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Distribution Model of HUL

SDM Assignment

Ankit Chhabra (104)

Sankalp Kohli (110)

Abhijit Arora (303)

Arpan Mehra (309)

Anshum Kawatra (308)

Anshul Jindal (306)

MBA (Tech.)

NMIMS, MUMBAI

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Introduction – Hindustan Unilever Limited

Hindustan Unilever Limited (‘HUL’), formerly Hindustan Lever Limited (it was renamed in

late June 2007 as HUL), is India's largest Fast Moving Consumer Goods company, touching

the lives of two out of three Indians with over 20 distinct categories in Home & Personal

Care Products and Foods & Beverages. These products endow the company with a scale of

combined volumes of about 4 million tonnes and sales of nearly Rs. 13718 crores.

HUL is also one of the country's largest exporters; it has been recognized as a Golden Super

Star Trading House by the Government of India.

The mission that inspires HUL's over 15,000 employees, including over 1,300 managers, is to

"add vitality to life." HUL meets every day needs for nutrition, hygiene, and personal care

with brands that help people feel good, look good and get more out of life. It is a mission

HUL shares with its parent company, Unilever, which holds 52.10% of the equity. The rest of

the shareholding is distributed among 360,675 individual shareholders and financial

institutions.

HUL owns brands like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's,

Sunsilk, Clinic, Pepsodent, Close‐up, Lakme, Brooke Bond, Kissan, Knorr‐Annapurna,

Kwality Wall's which are household names across the country and span many categories ‐

soaps, detergents, personal products, tea, coffee, branded staples, ice cream and culinary

products. These products are manufactured over 40 factories across India. The operations

involve over 2,000 suppliers and associates. HUL's distribution network comprises about

4,000 redistribution stockists, covering 6.3 million retail outlets reaching the entire urban

population, and about 250 million rural consumers.

We have analyzed the distribution network of HUL from the following aspects:

1) Introduction of the company

2) Distribution Model

3) The key stakeholders in the distribution model

4) How is the work of these stakeholders monitored?

5) What incentives are given to these stakeholders?

6) What are the key challenges in the distribution model?

7) How are the key challenges tackled by the company?

8) Recommendations on whether the company's action plan for tackling distribution

challenges is right.

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Distribution Network of HUL

Evolution over Time

The HUL’s distribution network has evolved with time. The first phase of the HUL

distribution network had wholesalers placing bulk orders directly with the company.

Large retailers also placed direct orders, which comprised almost 30 per cent of the total

orders collected. The company salesman grouped all these orders and placed an indent

with the Head Office. Goods were sent to these markets, with the company salesman as

the consignee. The salesman then collected and distributed the products to the

respective wholesalers, against cash payment, and the money was remitted to the

company.

The focus of the second phase, which spanned the decades of the 40s, was to provide

desired products and quality service to the company's customers. In order to achieve this,

one wholesaler in each market was appointed as a "Registered Wholesaler," a stock point

for the company's products in that market. The company salesman still covered the

market, canvassing for orders from the rest of the trade. He then distributed stocks from

the Registered Wholesaler through distribution units maintained by the company. The

Registered Wholesaler system, therefore, increased the distribution reach of the

company to a larger number of customers.

The highlight of the third phase was the concept of "Redistribution Stockist" (RS) who

replaced the RWs. The RS was required to provide the distribution units to the company

salesman. The second characteristic of this period was the establishment of the "Company

Depots" system. This system helped in transhipment, bulk breaking, and as a stock point to

minimise stock‐outs at the RS level. In the recent past, a significant change has been the

replacement of the Company Depot by a system of third party Carrying and Forwarding

Agents (C&FAs). The C&FAs act as buffer stock‐points to ensure that stock‐outs did not

take place. The C&FA system has also resulted in cost savings in terms of direct

transportation and reduced time lag in delivery. The most important benefit has been

improved customer service to the RS.

