country for test marketing andthen for all.

Shifted from purity- a product attribute to Health consumer benefit(As a positioning strategy)

Tried to shift the consumers from unbranded to brand. Started Using IODINE as a marketing strategy as there were other salts

including iodine but no one was focused on that. HUL started it.

Started endorsement through trusted government agencies. In 2002 it has made iodine patented in 80 countries. Strategic Shifts In the past 10 years, HUL has made four shifts in its

business strategy, targeted at boosting growth and reach

POWER BRANDS: Strategy in 2000. Focusing on fewer brands, 30 ofthem, and showering marketing attention on them.

MASSTIGE:


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Strategy in 2005-06. Making premium brands (prestige) attainable for a larger

section of consumers (mass).

ONE UNILEVER:

Strategy in 2007. Building leadership position in fast-growing markets.

PUMP UP THE VOLUMES:

Strategy in 2010. Global CEO Paul Polman is pushing the Indian operations

chasing value growth to deliver on the volumes as well.

Financial analysis of HUL


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If we analyze this financial statement we can see that the performance of HUL

has decreased over the last two years and the possible reasons for that are:

Higher expenses on the advertisement part. HUL is the king of distribution channel in India but now it is getting full

competition from the P&G and others like ITC, AMUL,DABUR,NESTLE etc One of most important factors is the power branding strategy of HUL

due to which it has ignored most of the brands and just focusing only on

the power brands.

Brand Management at HUL

HUL has a large brand portfolio consisting of nearly 110 bands. In every

product line, it has built a number of brands over a period of time. Quite a few

brands have come to its fold from the parent company. It has also acquired

several ongoing brands from the market. HUL also vigorously pursues brand

extension strategy. And concurrently, HUL undertakes line pruning and brand

restructuring and consolidation, based on marketing compulsions. HUL is also

playing the rejuvenation and re-launch game. With great benefit the

corporate-level endeavors at business expansion and diversification are also

throwing new challenges on the brand strategy front. HUL lends itself for a

proper understanding of the complexity of the brand management task. We

shall examine how HUL handles the complex demands in brand management.

Such an array of brands is the outcome of a conscious corporate strategy byHUL. As a corporate, HUL wants to be a leader in every one of its businesses

and the strategy is to fight on the strength of the competitive advantage

arising from the possession of strong brands. It is this strategy that is getting

reflected in the development of a multitude of strong brands. If we take the

business of bathing soaps, as an example, HUL has the objective of being a

national player (not a niche or a regional marketer) and the leader therein.

HUL also wants about 30 per cent of the corporate income to come from this

line.

So, HUL opted for the strategy of developing quite a few strong brands in thisline, and among them they cover different market segments and price points.

Dove, Lux, Liril, Rexona, Pears and Lifebuoy are the outcome of such a well

planned brand strategy implemented over time. Lifebuoy is 100 years old and

Liril 15 years old. In fact, HUL has about 10 brands of toilet soaps each having

good volume of sale to its credit . The point is that decisions on brand portfolio

are a fundamental expression of the companys objectives and strategy

governing a given business.


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HUL Locates Positioning Opportunities:

HUL methodically goes about the task of developing a brand portfolio across a

product category. It first identifies the various positioning opportunities across

benefits, target groups and price points. Existing brads are mapped across

these positioning opportunities, and gaps for possible new offers are

explored.The company then estimates the likely volumes for each of thepossible opportunity and the financial viability and sustainability of the

propositions in the long term. If some of these gaps look promising, HUL goes

ahead with the plans. It examines the existing set of brands with the company,

the product technologies available, the benefits that can be provided and

other considerations that have a bearing on the companys long term interests

in the business. Finally, if the company decides to go in for the new offer, a

decision has to be taken as to whether new brands should be created or

extensions if existing brands should be preferred or ongoing brands from the

market acquired.

HUL hires brands to capture new opportunities: Towards the close of the

1990s, HUL found that the germicide segment of the soap market was growing

fast, with RCIs Dettol antiseptic soap leading it. HUL did not have suitable offer

in its stable to capture a share of this segment. Lifebuoy was not strictly

meeting the particular benefit. HUL knew that launching and developing a new

brand would take a lot of time and resources, and the company would miss the

market if it chose this route. HUL did not have the product formula either to

enter this segment. It was in this background that HUL decided to hire theSavlon brand from J&J. Savlon was a successful antiseptic lotion, a competitor

to Dettol lotion. Just as the Dettol soap owed its origin to the success of the

Dettol lotion, HUL assessed that a Savlon antiseptic soap could be successfully

extended from the Savlon lotion. It entered into an agreement with J&J for the

use of Savlon brand name and the product formula, and launched the Savlon

antiseptic soap. HUL very deftly managed successfully new brand launch and

merged as a challenger to Dettol soap. J&J secures a good royalty from HUL for

lending the brand. It is a potentially win-win arrangement for both companies.

