ITC vs HUL ltd.

ITC vs HUL

Benchmarking Analysis

By- Saurabh Shukla (JIM,Lucknow)

BRIEF HISTORY

HUL- Hindustan Lever Ltd-Indians largest FMCG sector company-• All type of household products available.• It has Home & Personal Care products, and also food

and Water Purifier available with it. • HUL has largest number of brands in most trusted brands list.

16 of HULs brands featured in AC-Nielson Brand Equity list of 100 most trusted brands.

• HUL sales turnover- 2013 – 25,810.21 to that of Rs. 22,116.37 in 2012.

ITC Limited• Earlier known as Imperial Tobacco Company of India Ltd.• Headed by Yogesh Chander Deveshwar.• Mainly operates in the industry like Tobacco, Foods,

Hotels, Stationary and Greeting Cards with the major products constitutes Cigarettes, packed foods, hotels, and apparels.

• ITC Sales Turnover in 2013 – Rs. 29,901.27 to that of Rs. 35,247.25 in 2012.

HUL vs ITC Competitive Strategies

• Three basic competitive strategies are-

Overall cost leadership

FocusDifferentiation

• HUL- Largest pure-play FMCG company in the country .

• 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 not pure play company-deal mainly in cigarettes and it 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.

HUL vs ITC- Targeting Strategies

• HUL divide the customers into three types of the customers striving, aspiring and affluent andmake targeting strategies accordingly. They are as follows:

• Personal Care: HUL targets different types of customers with different set of bath products. For striving customers -Lifebuoy and Breeze, For aspiring customers-Hammam and basic Lux variants For affluent - Pears, Dove and superior range of Lux. • Key strategy- To straddle the pyramid and move consumers up to more

aspiration brands. Grow share by growing ahead of the Market • Detergent: In case of detergents- For striving customers-Wheel For aspiring customers- Rin For affluent customers-Surf Excel • Key Strategy: Work the pyramid; Grow profitably ahead of the market;

regain profitability through judicious price increases and cost effectiveness programs.• Tooth Paste: For striving customers-smaller packing For aspiring customers Pepsodent For affluent-Close Up, • Key Strategy: Grow with market with the our brands Close Up on freshness

platform and Pepsodent on family & health platform

• Tea: For the striving customers it has Taaza tea. For aspiring customers it has Red Label. For affluent customer it offers Taj Mahal and Lipton Yellow Label Key strategy: Presence across the pyramid; drive up trading of consumers; Convert loose tea drinkers to packet tea consumers

• Personal Care: • ITC also targets different types of customers with different set of bath products. For striving customers - Vivel, Superia For aspiring customers-Fiama and its variants For affluent - Essenza di wills• Key strategy-To target more and more customers and bring it in category of aspiring customers.• Detergent: In case of detergents- For striving customers-Henko, Mr. White, Ghadi For aspiring customers- Tide For affluent customers-Wheel, Ariel • Key Strategy: Profitability and large share in the market

ITC

HUL vs ITC- Performance• ITC- getting threaten by regulatory authorities!!!• HUL is more conservative in its strategies than its Indian

counterparts. • Moreover, given increasing competition, HUL faces the risk of

being overtaken by domestic players in various categories. • 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.

• ITC now has entered the high-clutter branded products market.• Creating brand recall and building market share in new products

are ITCs key challenges. Export ban and rising crop prices pose a threat for its agri-business, taxing its margins.

• HUL – always brings customer friendly products with major emphasis on low cost overall but no compromise on the quality of the product.

• They are leveraging the capabilities and scale of the parent company and focusing on the value of execution.• The entire product portfolio is also being tweaked to include premium offerings such as Ponds Age Miracle and

dove shampoo in skin and hair care.• ITC is focusing on delivering value at competitive prices. Its tremendous reach through extensive distribution

chain has been a competitive advantage. • E-choupal model for direct procurement is well known under which ITC partners with over 100,000 farmers for

spices and wheat procurement and an even larger number for oilseeds. This kind of rural pedigree is hard to beat

HUL vs ITC- Market Share- Ups and Downs

• ITC has overtaken Hindustan Unilever in branded food and beverages sales giving a shot in the arm to YC Deveshwar's ambition of making the cigarette maker India's largest FMCG firm.

• ITC, the maker of Sunfeast biscuits and Bingo chips, has posted branded food sales of over 4,600 crore in 2012-13, a 24% growth over the previous year, said a person with direct knowledge of the development.

• HUL -ahead of competitors in the total non-cigarettes FMCG market. Its total revenues of 25,810 crore during 2012-13 were more than three times ITC's sales of 6,982 crore from its pure-play FMCG portfolio consisting of packaged food, personal care, lifestyle retail, safety matches and agarbatti.

HUL Vs ITC- MARKET CAPITAL

HUL Vs ITC- New market news• ITC Ltd shares are up 1.5 percent

after touching an all-time high of 375.25 rupees while Hindustan Unilever Ltd (HUL) shares rose 2.4 percent after touching a record high of 720 rupees.

• ITC is firming up plans to foray into non-carbonated beverages and dairy businesses next fiscal to establish itself as one of the largest food companies in the country, a senior industry executive aware of the company's plans said.

Source- http://articles.economictimes.indiatimes.com/2014-02-20/news/47527368_1_chitranjan-dar-food-business-yc-deveshwar

HUL Vs ITC- Performance Measurement

• March 31, 2013 Data- • Operating Profit per share • HUL- Rs 18.51• ITC- Rs 13.45• Net Sales- • HUL- Rs (m) 25,810.21• ITC- Rs (m) 29,901.27• Profit after tax-• HUL- Rs (m) 3,796.67• ITC- Rs (m) 7,418.39• Return on Net worth (%)• HUL- 141.98• ITC- 33.28• Return on capital (%)• HUL- 147.56• ITC- 48.18 In terms of return HUL is doing far better than ITC.

• HUL has divided the whole market segment into three types of consumer Striving customers-

they are the largest in number as compared to other types of customers defined by HUL. Aspiring customers, those who are striving for recognition or

advancement; They have relatively high purchasing power. Affluent customers who are having an abundance of

wealth, they are relatively less in numbers as compared to other group of customers. • HUL has designed a different targeting strategy for every ASIAN JOURNAL OF

MANAGEMENT RESEARCH 556 segment of the market to satisfy the needs of customers under those segments with the aim of attaining organizational objectives

• ITC has also followed in the same pattern of dividing the whole set of market into various segments mainly based on the purchasing power of the customers, but it has clearly differentiated the complete market. The brand names of the ITC products itself represent which particular segment of the market it is targeting. ITC has also used big celebrities as brand ambassadors to promote their products. ITC also tend to target the various customers by using different distribution strategies for the various products. ITC and HUL are successfully segmenting the market, which tends to help in identifying the various needs of the customers in a particular segment in a better way and according to which the company can target the customer accordingly.