The role performed by the Redistribution Stockists includes:

Financing stocks

Providing warehousing facilities

Providing manpower

Providing service to retailers

Implementing promotional activities

Extending indirect coverage

Reporting sales and stock data

Demand simulation and screening for transit damages

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Detail Overview

The distribution network of HUL is one of the key strengths that help it to supply most

products to almost any place in the country from Srinagar to Kanyakumari. This includes,

maintaining favorable trade relations, providing innovative incentives to retailers and

organizing demand generation activities among a host of other things. Each business of

HUL portfolio has customized the network to meet its objectives. The most obvious function

of providing the logistics support is to get the company’s product to the end customer.

Distribution System of HUL

HUL's products are distributed through a network of 4,000 redistribution stockists, covering

6.3 million retail outlets reaching the entire urban population, and about 250 million rural

consumers. There are 35 C&FAs in the country who feed these redistribution stockists

regularly. The general trade comprises grocery stores, chemists, wholesale, kiosks and

general stores. Hindustan Unilever provides tailor made services to each of its channel

partners. It has developed customer management and supply chain capabilities for

partnering emerging self‐service stores and supermarkets. Around 2,000 suppliers and

associates serve HUL’s 40 manufacturing plants which are decentralized across 2 million

square miles of territory.

(Fig. 1 – Schematic of HUL’s Distribution Network)

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Distribution at the Villages:

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. The team focuses on building superior availability of products. In rural India, the

network directly covers about 50,000 villages, reaching 250 million consumers, through

6000 sub‐stockists.

HUL approached the rural market with two criteria ‐ the accessibility and viability. To service

this segment, HUL appointed a Redistribution stockist who was responsible for all

outlets and all business within his particular town. In the 25% of the accessible markets

with low business potential, HUL assigned a sub stockist who was responsible to access all

the villages at least once in a fortnight and send stocks to those markets. This sub‐stockist

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. Thus, Hindustan Unilever is trying to circumvent the barrier of motorable roads. The

company simultaneously uses the wholesale channel, suitably incentivising them to

distribute company products. The most common form of trading remains the grassroots

buy‐and‐sell mode. This enables HUL to influence the retailers stocks and quantities sold

through credit extension and trade discounts. HUL launched this Indirect Coverage (IDC) in

1960s. Under the Indirect Coverage (IDC) method, company vans were replaced by vans

belonging to Redistribution Stockists, which serviced a select group of neighbouring

markets.

Distribution at the Urban centres:

Distribution of goods from the manufacturing site to C & F agents take place through either

the trucks or rail roads depending on the time factor for delivery and cost of transportation.

Generally the manufacturing site is located such that it covers a bigger geographical

segment of India. From the C & F agents, the goods are transported to RS’s by means of

trucks and the products finally make the ‘last mile’ based on the local popular and cheap

mode of transport.

New distribution channels

Project Shakti

This model creates a symbiotic partnership between HUL and its consumers. Started in the

late 2000, Project Shakti had enabled Hindustan Lever to access 80,000 of India's 638,000

villages. HUL's partnership with Self Help Groups(SHGs) of rural women, is becoming an

extended arm of the company's operation in rural hinterlands. Project Shakti has already

been extended to about 12 states ‐ Andhra Pradesh, Karnataka, Gujarat, Madhya

Pradesh, Tamil Nadu, Chattisgarh, Uttar Pradesh, Orissa, Punjab, Rajasthan,

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Maharashtra and West Bengal. The respective state governments and several NGOs

are actively involved in the initiative. The SHGs have chosen to partner with HUL as a

business venture, armed with training from HUL and support from government

agencies concerned and NGOs. Armed with micro‐credit, women from SHGs become direct‐

to‐home distributors in rural markets.

