RESEARCH REPORT ON “A STUDY A DISTRIBUTION CHANNEL OF UNILEAVER IN RURAL MARKET” Submitted In Partial Fulfillment for the Award Of Degree of MASTER OF BUSINESS ADMINISTRATION (U.P. Technical University, Lucknow) SUBMITTED TO: SUBMITTED BY- MR. J.N. GIRI SUNNY KUMAR (FACULTY, MIMT) Roll No. : 0615270112
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RESEARCH REPORT
ON
“A STUDY A DISTRIBUTION CHANNEL OF UNILEAVER
IN RURAL MARKET”
Submitted In Partial Fulfillment for the
Award Of Degree of
MASTER OF BUSINESS ADMINISTRATION(U.P. Technical University, Lucknow)
SUBMITTED TO: SUBMITTED BY-MR. J.N. GIRI SUNNY KUMAR(FACULTY, MIMT) Roll No. : 0615270112
Signal. UNILEVER is the only source of Pears soap across the world.
Tea:
The categories are branded packet tea, and instant tea for Unilever's ready-to-
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drink tea business. The branded teas are Brooke Bond, Brooke Bond Red label,
Brooke Bond Taj Mahal, Lipton, Lipton Yellow Label, Lipton Green Label, Lipton
Brisk, Lipton 3-in-1 premix, Chinese Rickshaw.
Marine Products:
UNILEVER offers a comprehensive portfolio, ranging from Surimi, Crabsticks to
Shrimps and several value-added products. Among its customers is Icelandic,
the world's third largest seafood company. In addition, UNILEVER has also
become a part of Unilever's supply chain in seafoods for Europe too. UNILEVER's
Marine Products brands are Ocean Diamond, Ocean Excellence, Shogun, Hima,
Gold Seal, Tara and Prima.
Rice:
The categories are Basmati Rice and Basmati Rice-based ready-to-eat rice
meals. The brands are Gold Seal Indus Valley, Rozana and Annapurna.
Castor:
The categories are Castor Oil, Castor-oil based products, like hydrogenated
castor oil, 12 - Hydroxy Stearic Acid, Ricinoleic Acid (used in grease and
lubricant industry, paints and surface coatings, cosmetics, emulsifiers), and
Speciality Castor Oils (USP grade, BP grade, DAB 10) etc used in pharmaceutical
preparations. UNILEVER's Castor brand is Topsol.
Today, Exports is a substantial business in UNILEVER, accounting for about 12%
of the company's turnover. UNILEVER believes that its competitive advantages
of cost competitiveness, process competitiveness and economies of scale both
at the company and country level, hold it in good stead. They position the
company to become one of the hubs for sourcing by Unilever companies in HPC
and Tea, and also simultaneously become a preferred partner to global
customers in Marine Products, Castor and Rice.
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DIRECT SELLING:
Product Range• Lever home range• Male grooming• Oral Care• Ayurveda• Personal Wash• FoodsReach - 1400 towns (Largest in India)Consultant base - 330,000
ACCORDINGLY, UNILEVER'S AIMS ARE TO:
Ensure safety of its products and operations for the environment
by using standards of environmental safety, which are
scientifically sustainable and commonly acceptable.
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Develop, introduce and maintain environmental management
systems across the company to meet the company standards as
well as statutory requirements for environment. Verify
compliance with these standards through regular auditing.
Assess environmental impact of all its activities and set annual
improvement objectives and targets and review these to ensure
that these are being met at the individual unit and corporate
levels.
Reduce Waste, conserve Energy and explore opportunities for
reuse and recycle.
Involve all employees in the implementation of this Policy and
provide appropriate training. Provide for dissemination of
information to employees on environmental objectives and
performance through suitable communication networks.
Enctheirage suppliers and co-packers to develop and employ
environmentally superior processes and ingredients and co-
operate with other members of the supply chain to improve
overall environmental performance.
Work in partnership with external bodies and Government
agencies to promote environmental care, increase understanding
of environmental issues and disseminate good practice.
RESPONSIBILITIES
CORPORATE
The Board and the Management Committee of UNILEVER is
committed to conduct the company operations in an
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environmentally sound manner. The Management Committee
will:
Set mandatory standards and establish environmental
improvement objectives and targets for UNILEVER as a whole
and for individual units, and ensure these are included in the
annual operating plans.
Formally review environment performance of the company once
every quarter.
Review environment performance when visiting units and
recognise exemplary performance.
Nominate:
- A senior line manager responsible for environmental performance at
the individual UNILEVER site.
- UNILEVER environmental coordinator.
The Management Committee, through the nominated
environmental coordinator will:
Ensure implementation of UNILEVER Policy on environment and
compliance with Unilever and UNILEVER environmental
standards and the standards stipulated under relevant national /
local legislation. When believed to be appropriate, apply more
stringent criteria than those required by law.
Assess environmental impact of UNILEVER operations and
establish strategies for sound environment management and key
implementation steps.
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Enctheirage development of inherently safer and cleaner
manufacturing processes to further raise the standards of
environment performance.
Establish appropriate management systems for environment
management and ensure regular auditing to verify compliance.
Establish systems for appropriate training in implementation of
Environment Management Systems at work.
