Hindustan Unilever

HISTORYHISTORY

• In November 1956, HUL was formed by merging 3 companies, namely In November 1956, HUL was formed by merging 3 companies, namely Hindustan Hindustan

Vanaspati Manufacturing Company, Lever Brothers India Limited and United Vanaspati Manufacturing Company, Lever Brothers India Limited and United

Traders Limited.Traders Limited.

• HUL has completed 80 years of corporate existence in India.HUL has completed 80 years of corporate existence in India.

• Shareholders of Hindustan Unilever, India's largest consumer goods maker, tendered 319.7 million shares to the offer, taking Unilever's holding in the unit to 67.28 percent from 52.48 percent, Unilever said in a statement.

• In 2007, the Company name was formally changed to Hindustan Unilever Limited after receiving the approval of shareholders during the 74th AGM on 18 May 2007.

PRODUCT RANGEPRODUCT RANGE

FACTORS AFFECTING DEMANDFACTORS AFFECTING DEMAND

There are various factors that affect the demand for a product such as:There are various factors that affect the demand for a product such as:

•Shopkeeper’s recommendationShopkeeper’s recommendation-HUL have a wide product range -HUL have a wide product range

and popular products which makes shopkeeper recommend its and popular products which makes shopkeeper recommend its

product’s to the customer which affects the demand in a positive way.product’s to the customer which affects the demand in a positive way.

•Low priceLow price-HUL products are mostly ranged as per the products -HUL products are mostly ranged as per the products

weight. This helps firm to differentiate the price for different classes of weight. This helps firm to differentiate the price for different classes of

people making the product price low for that segment of consumer.people making the product price low for that segment of consumer.

• Need basedNeed based: Products of HUL are need based and that leads : Products of HUL are need based and that leads

to increase in its demand. For example: dove shampoo’s to increase in its demand. For example: dove shampoo’s

sachets for lower middle class.sachets for lower middle class.

• Brand awarenessBrand awareness: Company has a well-known brand image : Company has a well-known brand image

in the market created with extensive advertisements. This in the market created with extensive advertisements. This

awareness regarding brand makes customers demand for the awareness regarding brand makes customers demand for the

product. product.

• PromotionsPromotions: With continuous innovation in promotion and : With continuous innovation in promotion and

advertisements the firm has created its image in the eyes of advertisements the firm has created its image in the eyes of

the customer which has also fueled demand for its products.the customer which has also fueled demand for its products.

• AvailabilityAvailability: Demand is also affected by availability of the : Demand is also affected by availability of the

products. HUL product is easily available at all the nearby retail products. HUL product is easily available at all the nearby retail

outlets.outlets.

• Brand endorsementBrand endorsement: In the modern world where people get : In the modern world where people get

connected with the product by seeing any famous personality connected with the product by seeing any famous personality

endorsing it makes a large difference in the demand for the endorsing it makes a large difference in the demand for the

product but this can be both negative and positive. Eg: Clinic All product but this can be both negative and positive. Eg: Clinic All

Clear ad which is endorsed by Anushka Sharma and Virat Kholi.Clear ad which is endorsed by Anushka Sharma and Virat Kholi.

• LifestyleLifestyle: With proper market assessment HUL products are : With proper market assessment HUL products are

launched which suits the lifestyle of those state or class of launched which suits the lifestyle of those state or class of

people. This definitely leads to rise in demand. people. This definitely leads to rise in demand.

• Sales promotionSales promotion: Company also comes up with sales : Company also comes up with sales

promotion strategies like discounts or extra quantity at the promotion strategies like discounts or extra quantity at the

same price making consumer to buy the product with a same price making consumer to buy the product with a

better deal.better deal.

• Brand loyaltyBrand loyalty: Company is very old in the market and : Company is very old in the market and

has established a good reputation. This reputation helps has established a good reputation. This reputation helps

the company in the way that customers come again to the the company in the way that customers come again to the

brand, thus maintaining its demand and brand loyalty.brand, thus maintaining its demand and brand loyalty.

INDUSTRIAL LOCATIONINDUSTRIAL LOCATION

1. Amli factory and Dapada detergent factory-Silvassa1. Amli factory and Dapada detergent factory-Silvassa

•Reason for establishment:Reason for establishment:

• To boost industrial development in Silvassa as it was To boost industrial development in Silvassa as it was

granted as a tax free region.granted as a tax free region.