The model consists of groups of (15‐20) villagers below the poverty line (Rs.750 per month)

taking micro‐credit from banks, and using that to buy our products, which they will then

directly sell to consumers. In general, a member from a SHG selected as a Shakti

entrepreneur, commonly referred as 'Shakti Amma' receives stocks from the HUL rural

distributor. After being trained by the company, the Shakti entrepreneur then sells those

goods directly to consumers and retailers in the village. Each Shakti entrepreneur usually

service 6‐10 villages in the population strata of 1,000‐2,000. The Shakti entrepreneurs are

given HUL products on a `cash and carry basis.'

The following diagram shows the Project Shakti model as initiated by HUL:

Project Streamline

To cater to the needs of the inaccessible market with high business potential HUL

initiated a Streamline initiative in 1997. Project Streamline is an innovative and effective

distribution network for rural areas that focuses on extending distribution to villages with

less than 2000 people with the help of rural sub‐stockists/Star Sellers who are based in

these very villages. As a result, the distribution network directly covers as of now about 40

per cent of the rural population.

Under Project Streamline, the goods are distributed from C & F Agents to Rural Distributors

(RD), who has 15‐20 rural sub‐stockists attached to him. Each of these sub‐stockists / star

sellers is located in a rural market. The sub‐stockists then perform the role of driving

distribution in neighboring villages using unconventional means of transport such as

tractor and bullock carts. Project Streamline being a cross functional initiative, the Star

Seller sells everything from detergents to personal products.

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Higher quality servicing, in terms of frequency, credit and full‐line availability, is to be

provided to rural trade as part of the new distribution strategy.

The diagram in the next page shows the model of Project Streamline:

Hindustan Lever Network (HLN)

It is the company's arm in the Direct Selling channel, one of the fastest growing in India

today. It already has about several lakh consultants ‐ all independent entrepreneurs, trained

and guided by HLN's expert managers. HLN has already spread to over 1500 towns and

cities, covering 80% of the urban population, backed by 42 offices and 240 service centres

across the country. It presents a range of customised offerings in Home & Personal Care and

Foods.

The New Compensation plan for HLN partners provides new exciting ways of earning

substantial income in addition to offering rewards like revenue sharing through the

innovative concept of “pools”

Mother Depot and Just in Time System

In order to rationalise the logistics and planning task, an innovative step has been the

formation of the Mother Depot and Just in Time System (MD‐JIT). Certain C&FAs were

selected across the country to act as mother depots. Each of them has a minimum number

of JIT depots attached for stock requirements. All brands and packs required for the set of

markets which the MD and JITs service in a given area are sent to the mother depot by

all manufacturing units. The JITs draw their requirements from the MD on a weekly or bi‐

weekly basis.

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Major Stakeholders in the distribution channel

1. HUL

Unilever India is the largest FMCG (fast moving consumer goods) firm in India and has the

widest reach in the nation with a retail network of 4 million outlets. Levers are

implementing an IT system to connect 3,500 stockists in 1200 towns who account for 80 per

cent of company sales.

Sourcing: HUL promotes sustainable agricultural practices by working with external

agencies, farmers/small growers. They have developed a programme that ensures:

Farm owners and workers can earn an income they can live on and also improve

their living conditions

Fertility of soil is maintained

Efficiency in water consumption

Certification from independent agencies

Manufacturing: In their manufacturing processes they intend to reduce the carbon footprint

of our operations through:

Developing energy efficient production technologies like Ploughshare Mixer

Technology

Increasing the use of carbon neutral fuels

Implementing a strategy for water is based on the 4-R principle wherein they reduce

at source, reuse within process, recycle wherever possible and renew ground water

through rain water harvesting.

2. Carrying and Forwarding Agents (CNFs)

CFAs’ act as gatekeepers between the manufacturers and end-users. They are considered as

an important asset of a company in the overall company’s marketing & positioning strategy

and can serve as a key differentiator. Channel experience strongly affects end-user's overall

perception of the brand's image.

They help in the routing of transactions, adjustment of assortment discrepancy and sorting-

breaking down a heterogeneous supply into separate stocks that are relatively

homogeneous.