Ensure that all employees are made aware of individual and
collective responsibilities towards environment.
Arrange for expert advice on all aspects of environment
management.
Participate, wherever possible, with appropriate industry and
Government bodies advising on environmental legislation and
interact with national and local authorities concerned with
protection of environment.
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INDIVIDUAL UNITS
The overall responsibility for environment management at each
unit will rest with the Unit Head, who will ensure implementation
of UNILEVER Policy on environment at unit level. Concerned line
managers / heads of departments are responsible for
environmental performance at department levels.
In order to fulfill the requirements of the Environment Policy at
each site, the Unit Head will:
Designate a unit environment coordinator who will be
responsible for co-ordinating environmental activities at unit,
collating environmental statistics and providing / arranging for
expert advice.
Agree with the Management Committee Member responsible for
the unit, specific environmental improvement objectives and
targets for the unit and ensure that these are incorporated in the
annual objectives of the concerned managers and officers and
are reviewed periodically.
Ensure that the unit complies with Unilever and UNILEVER
mandatory standards and the relevant national and state
regulations with respect to environment.
Ensure formal environmental risk assessment to identify
associated environmental aspects and take appropriate steps to
control risks at acceptable levels.
Ensure that all new operations are subjected to a systematic and
formal analysis to assess environmental impact. Findings of such
exercises should be implemented prior to commencement of the
activity.
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Manage change in People, Technology and Facilities through a
planned approach based on training, risk assessment, pre-
commissioning audits and adherence to design codes.
Regularly review environment performance of the unit against
set objectives and targets and strive for continual improvement.
Sustain a high degree of environmental awareness through
regular promotional campaigns and employee participation
through training, safety committees, emergency drills etc.
Ensure dissemination of relevant information on environment
within the unit and to outside bodies, and regularly interact with
Government authorities concerned for protection of environment.
Maintain appropriate emergency procedures consistent with
available technologies to prevent / control environmental
incidents.
Provide appropriate training to all employees.
Ensure periodic audits to verify compliance with environment
management systems and personally carry out sample
environment audits to check efficacy of the systems.
Report environmental statistics to UNILEVER Corporate Safety &
Environment Group on a monthly basis.
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RESEARCH AND INNOVATION
CENTRES
Since most new products and processes are developed in these Units,
certain additional
responsibilities devolve on them to ensure implementation of the
Environment Policy of the company. In addition to the Unit Head's
responsibilities outlined above, the heads of these units will:
Ensure that a formal and systematic risk assessment exercise is
undertaken during the process/product development stage with
specific reference to environmental impact.
Transfer technology to the pilot plant and main production
through a properly documented process specification which will
clearly define environmental impact and risks associated with
processes, products, raw material and finished product handling,
transport and storage.
Ensure that treatment techniques are developed for any wastes
generated as a result of the new product/process and is
incorporated into the process specifications.
QUALITY POLICY:
Unileverconsiders quality as one of the principal strategic objectives to
guarantee its growth and leadership in the markets in which it
operates.
The company is committed to respond creatively and competitively to
the changing needs and aspirations of their consumers through
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relentless pursuit of technological excellence, innovation and quality
management across their businesses, and offer superior quality
products and services that are appropriate to the various price points
in the market as well as to their commitment to building shareholder
value.
The company recognises that its employees are the primary stheirce of
success in its operations and is committed to training and providing
them the necessary tools and techniques as well as empowering them
to ensure broad base compliance of this policy in the organisation at all
levels.
The company is committed to fulfill its legal and statutory obligations
and international standards of product safety and hygiene and will not
knowingly sell product that is harmful to consumers or their
belongings. It will institute systems and measures to monitor
compliance in order to meet its responsibilities to consumers.
The company will maintain an open communication channel with its
consumers and customers and will carefully monitor the feedback to
continuously improve its products and services and set quality
standards to fulfill them. The company is committed to extend its
quality standards to its contract manufacturers, key suppliers and
service providers and by entering into alliances with them, to jointly
improve the quality of its products and services. This policy is
applicable to production from its own facilities as well as to production
that is outsourced.
The company will periodically review this quality policy for its
effectiveness and consistency with business objectives.
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The company delegates authority and responsibility for dissemination
and implementation of this policy to each Business and Unit Head.
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SAFETY AND HEALTH POLICY
Unileversupplies high quality goods and services to meet the daily
needs of consumers and customers. In doing so, the Company is
committed to exhibit the highest standards of corporate behavior
towards its consumers, employees, the societies and the environment
in which we operate.
Towards this, the Company recognizes its responsibility to ensure
safety and protection of health of its employees, contractors and
visitors in all its operating sites, which include manufacturing, sales
and distribution, research laboratories and offices during work and
work related travel.
This Policy document defines the vision, principles, aim, required
actions and scope of the policy application as well as the responsibility
for execution.
Vision
"Their vision is to be an injury free organization."
UNILEVER NEWS:”We will bring safety on top of mind for all
employees and will integrate it with all business processes. We will
realize their Vision through an Integrated Safety Management
approach, which focuses on People, Processes, Systems, Technology
and Facilities, supported by demonstrated leadership and employee
commitment at all levels as the prime drivers for ensuring a safe and
healthy work environment”.