Repositioning and rebranding HUL has done the process of repositioning the

brands. Few of them as follows;

SUNSILK: Sunsilk co-creations , collaboration with 7 pioneer global hairexperts

BREEZE: New fragrances over the world, new look more colors,packaging


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Rexona: relaunched it with the coconut moistening Lifebuoy hand sanitizer: kills 99.99% germs in 15 seconds Fairness cream: Fair & lovely multivitamin Close-up: peppermint splash Pepsodent toothbrush: 25% flexibility.

HUL AND P&G ADVERTIESMENT WAR

The new campaign started by Rin, a product of Hindustan Unilever Limited. It

is a direct attack on the Tide Naturals product by Procter & Gamble. Note that

when It is said a direct attack it means an uncensored visual shows the

competitor product and then highlights how the other product is better then

the former. The sequence of the ad is as follows

1. Two ladies are standing on a bus stop, waiting to pick their kids from the

school bus.2. Both are carrying their shopping basket/bag with them.

3. Lady 1 has Tide Naturals in her bag.

4. Lady 2 has Rin in her bag

5. Both ladies have a look at each others bag and Lady 1 boasts that Tide has a

good fragrance and provide better whiteness/brightness to the clothes

6. In the meantime, the school bus arrives and its shown that the white shirt

of Lady 2s kid is strikingly brighter and whiter then the Lady 1s kid.

7. Lady 1 gets astonished by the whiteness seen.

8. Lady 2s kid reacts by asking he mother, as to why is the other lady so

observant and amazed

9. There is a disclaimer during the ad that the analysis has been done by an

independent agency

10. Its then claimed that now there is promotional price of Rs. 25 on Rin as

opposed to the earlier Rs. 35.

As it can be noticed, there is a direct mention of the competitor product along

with the visuals. This one seems to be an absolute direct attack. It is difficult to

say if the ad will continue on TV. Tide would definitely come out with a protest.


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However, I think the damage is already done. The main point about the

reduced price of Rin would definitely catch the consumers eye benefiting HUL.

PRICE WAR BETWEEN HUL AND P&G

In the

Year 2010 HUL has reduced 11-17% price in detergents, 7-17% in toilet soaps

and 6-7% in the toothpastes.HUL cut the price of RIN by 30% (price war with P&G). Due to which P&G reacts

by cutting 20% indirect price (25% grammage hike) in TIDE.

CHAPTER 7 : CONCLUSION

HUL's up-and-running business model is a treat for investors seeking exposurein the FMCG segment. The company has delivered in the past and has the

potential to do better in future. In short term. HULs growth story is evolving.

ITC is eyeing the pie which HUL and other FMCG players currently enjoy.

Though risky, the company's business model will pay off in the long run. ITC

has proved its expertise in the cigarettes, hotels, paper and agri-businesses.

Investors who want to bank on its execution ability in FMCG can consider the

stock with a long-term horizon.

According to us the companies should continue with their CSR and also

continue with their strategies. The thing that needs to be changed is that, ITC


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should go for more diversification in Non cigarette segment (FMCG) while HUL

should come up with the new strategies that could take the new product

forward to create a new segment. A recommendation For HUL is that it should

focus on rural area more.


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APPENDICES

Appendix A : Interview Schedule

Survey Questions

1) Which age group do you fall in?o 20-25o 25-30o 30 above

2) When it comes to the general FMCG products such as Washing Powders or Shampoos,generally, which age group people in your family influence the decision?

o 10-15o 15-20o 20-30o 30 above

3) When going for a particular FMCG product, what is the most important thing you look at?o Priceo Brando Qualityo Past Experienceo Others

4) Are you able to recognize the Brand of the FMCG Product you buy?o Alwayso Sometimeso Nevero Do not care

5) Which brand of shampoo are you using?o HULo P&Go ITCo Not Sure

6) Which brand of Washing Detergent are you using for clothes?o HULo P&Go ITCo Not Sure

7) Which brand of Biscuits do you eat?o HULo P&Go ITCo Not Sure


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Appendix B : References

1. Ramanuj Majumdar (2004). Product Management in India. PHI Learning.pp. 2628. ISBN 9788120312524. Retrieved 2010-06-19.

2. Sean Brierley (2002). The advertising handbook By Sean Brierley (2,illustrated ed.). Routledge. p. 14. ISBN 9780415243919.

Appendix C : Bibliography
http://books.google.com/?id=ESJzaCJE3fQC&pg=PA26&dq=what+is+fmcg&q=what%20is%20fmcghttp://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/Special:BookSources/9788120312524http://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/Special:BookSources/9780415243919http://en.wikipedia.org/wiki/Special:BookSources/9780415243919http://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://en.wikipedia.org/wiki/Special:BookSources/9788120312524http://en.wikipedia.org/wiki/International_Standard_Book_Numberhttp://books.google.com/?id=ESJzaCJE3fQC&pg=PA26&dq=what+is+fmcg&q=what%20is%20fmcg

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