ACCUMULATION-BRINGING SIMILAR STOCKS from different suppliers,

ALLOCATION- breaking down a homogeneous supply into smaller slots &

ASSORTING-Building assortments that are readily consumable.

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In the recent past, a significant change has been the replacement of the Company Depot by

a system of third party Carrying and Forwarding Agents (C&FAs). The C&FAs act as buffer

stock‐points to ensure that stock‐outs did not take place. The C&FA system has also resulted

in cost savings in terms of direct transportation and reduced time lag in delivery. The most

important benefit has been improved customer service to the RS.

3. Transportation and Logistics partners

Distribution of goods from the manufacturing site to C & F agents take place through either

the trucks or rail roads depending on the time factor for delivery and cost of transportation.

Generally the manufacturing site is located such that it covers a bigger geographical

segment of India. From the C & F agents, the goods are transported to RS’s by means of

trucks and the products finally make the ‘last mile’ based on the local popular and cheap

mode of transport.

4. Redistribution Stockists

The role performed by the Redistribution Stockists includes: Financing stocks, providing

warehousing facilities, providing manpower, providing service to retailers, implementing

promotional activities, extending indirect coverage, reporting sales and stock data, demand

simulation and screening for transit damages.

5. Wholesaler

Wholesaler is an intermediary who buys goods for resale usually from company distributors

or stockists. He buys from various companies and stocks all major brands in the category in

which he operates. He has the ownership of the goods he sells and the operations are run

like a typical store where the resellers (could be retailer's themselves or bulk buying

individual customers) who come to him with an elaborate list and buy. To answer the

question why he survives as an intermediary, he is willing to provide smaller lots of goods,

provide credit if needed and is a one stop shop for all the brands in that category.

HUL considers it a necessary evil, in an ideal situation they would like to avoid them totally ,

but the fact is that in spite of the negatives like loss of control, and lack of transparency,

they have an important role to play in Indian distribution channels. They are the ones who

provide substantial reach for various companies (though the degree of dependence

wholesale varies across product categories, like very high in FMCG high volume and low

value products) especially in rural markets. In the research we have been a called I have

found that rural retailers more than three-quarters of the time rely on the wholesaler for

their purchases.

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Companies like HUL have very specific wholesaler-activation plans to push their products

through the wholesale channel. And a recent example shared with me was how some

companies have been working with the boys who work at the wholesalers, by providing

them with very small incentives like taking them out for a pizza treat and other small

incentives and have got positive results out of that.

6. Retailers

These consist of Urban and rural consumers. While a traditional distribution chain is

followed in the urban markets, the rural areas have a new strategy implemented for

catering to the rural customers. In recent years, rural markets have acquired significance in

countries like China and India, as the overall growth of the economy has resulted into

substantial increase in the purchasing power of the rural communities. On account of the

green revolution in India, the rural areas are consuming a large quantity of industrial and

urban manufactured products. In this context, a special marketing strategy, namely, rural

marketing has taken shape.

This rural marketing effort is known as iShakti.

Shakti was initiated to reach the massive un-served and under-served markets that cannot

be economically and effectively serviced through traditional methods. HUL identifies

underprivileged women in villages and these women are trained to become Shakti

Entrepreneurs (SEs) i.e. distributors of HUL products in villages to earn a sustainable income

through this business.

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HUL invests resources in training these village women to become entrepreneurs by helping

them become confident and independent. They are also a source of inspiration for the other

women in the community. Hence, besides being a sale, distribution and communication

initiative, Shakti is a micro-enterprise initiative that creates livelihoods and improves the

standard of life. The Shakti initiative also enables rural consumers to access world class

products, thereby reducing the menace of spurious products.

Today, it benefits business by significantly enhancing HUL's direct rural reach and enabling

communication of HUL's brands effectively in media-dark regions. The products distributed

through project Shakti are some of the country's most trusted brands of consumer goods

which are specifically relevant to rural consumers. From 17 SEs in 1 state in 2001 to more

than 45,000 SEs in 2008, Shakti has indeed come a long way in impacting lives in rural India.