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SAFETY PRINCIPLES:
UNILEVER's Occupational Safety and Health Policy is based on and
supported by the following eight Principles.
These Principles have the same status as the Company's Code of
Business Principles:
All injuries and occupational illnesses are preventable
All operational exposures can be safeguarded
Safety evaluation of all business processes is vital
Working safely is a condition of employment
Training all employees to work safely is essential
Management audits are a must
Employee involvement is essential
All deficiencies must be reported and corrected promptly
In order to facilitate operationalisation of the Safety Principles, a
separate document has been prepared, which covers:
a) Safety Principles
b) Success Criteria
c) Illustrative KPI
CONSUMER SATISFACTION
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Indira is 20 years old, a tribal woman at Kondegaon village in Bastar
district. She is just back from the nearby jungles, collecting firewood.
After attending to her baby son, she will go to the village well to take a
quick wash. Yesterday her husband brought her a white soap, with pink
petals in it. Indira had requested him to buy one, for the festival later
this evening.
Indira is among millions of consumers in rural India who use Hindustan
Lever's products. She came to know about Lux through the TV set at the
community centre. It is not very costly, and also available nearby.
Home to over 700 million people, rural India comprises not only over
70% of India's billion-strong population, but also over 12% of the world's
population. The rural population already accounts for substantial
consumption of Fast Moving Consumer Goods and also consumer
durables. About 50% of the sales of soaps & detergents are generated in
rural India. Similarly, almost half the demand for black & white television
sets, pressure cookers, table fans, sewing machines also comes from
there.
COST MANAGEMENT:
But the potential is even larger, both in terms of consumption and
penetration. The fact that 70% of the population accounts for only 50%
of even relatively well-penetrated categories, like soaps & detergents,
indicates the enormous scope of consumption-led growth in these
categories. Therefore such categories will derive growth out of increased
usage. In categories, which are relatively less penetrated, like personal
products, rural India offers an even bigger growth opportunity through
greater penetration and then consumption. For example only three out
of 10 consumers in rural markets use shampoo or skin care products.
Therefore growth in such categories will emerge, as more consumers
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purchase these products, and then continue to use them regularly.
Hindustan Lever has taken many initiatives over the decades to create
markets in the rural hinterlands. By marketing relevant products, at
affordable prices.
A unique example is Hindustan Lever's Lifebuoy soap. In rural India,
health is of paramount importance, because indisposition is very directly
related to loss of income. Lifebuoy, whose core equity is health and
hygiene , has for decades now been synonymous with soap in rural
India.
At the same time, if products have to come up the order in the rural
purchase hierarchy, they have to be affordable. If rural India today
accounts for about half of detergents sales, it is because UNILEVER has
developed low-cost value-for-money branded products, like Wheel. The
company has also taken initiatives to create markets even for
apparently premium products, by offering them in pack sizes, like
sachets, whose unit prices are within the reach of rural consumers. For
example, initiated in the 1980s, sachets (Rs.2, Re.1, or 50 paise) today
constitute about 55% of Hindustan Lever's shampoo sales. With media
reach gradually increasing, rural consumers today, where the media has
its footprints, share the same aspirations with their urban counterparts.
UNILEVER has responded to the trend with low unit price packs of even
other products - Lux at Rs.5, Lifebuoy at Rs.2, Surf Excel sachet at
Rs.1.50, Pond's Talc at Rs.5, Pepsodent toothpaste at Rs. 5, Fair &
Lovely Skin Cream at Rs.5, Pond's Cold Cream at Rs.5, Brooke Bond
Taaza tea at Rs.5.
OTHER MARKETING STRATEGIES:
For decades now, Hindustan Lever has also taken initiatives to
circumvent the limitation in communication channels, by innovatively
leveraging non-conventional media. Among them are wall paintings,
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cinema vans, weekly markets (haat), fairs and festivals. Given the rural
consumer's fascination for cinema, the cinema vans show popular
movies, interspersed with products advertisements. Weekly markets,
fairs and festivals are parts and parcel of rural life. They give an
opportunity to address consumers, spread over many tiny hamlets, at
one location. The occasions are used to demonstrate product benefits
and also sell such products. Such demonstrations have played a
significant role in creating, for example, the detergents market in rural
India. In recent times, such demonstrations are being deployed to
illustrate how visible clean is not hygienic clean, and how using soap is
essential to prevent easily avoidable infections.
Communication through fairs and festivals are backed by direct
consumer contact. For example, in 1998-99, Hindustan Lever
implemented a major direct consumer contact, 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 shampoo,
talcum powder, toothpaste and skin cream, along with educational
leaflets and audio-visual demonstrations. The project has helped
eliminate barriers to trial, and has strengthened salience of both
particular categories and brands. Similarly in 2002, Hindustan Lever has
launched a similar large-scale direct contact, called Lifebuoy Swasthya
Chetana, which already covers 70 million people in 18,000 villages of 8
states. The project is intended at generating awareness about good
health and hygiene practices, and specifically how a simple habit of
washing hands is essential to maintaining good health. The initiative will
involve interaction with students and senior citizens, who act as change
agents.
AVAILABILITY OF UNILEVER’S PRODUCT:Generating awareness pays dividends only when steps are taken to
ensure constant availability of products. In rural India particularly,
availability determines volumes and market share, because the
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consumer usually purchases what is available at the outlet, influenced
very largely by the retailer.