• It has a population of more than 2 lakh people which It has a population of more than 2 lakh people which

comprises mostly of labourers and therefore labour is comprises mostly of labourers and therefore labour is

available in abundance and is cheap.available in abundance and is cheap.

2. Doom Dooma Factory-Assam2. Doom Dooma Factory-Assam

•Reason for establishment:Reason for establishment:

• Assam climate supports tea cultivation which is the Assam climate supports tea cultivation which is the

major reason for their establishment.major reason for their establishment.

3. Khamgaon Factory-Maharashtra3. Khamgaon Factory-Maharashtra

•Reason for establishment:Reason for establishment:

• Khamgaon is one of the growing cities of Maharashtra. This Khamgaon is one of the growing cities of Maharashtra. This

gives the company an advantage as government will also be gives the company an advantage as government will also be

supporting the company for the further growth of both the supporting the company for the further growth of both the

city and the firm.city and the firm.

• To cater the demands of the deodorant from various parts To cater the demands of the deodorant from various parts

of the world Hindustan Unilever decided to establish the of the world Hindustan Unilever decided to establish the

company in khamgaon plant.company in khamgaon plant.

4.4. Sewri Factory-MumbaiSewri Factory-Mumbai

• Reason for establishment:Reason for establishment:

• Mumbai being a port city its easy to import raw material as Mumbai being a port city its easy to import raw material as

well as export the finished goods at low transportation cost.well as export the finished goods at low transportation cost.

• Mumbai being densely populated and the rate of migration Mumbai being densely populated and the rate of migration

increasing from rural areas have provided cheap and increasing from rural areas have provided cheap and

abundant labour to the company.abundant labour to the company.

• Mumbai comprises of large chunk of urban population which Mumbai comprises of large chunk of urban population which

increases the consumption of the FMCG product and increases the consumption of the FMCG product and

therefore distribution cost from factory to wholesaler is not therefore distribution cost from factory to wholesaler is not

high.high.

5.5. Haldia Detergent Factory-West Bengal Haldia Detergent Factory-West Bengal

• Reason for establishment:Reason for establishment:

• Proximity to haldia port.Proximity to haldia port.

• Easy allotment of land by Haldia Development Authority Easy allotment of land by Haldia Development Authority

(HDA).(HDA).

• Uninterrupted power supply.Uninterrupted power supply.

• Subsidies and incentives provided by state and central Subsidies and incentives provided by state and central

government.government.

PRICING POLICYPRICING POLICY

• Being a part of the FMCG sector which is price sensitive, Being a part of the FMCG sector which is price sensitive,

HULs pricing strategy depends upon a number of factors HULs pricing strategy depends upon a number of factors

such as:such as:

Purchasing Power Of CustomerPurchasing Power Of Customer

CompetitionCompetition

Flexible PricingFlexible Pricing

PURCHASING POWER OF CUSTOMERPURCHASING POWER OF CUSTOMER

• As said earlier that FMCG is price sensitive, therefore all of As said earlier that FMCG is price sensitive, therefore all of

its product prices depends on the real income of consumer.its product prices depends on the real income of consumer.

• Therefore, with the middle class dominating the Indian Therefore, with the middle class dominating the Indian

Population the prices are affordable as well as regular Population the prices are affordable as well as regular

incentives are also introduced.incentives are also introduced.

COMPETITIONCOMPETITION

• The price of a product is also determined by the competition in the The price of a product is also determined by the competition in the

market which plays a major role in the pricing strategy.market which plays a major role in the pricing strategy.

• If the firm is operating in a monopolistic market it can set the price at If the firm is operating in a monopolistic market it can set the price at

that point till which it is acceptable to the consumers.that point till which it is acceptable to the consumers.

• But here being a FMCG company, the company is operating in a But here being a FMCG company, the company is operating in a

monopolistic market and so the company has to set prices as per the monopolistic market and so the company has to set prices as per the

competitors in the market. Because if it sets higher prices then the competitors in the market. Because if it sets higher prices then the

consumer won’t buy the product because of the presence of the close consumer won’t buy the product because of the presence of the close

substitutes.substitutes.

FLEXIBLE PRICINGFLEXIBLE PRICING

• HUL follows flexible pricing for all its products.HUL follows flexible pricing for all its products.

• Different prices are followed for different variants of each product.Different prices are followed for different variants of each product.

• This flexible pricing helps one to buy the quantity he wants and pay that This flexible pricing helps one to buy the quantity he wants and pay that

much only.much only.