7. End User/Consumers

They are committed to responsible marketing and have clearly defined principles which

guide their communications. Advertising is a way for them to engage with consumers on

issues that matter to them. At the same time, we recognise the influence of marketing and

advertising on consumers and take our responsibilities seriously. This means ensuring that

all claims they make have a sound scientific basis and that all such communication passes

the baseline test of being 'legal, decent and honest'.

They also carry out scientific assessments of all their products to ensure they are safe.The

products are developed as per the guidelines set by Unilever globally. All risk assessments

are undertaken by the Safety and Environmental Assurance Centre (SEAC). SEAC's role is to

provide independent scientific evidence and guidance so that they can identify and manage:

Risks for consumers, workers and the environment with regard to the safety of products and

supply chain technology, and

Environmental impacts, with regard to the sustainability of Unilever's brands, products and

supply chain

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Monitoring the Stakeholders

Quantitative Measures

COST BENEFIT ANALYSIS

Cost benefit can be achieved through development of information technology at the

doorsteps of villagers; most of the rural farmers need price information of agri- produce and

inputs. If the information is available farmers can take quick decision where to sell their

produce, if the price matches with local market farmer no need to go near by the city and

waste of money & time it means farmers can enrich their financial strength.

NEED BASED PRODUCTION

Supply plays major role in price of the rural produce, most of the farmers grow crops in

particular seasons not throughout the year, it causes oversupply in the market and drastic

price cut in the agricultural produce. Now the information technology has been improving if

the rural people enable to access the rural communication, farmers awareness can be

created about crops and forecasting of future demand, market taste. Farmers can equates

their produce to demand and supply, they can create farmers driven market rather than

supply driven market. If the need based production system developed not only prices but

also storage cost can be saved. It is possible now a days the concept of global village.

Qualitative Measures

LEVERAGING INFORMATION TECHNOLOGY

HUL customers are serviced on continuous replenishment. This is possible because of IT

connectivity across the extended supply chain of about 2,000 suppliers, 80 factories and

7,000 stockists. This sophisticated network with its voice and data communication

facilities has linked more than 200 locations all over the country, including the head office,

branch offices, factories, depots and the key redistribution stockists. They have also

combined backend processes into a common Shared Service infrastructure, which supports

the units across the country. All these initiatives together have enhanced operational

efficiencies, improved the service to the customers and have brought us closer to the

marketplace.

RS NET INITIATIVE:

The RS Net initiative, launched in 2001, aims at connecting Redistribution Stockists (RSs)

through an internet based system. It now covers stockists of the Home & Personal Care

business and Foods & Beverages in close to 1200 towns and cities. Together they account

for about 80% of the company's turnover. RS Net is one of the largest B2B e‐commerce

initiatives ever undertaken in India. It provides linkages with the RSs’ own

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transaction systems, enables monitoring of stocks and secondary sales and optimises

RS’s orders and inventories on a daily basis through online interaction on orders,

despatches, information sharing and monitoring. The IT‐powered system has been

implemented to supply stocks to redistribution stockists on a continuous

replenishment basis. Today, the sales system gets to know every day what HUL stockists

have sold to almost a million outlets across the country. Information on secondary sales is

now available on RS Net every day.

ADEXA ICOLLABORATION SUITE

In 2000, HUL identified improved supply chain management as a critical business

priority and launched a comprehensive initiative, “Project Leap,” tasked with

increasing supplier/distributor responsiveness, reducing inventory buffers, and optimizing

planning and scheduling. HUL chose the Adexa iCollaboration suite for facilitating

centralized monitoring of the SCM, live customer /supplier collaboration, and integrating

demand and distribution planning with production scheduling. With the aggregated view of

data provided by the iCollaboration suite, HUL was able to combine sales and distribution

efforts on the diverse product lines, which resulted in significant savings on the cost side

for inventories and distribution. HUL updates inventory positions, shipments and customer

orders on a daily basis with these software packages and can get a pulse on the market real

time.