Therefore, over the decades, Hindustan Lever has progressively
strengthened its distribution reach in rural India, which today has about
33 lakh outlets. Direct rural distribution in Hindustan Lever began with
the coverage of villages adjacent to small towns. The company's
stockists in these towns were made to use their infrastructure to
distribute products to outlets in these villages. But this distribution mode
could only be extended to villages connected with motorable roads, and
it could cover about 25% of the rural population by 1995.
Therefore in 1998, Hindustan Lever launched Project Streamline to
further extend its distribution reach. Under this initiative, the company
identifies sub-stockists in a large village, connected by motorable road
to a small town. This sub-stockist in turn distributes the company's
products to outlets in adjacent smaller villages using transportation
suitable to interconnecting roads, like cycles, scooters or the age-old
bullock cart. Hindustan Lever is thus trying to circumvent the barrier of
motorable roads. As a result, the distribution network, as of now, directly
covers about 50,000 villages, reaching about 250 million consumers.
The company simultaneously uses the wholesale channel, suitably
incentivising them to distribute company products.
UNILEVER has in the recent past established a common distribution
system in rural areas for all its products. Given the number of brands
and their packs the rural retailer usually requires, one UNILEVER
representative can take all the products from the company portfolio that
he needs. This common distribution system is now fully operational,
under one Regional Sales Manager exclusively dedicated to rural
markets of each region of the country.
Over time, Hindustan Lever will further strengthen its rural distribution
through mutually beneficial alliances with rural Self Help Groups (SHGs).
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Over the last five years, financial institutions, NGOs and government
organisations are working closely to establish SHGs, whose objective is
to alleviate poverty through sustainable income-generating activities.
Since 2001, Hindustan Lever is implementing Project Shakti, whereby
SHGs are being offered the option of distributing relevant products of
the company as a sustainable income-generating activity. The model
hinges on a powerful win-win relationship; the SHG engages in an
activity which brings sustainable income, while Hindustan Lever gets an
interface to interact and transact with the rural consumer. UNILEVER's
vision for Project Shakti is to scale it up across the country by 2005,
creating about 25000 Shakti entrepreneurs, covering 100,000 villages,
and touching the lives of 100 million rural consumers. Begun with 50
groups in Nalgonda district of Andhra Pradesh, with the support of local
authorities, the project has been extended, as of now, to about 50,000
villages in 12 states. A typical Shakti entrepreneur conducts business of
around Rs.10,000 - Rs 15,000 per month, which gives her an income of
about Rs 700 - Rs.1000 per month on a sustainable basis. As most of
these women are from below the poverty line, and live in extremely
small villages (less than 2000 population), this earning is very
significant, and is almost double of their past household income. The full
benefit of Project Shakti will be realised after some years.
This is the whole Distribution Chain of UNILEVER to cover the Rural market. The company have remarkably worked upon to make the supply chain from manufacturers to retailers simple with very few number of mediators and jobbers. It has helped them to maintain the transparency in the cycle and also have let them established a prompt delivery process. The products are manufactured in the factories all across India and then is supplied from there to the various Carriage and Forwarding (C&F) units which are 5-10 per state depending on the area they have to cover and are established by the company. These C&F units then supply the products to the various Wholesalers confined to their area only and according to the wholesalers demand. The wholesalers then supply the products to the semi-wholesalers and the retailers as per the volume of their order. Then the semi-wholesalers deliver the products to the retailers and customers.
STAGE 1-
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MANUFACTURER
C&F
In this stage the products reach to the Carriage and Forwarding unit from various manufacturing units established all across India. The volume of the delivery depends upon the quantity required/ordered by the C&F unit. The depot sends the request of the volume of the products to the Head Office, which then order the various factories to supply the products to the mentioned depot. The supply is met within a week. UNILEVER has 45 C&F’s with 7000 stockists and 2000+ suppliers and associates to target the market.
STAGE 2-
The C&F then supplies the products according to the demand of various wholesalers. Each of the depot cover a region assigned to them.Each C&F acquires 5-7 trucks and hire 4-5 more trucks to supply products everyday.They work on the concept of advance payment by DD by the wholesalers and deposit them in the bank which is transferred to the head office.
NATION WIDE MANUFACTURING:
80 factories, across India
The year was 1923. Lord Leverhulme, the legendary founder of Lever
Brothers, was visiting India. The nationalist sentiment in India was for
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C&F
WHOLESALERS
locally manufactured products. Lord Leverhulme, who believed that
what is good for a country is equally good for the company, responded
to that aspiration because he too shared that dream.
His dream ultimately was realised in 1934. In September 1934, after
more than a decade of discussions in London and in India, a Lever
factory was allowed to sprout on the land that had been reclaimed by
the Bombay Port Trust at Sewri. From here, a month later rolled out the
first cake of Sunlight soap to be manufactured in India. The same year,
Lever Brothers took over the Garden Reach Factory in Kolkata.
These two factories were the first in a manufacturing base, which today
literally dots the length and breadth of India. From Assam to Gujarat,
from Uttaranchal to Kerala.
