3. Overview
1931 :
Unilever sets up Hindustan
Vanpasti Manafacturing
Company
1933:
Lever Brothers set up
Indian Subsidiary
1935:
United Traders Limited
enter India
1956:
Hindustan Lever Ltd(HLL)
is formed following the
merger of the three
companies
1982: Government allows
51 per cent Unilever
shareholding in HLL
2007: Company name
changed to Hindustan
Unilever Ltd (HUL)
2008:
Market Leader with sales
of $2.8 Billion
2017:
Maintains Market Leader
position with 34.7% share
“OurVision is to earn the love and respect of India by making a real difference to every India”
-Nitin Paranjpe,CEO and Managing Director
• Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods company with a heritage of
over 80 years in India.
• On any given day, two billion people use Unilever products to look good, feel good and get more out of
life.(26% of theWorld Population)
• 9 out of 10 Indians use an HUL product on a daily basis
• Ranked No 1 in India on the Forbes list ofThe World’s Most Innovative Companies 2017.
• In India 18,000 people work for Unilever out of which 30% are women
• Identified their purpose as making sustainable living a commonplace.
• In 2009, HUL launchedThe Compass – our strategy for sustainable growth.
4. Overview
• Identified their purpose as making sustainable living a commonplace.
• In 2009, HUL launchedThe Compass – our strategy for sustainable growth.
• Principles followed by HUL :
1. A better future for children
2. A healthier future
3. A more confident future
4. A better future for the planet
5. A better future for farming and farmers
What does the Logo Stand for?
5. Product Mix
• Product Mix Width : 11
• Product Mix Length : 52
• Unilever has more than 400 brands, 14 of which generate sales in
excess of €1 billion a year.
• 17 Brands of HUL feature in the top 100 ‘Most Trusted Brands’ list for
2016 published by The Economic Times, 4 of which are in the Top 10
Consistency Mix
6. M&A STRATEGY, CORE COMPETENCIES
COMPETITIVE ADVANTAGE
Network of about 7000
redistribution stockists
covering about 1 Million
direct retail outlets
Total coverage :~ 7 Million
•2000+ suppliers
•7500 distributors
Serving HUL’s 100
decentralized
factories
Point of purchase method
• Higher level of direct
contact through in-store
facilitators , sampling,
education and experience
•Customer management
•Supply chain capabilities
for partnering emerging
self service stores &
supermarkets,
Unify IT solution allowing
real time tracking of
secondary sales and stocks
at the retail outlets
Separate channels
identified on the basis of
consumer behavior and
buying pattern
CORE COMPETANCY? HUL’s Wide &Versatile Distribution Network
7. RURAL INDIA’S COMPETITIVE ADVANTAGE
Shakti Programme empowered 72,000 Shakti
Entrepreneurs across 16 states by December 2016
supported by 48000 Shaktimaans
In 2010, HUL extended Project Shakti to include
‘Shaktimaans’. Shaktimaans are typically the
husbands or brothers of Shakti Ammas
This model has been the growth driver for HUL
and presently about 50% of HUL's FMCG sales
come from rural markets
Project Shakti is HUL’s initiative to financially
empower rural women and create livelihood
opportunities for them
8. Business strategy:
•Volume led growth and improvement in operating
margin.
•FY 17 saw an Ebitda margin growth of just 90 basis
points
•Market slowdown and channel correction were the reasons
for lower than expected volumes in the last quarter
M & A Strategy
•Lakme :used its already
established distribution network
•Ponds (India) Limited : started a
significant economic base in
specialty products and personal
products
Cosmetics &
Personal care
Food &
Beverages
•UB group’s Kissan
Products: entered food
business
•Brook Bond Lipton India
Ltd
•Considers takeovers as a preferred mode of
strategy for rapid expansion
9. • Monthly report to Board and Chairman during the 15 month pilot project
• Venture Leaders to oversee projects which are potentially viable, scalable & worthy of
future investment
Consistently ensuring top leadership participation in the project
• To ensure initiative is continually aligned , design of metrics was the key
• Initially focus was on scalability & sustainability later focus shifted to financial targets
and organizational structure
Designing unique metrics and making adjustments to organizational structure
• Difficult to predict customer data for rural Indian population
• Used ‘Density MappingTechnology’ to determine population density and distance
between villages
Using technology to design a flexible rural supply chain and sales network
Strategies for success in Remote markets
• 70% of the Indian
population lives in
rural market
• 65% of HUL’s sales
is from rural
market only
• HUL grew over 6%
in rural market
where as its
competitors grew
at 1-3% only
10. PESTLE ANALYSIS
Political
LegalEnvironmental
TechnologicalSocial
Economical
• Deregulatory environment in 1991
• Market regulations, Eg. GST
• Rin bar- 17% slashed price
•Trade agreements
• Monsoon 2017; 4% revenue growth
• Global Warming
• Solid waste mangement
•Water conservation
• Avenues for women to earn livelihood
• Project Shakti a big success
• Lifebuoy hand washing program
• Pureit provides clean water and reduces
CO2 emission
• Raw material price fluctuation
• Price sensitivity of FMCG products
• Stiff competition from local players
Eg.Wheel vs Ghadi
• Digitization to engage customers
• CRM in modern trade
• Predictive analytics and big data
• E-com is key driver for industry growth
• Health and safety; Factories Act 1948
• Equal opportunities, Eg. MNREGA
• Advertising standards
• Consumer rights and laws
11. STRENGTHS
• Strong brand equity- Unilever group
• 18000 employees
• Extensive distribution system- reach to 6.4 million retail
outlets
• Innovative FMCG company- Two R&D centres in India in
Mumbai and Bangalore
• Products with presence in over 20 consumer categories
• 700 million Indian consumers using its products
WEAKNESS
• Market share is limited due to presence of other strong
FMCG brands
• High advertising and promotion spend- 12-14% of its
sales
• Low growth in food business- Knorr soups, Annapurna
atta etc.