Field Sales Force:

To meet the ever‐changing needs of the consumer, HUL has set up a distribution

network that ensures availability of all their products, in all outlets, at all times. This

includes, maintaining favourable trade relations, providing innovative incentives to

retailers and organizing demand generation activities among a host of other things.

The important activities that HUL field sales force does are (i) target chasing and (ii)

reporting on a daily basis.

Account information is maintained on palmtops given by HUL. During our research and

informal survey of HUL field sales force, we came to know that for the last two years,

training is not being given at all to the sales force.

HUL has limited the network channel selling to categories of Home & Personal Care (HPC)

and Food products with exclusive brands for this channel. That is, these particular brands

(products) are all exclusive to HLN, specifically developed for the Direct Selling channel,

and not available in the retail channel. The general trade comprises grocery stores,

chemists, wholesaler, kiosks and general stores. Hindustan Unilever services each with a

tailor‐made mix of services.

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Incentives given to channel partners Redistribution Stockists:

Sales Margin: 4.76% which includes cash discount, unloading expenses

from depot, distribution expenses to retailers, incentive schemes & other

incidental expenses.

Modes of transport used: Rickshaw, tempo.

Incentive schemes: Before 2000 holiday packages and tours but after 2000 no

non‐monetary incentive for RS.

Selling Operations: RSs sells the goods to ‐

o Wholesaler (gets 1.5 % max. discount from RS)

o Retailers (gets 1.0% max. discount from RS)

Wholesaler:

Gets cash discounts and other schemes promoted by HUL (gets points under Vijeta

Scheme). The wholesaler gets bulk discounts when he orders in bulk. Most of the

bigger wholesalers get these discounts since their orders are huge and they in-turn

supply to major retailers of a particular region.

Retailers:

ƒ

Sales Margin: Depends on the product

o Soap, detergents ‐ 8% on MRP

o Cosmetics ‐ 10% on MRP

o Food items ‐ 8% on MRP

Incentive schemes: Company programs (Scheme Discounts + Cash Discounts) TPR

schemes based on Sales (1 % to 4 %). Vijeta scheme is not for retailers.

Key challenge faced in the distribution network The main challenge of HUL is to cater to the needs of seven million distinct outlets across

India and 59 percent of these stores are in rural India. HUL directly serves over 1 million

stores and has a network of over 7000 stockists and distributors.

HUL caters to a huge audience for which it has to route its goods through C&F, Stockists and

Retail outlets. The main challenge lies in maintaining a consistent Demand and Supply so

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that the customers do not face any problem.

Consumer Consumer Consumer

U Steps taken by the company to tackle challenges HUL has taken the following initiatives to improve its distribution network:

Setting up of a full‐scale sales organisation comprising key account management

and activation to impact, fully engage and service modern retailers as they emerge.

Servicing Channel partners and customers with continuous daily replenishment.

Leveraging scale and building expertise to service Modern Trade and Rural Markets.

Delayering of sales force to improve response times and service levels.

Revamping of its sales organisation in the rural markets to fully meet the

emerging needs and increased purchasing power of the rural population. HUL’s

distribution network in rural India already directly covers about 50,000 villages,

reaching about 250 million consumers through about 6,000 sub stockists.

Implementation of supply chain system that connects stockists across the country,

and also includes a back‐end system connecting suppliers, all company sites and

stretching right up to stockists. IT tools have been deployed for connectivity across

HUL

C&F

Stockists

CSD Canteens Retail Outlets

Modern Trade

Ch

allenge lies in

reachin

g the cu

stom

ers

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the extended supply chains. Backend processes have been combined into a

common Shared Service infrastructure.

Launching of Project Shakti through which the company is able to extend its

operations in villages. HUL has also included several NGOs and state governments

as the initiative helps rural women to improve their financial position.

Launching of HUL Network to leverage the channel of direct selling by presenting

customized offerings in 11 home and personal care and food categories. Started in

2003, it already has a base of 300,000 consultants across the country.