Hindustan Lever's diverse product range is today manufactured in about
80 factories. In addition, the company outsources from 150 other units.
The operations involve 2,000 suppliers and associates.
DEVELOPING BACKWARD AREAS
Several UNILEVER factories are situated in backward areas. The
company has consciously responded to the national policy of
development of backward areas by setting up manufacturing units in
these places, which provide several direct and indirect employment
opportunities for these areas, and leads to general economic
development of these regions through industrialisation. In fact, all major
investments of UNILEVER, in recent years, have been either in A-
Category backward areas or No-Industry Districts. These include
factories in Khamgaon and Yavatmal (Maharashtra), Chhindwara
(Madhya Pradesh), Orai, Sumerpur and Khalilabad (Uttar Pradesh),
Haldia (West Bengal), Silvassa (Dadra & Nagar Haveli), Pondicherry,
Goa, Doom Dooma (Assam), Haridwar (Uttaranchal) and Barotiwala
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(Himachal Pradesh). Since 2001 itself, UNILEVER has set up nine new
factories in backward areas.
Equally, UNILEVER has an enviable track record in taking over sick
enterprises, in response to requests from Government, and converting
them into viable operations. The company's units at Mangalore and
Rajpura all bear testimony to this achievement. In the process,
UNILEVER has saved precious jobs and developed local economies.
UNILEVER's manufacturing facilities, like the Khamgaon soap plant and
the Sumerpur detergent bar unit, are recognised as among the best in
the Unilever world.
UNILEVER has adopted Total Productive Maintenance (TPM) for achieving
manufacturing excellence since 1994. As on date, TPM is in different
stages of implementation in 28 factories. Four UNILEVER factories have
already received the TPM Consistency Award, and 14 factories have
been awarded with the TPM Excellence Award.
MARKETING NEEDS EVERY WHERE
How do you ensure that Mr. Ramesh in Kanyakumari gets his Lifebuoy
soap and Mrs. Kulkarni in Jammu gets to know how Bru coffee tastes
even before she has bought it? Well, you need to have a cutting edge
distribution network in place.
Hindustan Lever's distribution network is recognised as one of its key
strengths. Its focus is not only to enable easy access to our brands, but
also to touch consumers with a three-way convergence - of product
availability, brand communication, and higher levels of brand
experience.
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UNILEVER's products, manufactured across the country, are distributed
through a network of about 7,000 redistribution stockists covering
about one million retail outlets. The distribution network directly covers
the entire urban population.
The general trade comprises grocery stores, chemists, wholesale,
kiosks and general stores. Hindustan Lever services each with a tailor-
made mix of services. The emphasis is equally on using stores for
direct contact with consumers, as much as is possible through in-store
facilitators.
AT THE SUPERMARKETS
Self-service stores and supermarkets are fast emerging in metros and
large towns. To service modern retailing outlets in the metros,
UNILEVER has set up a full-scale sales organisation, exclusively for this
channel. The business system delivers excellent customer service,
while driving growth for the company and the store. At the same time,
innovative marketing initiatives are taken to provide consumers with
experience of our brands at the store itself, through product tests and
in-store sampling.
IN THE VILLAGES
UNILEVER has also revamped its sales organisation in the rural
markets to fully meet the emerging needs and increased purchasing
power of the rural population. The company has brought all markets
with populations of below 50,000 under one rural sales organisation.
The team comprises an exclusive sales force and exclusive
redistribution stockists, under the charge of dedicated managers. The
team focuses on building superior availability, while enabling brand
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building in the deepest interiors. UNILEVER's distribution network in
rural India already directly covers about 50,000 villages, reaching
about 250 million consumers, through about 6000 sub-stockists.
HARNESSING INFORMATION TECHNOLOGY
An IT-powered system has been implemented to supply stocks to
redistribution stockists on a continuous replenishment basis. The
objective is to catalyse UNILEVER's growth by ensuring that the right
product is available at the right place in right quantities, in the most
cost-effective manner. For this, stockists have been connected with the
company through an Internet-based network, called RSNet, for online
interaction on orders, despatches, information sharing and monitoring.
RS Net covers about 80% of the company's turnover. Today, the sales
system gets to know every day what UNILEVER stockists have sold to
almost a million outlets across the country. RS Net is part of Project
Leap, UNILEVER's end-to-end supply chain, which also includes a back-
end system connecting suppliers, all company sites and stretching
right upto stockists.
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SHAKTI - CHANGING LIVES IN RURAL INDIA
Shakti is UNILEVER's rural initiative, which targets small villages with
population of less than 2000 people or less. It seeks to empower
underprivileged rural women by providing income-generating
opportunities, health and hygiene education through the Shakti Vani
programme, and creating access to relevant information through the
iShakti community portal.
In general, rural women in India are underprivileged and need a
sustainable source of income. NGOs, governmental bodies and other
institutions have been working to improve the status of rural women.
Shakti is a pioneering effort in creating livelihoods for rural women,
organised in Self-Help Groups (SHGs), and improving living standards
in rural India. Shakti provides critically needed additional income to
these women and their families, by equipping and training them to
become an extended arm of the company's operation.
Started in 2001, Shakti has already been extended to about 80,000
villages in 15 states - Andhra Pradesh, Karnataka, Tamilnadu,
Iams, Olay, Pampers, Pantene, Pringles, Tide, and Wella).