THREATS
• Low global growth and geopolitical uncertainties in India
• Increasing no. of local and national players e.g. Patanjali,
Ghari etc.
• Emerging e-commerce channels
• Sluggish rural demand – due to poor monsoons and
demonetization (2016-17)
• GST impact-Increased tax for detergent, shampoo and
skin care products
OPPORTUNITIES
• Increase its ‘naturals’ (Ayurvedic / herbal) portfolio
through M&A
• Using big data and analytics for effectively meeting the
objectives of campaigns
• Increasing purchasing power of people in India-demand
for premium products
SWOT ANALYSIS
13. PORTER’S 5 FORCES
Competitive Rivalry
FACTORS DETERMIING
RIVALRY
INTENSITY `
HIGH NUMBER OF FIRMS STRONG FORCE ITC , P&G
AGGRESSIVENESS OF
FIRMS
STRONG FORCE Marketing expense of HUL is
9.9% of revenues, ITC-2.25%,
P&G- 7.1%
LOW SWITCHING COSTS STRONG FORCE Sunsilk (80ml)- 48 Rs
L'Oreal (75 ml) – 51 Rs
Pantene (80 ml) – 50 Rs
Bargaining Power of Customers
FACTORS DETERMIING
BARGAINING POWER
INTENSITY
LOW SWITCHING
COSTS
STRONG FORCE
HIGH QUALITY OF
INFORMATION
STRONG FORCE Access to online information
through customer reviews and
other insights
14. PORTER’S 5 FORCES
Bargaining Power of Suppliers
FACTORS DETERMIING
RIVALRY INTENSITY
SIZE OF INDIVIDUAL
SUPPLIERS
MODERATE FORCE PAT for Galaxy Surfactants -106
crores. PAT for HUL- 4082
crores
POPULATION OF SUPPLIERS MODERATE FORCE Backward Integration – HUL
owns 19 tea estates. Investment
of 40 crores in skin care factory
at Silvasa
OVERALL SUPPLY MODERATE FORCE Any change in supplier’s
production levels affects overall
industry Threat of Substitutes
FACTORS DETERMIING
RIVALRY INTENSITY
LOW SWITCHING COSTS STRONG FORCE
LOW SUBSTITUTE
AVAILABILITY
WEAK FORCE Substitutes needed by
consumers not readily available.
Close Up of HUL is readily
available at grocery stores
LOW PERFORMANCE TO
PRICE RATIO OF
SUBSTITUTES
WEAK FORCE Vicco Toothpaste (100gm)- 74
Close Up (80 gm) - 45
15. PORTER’S 5 FORCES
FACTORS DETERMIING RIVALRY INTENSITY
HIGH COST OF BRAND
DEVELOPMENT
WEAK FORCE Himalaya started as a FMCG company in
2009 has a target of 12% market share.
Exception- Patanjali
HIGH ECONOMIES OF SCALE WEAK FORCE Competitive pricing
To achieve better economies of scale,
focus on better structure & Organization
Ex: Axe deodorant launched together in
52 countries
Threat of New Entrants
16. VALUE CHAIN
Primary Activities
Inbound Logistics:
• Tie up with Mahindra logistics with farmers and owns
19 tea estates
Operations:
• Implements kaizen,TQM and cost optimization
• Sumerpur factory won ‘National Energy Conservation
Award’ for saving 567 MWh
Outbound Logistics
• Total 35 C&F agents . Partnered with Future Group
logistics
• Hindustan Lever Network-Direct selling channel
• Covers 50,000 villages. Shakti amma provides
penetration in villages with no roads for trucks
• Full-scale sales organisation for supermarkets
• RS Net for monitoring
17. Marketing and Sales
• Celebrity endorsement
• Kaan KhajuraTesan-50 lakh subscribers
Services
• Lakme salons, Dove litmus test and in store sampling.
Support Activities
Firm Infrastructure
• 5 whole time Directors and 5 independent non-executive Directors.