• This pricing also helps in the selling of products to all classes like in rural This pricing also helps in the selling of products to all classes like in rural

sectors people can buy Shampoo Sachets instead of spending a large sum sectors people can buy Shampoo Sachets instead of spending a large sum

on a bottle.on a bottle.

• Example – Dove Shampoos are available in Rs 2 sachets to Plastic bottles Example – Dove Shampoos are available in Rs 2 sachets to Plastic bottles

worth Rs 150.worth Rs 150.

HIRING STRATERGYHIRING STRATERGY

• Recruits 40 to 50 management trainees from management schools.

• Around 700 to 1000 people are recruited in the factories as well as in the sales force.

• Hindustan Unilever has been declared best employer by a survey conducted in B-Schools.

THE PROCESS OF RECRUITMENT

• There are 4 regional branches in each of the 4 big metros.

• Process:

1. Examination of CV

2. Short-listing

3. Preliminary interview

4. Screening

5. Final interview.

TRAINING AND DEVELOPMENT OF EMPLOYEES

• 15 months of intensive training.

• The Levers Business Leadership Training Program (BLTP)- Thorough warming up of trainees.

• The rigorous training will help the recruits to take calculated risks, cope with the pressures of corporate life and hone the leadership skills.

• All HUL units provide some form of training and/or education programs, both classroom and on the job training at the plant itself.

• The company has set up a learning center where the employees are taught in their local languages.

MARKETING STRATERGYMARKETING STRATERGY

1. Pan pyramid straggling portfolio:

•To promote the sale of such a vast product range HUL charges different prices for different products according to the class and segments of the society.

•This shapes a pyramid where at the below lies the low level product that get sold the most then comes the middle level of pyramid where sales decreases and top of the pyramid only the upper middle class can afford it.

2. Pushing consumer for more usage:

•The firm uses low priced sachets which prompts the consumer to purchase the products.

•This also pushes the usage of the product and increases the brand loyalty of the consumers towards the brand.

•Seasonal products are also launched by HUL this also acts as a marketing strategy of the company increasing its sales and the peak seasons. Eg: Vaseline lotions for summer and winter season.

3.Competitive and compelling communication:

•Under this the advertisements aired by HUL prompts the consumers to purchase the product.

•The ads launched create a sense of connectivity and develop those emotions which attract the consumer towards that product when they are in market for a purchase.

•This awareness persuades the consumers to purchase the product leading to increase in sale of HUL products.

4. Highlighting benefits:

•Provides additional benefits in its individual brand.

•This makes people get value for money and maximum satisfaction or utility.

•Eg: dove comes with various other products like dove conditioner with its shampoo.

5. Increasing consumption in rural market:

•More availability of Rs.1 sachets in the rural India. One of the ways of packaging to market the product.

•Awareness camps about the products which also rural people to understand the use and advantages of the product and influence them to buy the product at cheap prices.

6. Betting on big starts for advertising:

•Today’s world is all about show business the higher and bigger person endorses yours product people will be more attracted towards it.

•HUL products are endorsed by many big celebs and popular film stars they influence the consumers to purchase the product.

•Eg: Juhi Chawla - advertisement of Kissan jam.

7. Bigger, better and faster innovation:

•Major investment done in R&D by HUL has allowed the company to come up with various innovations.

•Eg: fair & lovely cream gets innovated every year mostly. Currently endorsed by yami gautam as advanced fair and lovely.

•Major changes in quality, design, packaging pricing all adds to marketing.

8. Stepping up front end execution:

•With the increasing globalization and the rapid development of mall culture in India the availability of product is everywhere.

•Various retail outlets of unilever products are opened by the company itself like lakme.

•Increasing brand image in the market has created various stores for its product, providing better quality product with better service.

FINANCIAL PERFORMANCE AND PROFITABILITY

NATURE OF MARKETNATURE OF MARKET

• The nature of market in FMCG firms is a monopolistic market.The nature of market in FMCG firms is a monopolistic market.

• Large number of sellers, selling FMCG Goods.Large number of sellers, selling FMCG Goods.

• Large number of buyers.Large number of buyers.

• Sellers selling close substitutes

• Selling Cost: It needs to work more on R&D and sales promotions strategies.

• Demand curve in the monopolistic market is a flatter demand curve showing that the elasticity of the products is relatively elastic in nature. Potential Potential

Competitors: ITC Limited, Britannia Industries Ltd., Nestle India, etc.Competitors: ITC Limited, Britannia Industries Ltd., Nestle India, etc.