Acquisitive P&G bought Clairol in 2001 and a majority of Wella in
2003. Its purchase of Gillette in late 2005 was its biggest buy in
company history.
FINANCIAL HIGHLIGHTS
Fiscal Year End: June
Revenue (2007): 56741.00 M
Revenue Growth (1 yr): 10.40%
Employees (2007): 110,000
Employee Growth (1 yr): 0.00%
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RESEARCH METHODOLOGY
The section includes the overall research design, the sampling
procedure, the data collection method, the field method, and analysis
and procedure.
Research design:-
For this research project exploratory method is using
DATA COLLECTION METHOD:-
The data collect for the research can be classified as primary data and
secondary data.
Primary data is by visiting existing customer and expected customer of
Unilever. And making them fill up the questionnaire
Secondary data is from internet, books, magazine etc.
RESEARCH INSTRUMENT
The instrument use for data collection is structured questionnaire.
Question is open and close ended depending upon the information that
needed to be elicited. I am also using the scaling technique to assess
the attitude of the customer.
Sampling plan:-
Keeping all the constrains in mind a sample size of 100 people .The
sampling procedure is systematic sampling
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FUTURE SCOPE
The Indian FMCG market currently appears to be at a crossroads, and
UNILEVER are attempting to change customer perceptions of their
brands and where specific buying motivations appear to be replacing
generalities.
This meanwhile, is quite unlike the west where buyers consider
aesthetics, comfort and safety, not necessarily in that order, before
finalising a purchase. “It’s smarter to think about emotions and
attitudes, if marketers are to do a better job of marrying what a
UNILEVER offers to the consumer’s image of the offerings. Another
important outcome of the research is the believability of the claims.
Most of the claims are realistic and easy to understand. Most of the
people don’t understand the quality claims by UNILEVER.
The mindset of the Indian consumer is such that he is delighted if he
buys a pen a little cheaper than his neighbour. Things are, however,
slowly changing and customers at the upper end of the market are now
ready to pay more for more. I hope that this approach will soon enter
the new era, maybe not with the same intensity .
“Success will largely be determined to the extent a company
can differentiate itself in terms of intangibles that go with a Product”.
Thus, success could well hinge on the best of bundle of services that
UNILEVER provides.UNILEVER grew from zero to the 2,268 Million $,
mark and the number One FMCG company in India this year. Looking
at the present scenario it can be said that though there is lot of
competition in the market but UNILEVER is picking up well. The
landmark achievement comes in 74 years in India after clinching its
first overseas sale.
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FINDINGS, DATA ANALYSIS AND CONCLUSIONS WHEN COMPARED WITH PROCTER AND GAMBLE LTD.
Findings
On the basis of research, we found that there is a nominal difference in the efficiency of Unilever. vis-à-vis Procter and Gamble Ltd. I have reached to this conclusion on the basis of following findings. They are as follows.
PRODUCT LINE
Unilever
UNILEVER Home & Personnel Care
> In personal Wash they have Lux , Lifebuoy, Liril, Hamam, Breeze, Dove, Pears and
Rexona .
In Laundry they have Surf Excel, Rin and Wheel. In skin care their brands are Fair N Lovely and Ponds.
In hair Care they have Sunsilk Naturals and Clinic All clear.
In Oral Care their brands are Pepsodent and Close-up.
In Deodorants they have Axe and Rexona.
In Colour Cosmetics they have Lakeme.
In Ayurvedic Personal And Health Care they have Ayush.
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Foods
In tea they have the brand name brook bond and lipton. In coffee they have bru.
In foods they have kissan and kinnor annpuran.
In ice creams they have the kwality walls.
Water
Unilever has launched pueit, the most advanced in home water
purifier in the world.
Procter and Gamble P&G Hygiene and Health care ltd. markets several leading brands: Whisper sanitary napkins in the Feminine Hygiene category; Health care products such as Vicks VapoRub, vicks action 500, Vicks Cough Drops, Vicks Inhaler; skin care and cosmetic products viz. Old Spice.
P&G Home Products Ltd. markets several leading brands. In Fabric Care P&G has two of its world leading detergents Tide and Ariel, in Hair Care they have Pantene Pro V, Head & Shoulders and Rejoice. In Baby Care they have Pampers.
CONCLUSION- As Unilever has more brands in its basket then Procter and gamble so it is more close to common man and touching his or her daily life in a more comprehensive manner.
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DEALERS
While choosing the dealers UNILEVER mainly emphasizes on the ‘market potential of that area, dealer’s financial position, and dealers back ground (previous business), present business, goodwill and risk taking capabilities ,by the good responsibility of the dealer.
PROCTER AND GAMBLE
There is no difference as such in the process of selection of dealers in Procter and Gamble also. Like UNILEVER, P&G also considers dealer’s financial position; present business, goodwill and risk taking capabilities.
Finally, Dealers of UNILEVER are satisfied by the companies support in there sales because the company provides them with various schemes and discounts, whereas satisfaction of P&G dealers lies in good promotional activities, advertisement and the flexibility that the company provides them. According to the senior officials of P&G it was found that it’s a volume based company, hence all the above stated parameters helps the dealer to attract more and more customers.