• Two self-sufficient divisions - Home & Personal Care & Foods - supported by certain central functions
Human Resources Managements
• Future Leaders Program
• 50 % of management committee and 500+CEOs in India and abroad
Technology Development
• HURC in Mumbai and Bangalore
• 20,000 registered patents.$5.3 million R&D expense in 2016
Procurement
• Follows sustainable sourcing code of conduct
18. McKinsey’s 7S Framework
STRATEGY
STYLES
SYSTEMS
STRUCTURE
STAFF
SKILLS
In house monitoring of database, reduces
costs, dependency and time
On-the-fly demand projections and helps
avoid stock-out losses
Zero-based budgeting
Stepping into One programme among
shop floor employees for leadership &
technical skills
In house manufacturing
R&D support from Unilever
Attrition rate – 5%
FMCG average – 15%
36% women managers
Graduate Employer of Choice by
Nielson
'Connected 4 Growth’: Pruned reporting
layers: Agility, Quick decision, Innovations
Winning in Many Indias(WiMi)
Nitin Paranjpe –Youngest CEO,
Lever Lifters promote young talent
Business Leadership Trainee (BLT)
programme
Unilever Sustainable Living Plan (USLP)
Prabhat: promotes health and hygiene
for employees
51% of raw material sustainably sourced
Compass: 2x growth in market cap by
2017, while reducing environmental
footprint
₹30 Crore investment in R&D
20. ANSOFF’S GROWTH STRATEGY
M
A
R
K
E
T
PRODUCTS
Existing New
ExistingNew
Diversification
New Product: Ayurvedic products under brand Ayush
Market: India
• Why- Behemoth vs Baba
• Launch 20 products of toothpaste, skin creams and other
beauty products with mass market positioning
• Price range between Rs. 30 and Rs. 130
Product development
New Product:Various new products of Dove
• Shift from soap brand to a beauty brand
• The ads made used real women as opposed to models
• High priced and good quality
• Needed to be differentiated to remain competitive
• Brand extension- Deodorant, Facewash, Lotions etc
Market penetration
Market: India
Product: Lifebuoy
• Re-launched as sales plummeted in 2001 by 15%
• Swasthya Chetna Campaign and a new shape of the soap
• In 2009, introduced the Lifebuoy Way to reach rural
markets
Market development
Market: India
• Existing product- Citra, skin care brand which is available
in Middle east and South East Asia
• Competition to Patanjali, Dabur and Himalaya
• Targets women between the age 15-35 yrs
• Why-further strengthen HUL’s dominance in skin care
24. BLUE OCEAN STRATEGY
Creation by the company of a new, uncontested market space that makes competitors
irrelevant and that creates new customer value while decreasing costs
• Launched in 1997 in the Indian market; launched almost at the same time as
that of Maggi Soups (Nestle).
• Only competitor at the time of launch – Maggi Soups.
• Market leader ever since its launch in the Indian Market.
• Market share as of 2016 – 60% (Source – Euromonitor International), 0.5%
rise compared to the previous year
25. BLUE OCEAN STRATEGY
Creation by the company of a new, uncontested market space that makes competitors
irrelevant and that creates new customer value while decreasing costs
•Launched in 1975 as a safe and effective skin lightening cream; Created a new
segment for skin care and fairness.
•Targeted at Asian women who considered fairness as a status symbol.
• Market leader ever since its launch.
• Market share as of 2016 – 53%.
• Closest competitor – Emami’s Fairever – Approx. 23%.
26. BLUE OCEAN STRATEGY
Creation by the company of a new, uncontested market space that makes competitors
irrelevant and that creates new customer value while decreasing costs
• Launched worldwide in 1969, in India in 2008.
• First product in the Fabric conditioner space in the Indian market.
• Used to make the garments gentle and perfumed and also preserves the color
of the clothing even after a number of washes.
• Posted global sales of more than Rs. 4500 crores, and is the market leader in
the fabric conditioner space.
Economic – raw material procuring is fist step of supply chaina dn fluctuation in price can be a macro economic factor affecting the business. People are price sensitive to products used in daily lives. Ghari is a major player in UP and beats hul’s wheel in market share
Political…perger with tata and lakme brought them into food and cosmetic environment. change in taxation landscape in india because of GST…Trade agreements in the distribution channels http://www.business-standard.com/article/economy-policy/gst-impact-hul-slashes-prices-of-detergents-soaps-extends-tax-benefits-117070200372_1.htmlEnvironment…4% revenue growth improvement in technology to reduce specific energy consumption. india has 18% of world population and just 4% of freash water available. Manufaturing factori…HUL trie to reduce its consumption of fresh water per unit output of its operations…minimize the discharge of solid waste …http://www.itcportal.com/sustainability/sustainability-report-2006/html/itc-impacts.aspx
Economic…http://www.cio.in/cio-interview/indian-fmcg-industry-turning-tables-digital-marketing-strategies
http://www.marketing91.com/swot-analysis-of-hindustan-unilever/
We grew strongly in the fast emerging e-commerce channel even as we adopted sophisticated IT solutions to improve our reach and service to millions of small retailers across the length and breadth of India.
The two new fastest growing channels are modern trade and e-commerce. The likes of Amazon and Flipkart are threatening to change buying habits in a way that could put traditional distribution models at risk. Breadth of products, aggressive pricing and convenient delivery options have made this the retail channel of choice for a new generation of consumers.