Starting of franchised Lakme Beauty Salons and Ayush Therapy centres to offer

standardized services, in line with the strategy to leverage the equity of its

brands through relevant services.

Finding out Innovative ways to reach out to its consumers, particularly in rural

areas by leveraging non‐conventional media like wall paintings, cinema vans, weekly

markets (haats), fairs and festivals.

Initiating the concept of Super Value Stores (SVS) in urban areas to partner

traditional stores to provide a range of services ranging from managing their

inventory to setting up POS (point of sale) banners. In addition to this, to boost up

traditional retail in the face increasing in‐roads made by large, modern retailing

chains like Spencer’s, Reliance Fresh etc (where HUL is squeezed harder for

discounts), HUL started restructuring some of the selected SVSs into the form of

self‐service retail shops a la modern retails. This is to protect & maintain the

competitive advantage that HUL has over its biggest competitors in the other

markets (e.g., P&G), with its very deep distribution reach through traditional retail.

Launching the Unicare scheme with upmarket pharmacies and retailers to sale its

premium brands.

Undertaking several initiatives for traditional channels in order to improve its

capabilities at the front‐end by developing skills for stockists' sales force. Under

'Project Dronacharya', the FMCG major continuously imparted training to over

10,000 stockist salesmen.

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Launching of several promotional schemes for existing wholesalers and

distributors. For instance, it has started the ‘Vijeta ‐ Rishta Jeet Ka’ scheme last year

to provide a platform for the wholesaler and HUL to grow the business by earning

points and redeeming them.

RECCOMENDATIONS

Pure It needs a dedicated sales-force

Pure it, the water purifier from HUL has a very big service component attached to it, which they are

not able to provide customers. HUL needs to manage the distribution of this workforce better and

needs to ensure up to the mark performance.

Pure it being a low cost water purifier has a lot of potential customers waiting in rural areas; HUL

should market it effectively in rural areas in order to tap that market. Non conventional marketing

strategies should be used like installing a free purifier in Sarpanch’s house in the village which will

give them a champion who will help them further increase the sales.

Co-Creation

P&G has a customer connect initiative, which it exercises all over the world in order to ensure their

House of Quality. HUL also should come up with some such strategy, which will help it to satisfy

customer needs in a better manner.

Basket Sales

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When we look at all the above brands, most of us would be using more than 60 % of these

brands in their respective categories. Have we ever wondered where do the remaining 40%

brands in our consumption come? They come from HUL competitors i.e. P&G, Colgate-

Palmolive.

When we were discussing about HUL for the project, we were wondering if there is anything

wrong with the FMCG giant. After some brainstorming, when we couldn’t find anything

drastically different, we paid attention to devising a new strategy which could help us

increase HUL’s revenue and give it an edge over intense competition sprawling up.

The organized retail, as many recent researches have pointed out, are growing at a rapid

rate. HUL covers maximum portion of shelves at these retail stores and has products for all

income segments.

We would suggest HUL to start bundling its products in a big way and kill the competition.

HUL should create a package for Upper Middle Class, another one for Semi-urban areas and

one for the lower income group or for rural areas. Following distribution will give you a

better idea:-

For instance, consider the following basket of product for the upper middle class:-

Example: Upper-Middle Class (Urban Areas)

Fabric Wash

Personal Wash

Hair Care Foods

Beverages Skin-Care

Oral Care

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A similar package in Rural sector will include products like Wheel, Lifebuoy, Sunsilk, Ruby

Tea and other similar products. This packaging will help them take on the rivals in a better

manner.

HUL recently collated its distributors for all the three different divisions, now the products

can be collated at the distributors and forwarded to retailers in a basket. It’s now become

easy for HUL to follow such strategies.

REFERENCES

HUL Website (http://www.hul.co.in/)

HUL CLSA Conference, Investor Presentation (24th Sept., 2008).

www.wikipedia.org