MODE OF TRANSPORTATION
Unilever; UNILEVER uses modified trucks and rails to deliver the products from various production sites to the dealers. They are using new state of the art technology so that they can even track every single bottle of shampoo. Transportation cost is shared by UNILEVER and the dealer.
PROCTER AND GAMBLE
P&G is also using road and railway transportation system to deliver product from various production sites to the dealers. They are also using latest Information Technology to track there consignment whose backend is managed by infosys. Each dealer has to keep the Good Receipt Note (GRN) number and report of the whole items of delivered products. Transportation cost is paid by P&G.
In the end, both P&G and UNILEVER uses advanced tracking technology to track the goods and both companies use railways and roadways for transporting there products. In UNILEVER transportation cost is shared by UNILEVER and the dealer, where as at P&G, transportation cost is paid by P&G.
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FLEXIBILITY
Unilever As far as flexibility is concerned; our group found that UNILEVER provides more flexibility in terms of delivery of produce. UNILEVER has there own warehouses in every state and if the dealer orders more , he is supplied with the products in time.
As far as flexibility is concerned; our group found that P&G does not provides more flexibility in terms of delivery of produce and in taking order from dealers.
Our group has found that Dealers of UNILEVER are more satisfied than the dealers of P&G and therefore UNILEVER is a step ahead in terms of flexibility of placing orders and accepting orders from the dealers.
DISTRIBUTION CHANNEL STRUCTURE
Unilever- Unilever channel structures consist of whole seller, mass retailers, rural and modern trade. Their new approach to distribution is holistic and seeks a three way convergence of product availability brand communication and brand experience. They are reinventing distribution—creating new channels and redefining the way current channels are serviced. They are building new capabilities in training the large number of people involved in these initiatives.
Procter and gamble’s channel structure also have whole sellers, mass retailers. They are revamping the company’s distribution system using efficient consumer response {E C R} principles. The new distribution system has given the company considerable cost and process efficiencies while significantly availability and visibility of the company’s product in the stores.
Our group has found that Unilever has more effective and efficient distribution network as compared to P & G, which increases the availability and presence of UNILEVER product. UNILEVER is also given emphasis on penetrating the rural market as well.
DEALING WITH UNSOLD AND DAMAGED MERCHANDISE
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Unilever-It depends on the condition and type of the product. If company feels that it is not the fault of the dealer then company would return it, unsold products are mostly taken back by UNILEVER
P & G replaces the damaged product with the new one, it means that the damaged product are replaced by new product.
Our group has found that both the companies take back the unsold product however P & G is more flexible in returning the damaged product as compared to the UNILEVER. Hence P & G is more flexible here.
PERFORMANCE APPRAISAL SYSTEM
UNILEVER - The performance appraisal system in Unilever is done under the supervisory of the Appraisal supervisor. The supervisor keep track of the performance of the employees and based on their performance he choose the right method of performance appraisal.the main method of performance appraisal that have been adopted by Unilever are 360 degree appraisal and supervisory appraisal methods.it is done as an early exercise and performance appraisal parameter is the past performance of the employees.
The performance appraisal system in Procter and gamble is also done under the supervisory officer and almost same method are used as in the Unilever.
the conclusion that our group has found that there is hardly any differences is the performance appraisal methods in both the companies .both the companies are taking almost the same measures and same parameters for performance appraisal , however both the company were not willing to disclosed any changes brought in performance appraisal system during the past five years .both of the companies said that there have been change in some areas and which has shown positive results, but not willing to give any reasons and what changes have been brought.
TARGETS
Unilever: UNILEVER has different channel members with specified targets and they are intended to increase sales, UNILEVER has also
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made changes in channel members during 2001-2006 to increase sales of the company. Every channel member has to fulfill there given targets, channel members expect the company of ROI. Every channel member gets credit period of two weeks. There was also change in performance appraisal system during 2001-2006 to improve sales. UNILEVER has also made changes in commercial terms intended to increase the sales in different channels and also to increase profit margins to company.
P&G also has different channel members with specified targets and they are intended to increase sales .P&G also made changes in channel members during 2001-2006 to increase sales of the company. The channel members expect ROI depending on there knowledge and on there performance to. Channel members get credit period of 30 days. Payment terms of P&G are also flexible to the channel members and P&G also has flexible payment terms P&G also offers many discounts to these channel members. P&G has made many changes to there commercial terms during 2001-2006 to increase sales.
Both UNILEVER and P&G are flexible to channel members, but UNILEVER runs some monopoly over the market by offering a credit period of only two weeks where as P&G offers credit period of 30 days. UNILEVER also sets targets to there channel members and provides very less margins to dealers compared to P&G.
SALES FUNCTIONING:
UNILEVER is emphasizing on rural areas through project Shakti these days and sales also have been increased and UNILEVER does not have any sales outlets UNILEVER assigns sales territory to there sales persons according to there skill and experience and assigns targets to them. Performance appraisal of sales force is done by appraisal supervisor and it is done through 360 degree appraisal method, parameter used is performance of the sales personnel . UNILEVER adopts on the job and off the job training system to there sales force it is emphasized on improving skill and experience of the sales personnel. Sales personnel are motivated through incentives and promotions.
Procter And Gamble: P&G has increased the number of outlets in the country and the population in the area also increased and there is no effect on sales. P&G sets targets to there sales force on the basis of increase or decrease in demand and also according to the previous sales , sales territories are assigned according to the capabilities of the
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sales personnel, responsibility of the sales personnel is to clarify the doubts of the customer and make sales of the product. Performance appraisal of sales force is done by the manager by doing meeting with them parameters of appraisal is increase or decrease in sales it is done on monthly basis. P&G trains their sales force by on the job training and training process is emphasized on skill and experience, P&G has also brought many changes in the training system that has affected its sales too. P&G motivates their sales force by providing them with targets and incentives.
Both P&G and UNILEVER trains their sales force and has a good performance appraisal system, P&G does appraisal on a monthly basis depending on increase and decrease of sales where as UNILEVER does it once in a year.
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RECOMMENDATIONS
Both the companies having good market share in India and it keep on
increasing. Both the co. i.e. UNILEVER and P&G should open exclusive
shop. UNILEVER is already having exclusive shop in Mumbai called
SANGAM STORE. But it is only in India so it should be increased. The
employee should be given uniforms in which the name of the company
should be printed, by doing this the sales people get motivated. These
shops should be opened for 24 hours. They should offer 24 hours free
home delivery system. The delivery vehicle should be attractive the
name of the company should be printed in that so that it becomes the
sources of advertisement.
The companies should emphasis on its advertisement, there should be
BRAND FIT in that. For example when lux launch its advertisement with
sharukh khan with girls. It was heavily criticized because it was not fit
with the brand. It adversely affect the opinion of the customer and it
results in decrease in sales.
Both companies should emphasis their business in areas. They should
penetrate their business in the rural areas. 69% of the Indian
population lives in rural areas. There is huge market there and very
less market has been penetrated. Both these companies should
concentrate on rural areas. P&G has been hardly been seen in the rural
areas.
So they should increase their presence.
They should increase their CSR activities in northern India. At present
they are currently doing their CSR in southern India. So they should
increase their activities in north India also.
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SUGGESTIONS
KEY ATTRIBUTE COMPONENTS:
Value for money and Customer Care
Operational attributes.
Physical attributes.
Brand Image.
Customer Specific Details.
In any correspondence with the customers the message should be sent
in these components only to have the maximum benefit from the
advertisement. Also these components should be dealt with
independently. The advertisements should speak only of the believable
concepts rather than glorifying the pretentious ones. The basic need of
the customer need to be addressed which is actually not much
expensive and better quality.
UNILEVER sales growth in june 2007 was decreased due to the problem
with promotion and pricing. Although being the most competitive
product on the basis of the Market Operating Price (MOP), the
shampoos are still not selling much. This is perhaps due to the
bargaining stress on the customer and the weak push given by the
dealer to the particular item, when actually it should be sold like a high
volume product.
Another serious suggestion is that UNILEVER must give good attention
to their all the products rice and all are not getting much attention. The
dealers don’t provide much support to the customers in making them
understand the real Quality behind them. Either, the technical details
should be presented in a clearer manner or the dealers need to be
educated properly.
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LIMITATIONS
Everything in this world has its own advantages and disadvantages
which shows ‘nothing is perfect’.
Following are the problems faced but it’s a part of game:
1. TIME CONSUMING: It is very much obvious that it is a time
consuming process. So much time has been spent for this purpose.
2. LOW PARTICIPATION: Obviously many respondents have not
participated in this and have also created some problems which
simply shows that they were not interested.
3. BIASNESS: Sometimes interested customers were also biased so the
collected figures involve both positive and negative figures.
4. It does not cover all the aspects of the company.
5. SUBJECTIVE: This project only tells you what it is all about.
Q7. What Recommendations or suggestions would you like to give for improvement of our products?
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QUESTIONNAIRE
1. Do you keep products of Parle in your shop? ( please tick mark on the appropriate answer) a).Yes b). No(If the answer is yes then go to question number: 3 )
2. Why don’t you keep the products of Parle in your shop or why did you stop keeping its products?
Yes Noa). erratic supply b). lack of demandc). low margin d). no suppliere). don’t know about the company
3. Which products of UNILEVER do you keep?
Personal Wash
Lux __________ Breeze ___________ Dove __________ Others ___________
Laundary Surf Excel _______ Rin ________ Wheel Others
4. What is the sales/demand of the product?1. Very High 2. High
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3. Average 4. Rarely 5. Very Rarely 6. Never
5. From whom do you purchase your product?1). Distributor 2). Dealer 3). Agency 4). Wholesaler
6. How do you rate the delivery process by the dealer?1. Excellent 2. Above Average 3. Average 4. Below Average 5. Extremely Poor
7. How many dealers are there in the district?a).One b)Two. c)Three. d)More than three.
8. Which vehicle do they mainly use for delivery?1). Two wheeler
a). scooters__ , b). motorbike__.2) Three wheeler 3) Four wheeler
a) van__ ,b) truck__,c) others__.
13. What are the other schemes and incentives offered by them?______________________________________________________________________________________________________.
14. What improvements would you like to have in the distribution process?______________________________________________________________________________________________________.