CHAPTER 6

CASE 1: HINDUSTAN UNILEVER LIMITED

In order to enlighten a non-traditional retail structure we chose the multi retailer Hindustan
Unilever Limited that within India is a legendary company. What really drew our attention to this
outsider was their unique formula for sustainable competition, coming from the ability of
keeping their costs down.
INTRODUCTION:
Hindustan Unilever Limited is Indias largest Fast Moving Consumer Goods company, touching
two out of three Indians with their large brand portfolio. HULs products are household names
across the country and span a host of categories such as soaps, detergents, personal products, tea,
coffee, ice cream, and culinary products. Today, there are over 7.7 million retail outlets in India
with an average of 6.8 stores per thousand people the highest store density in the world.
Growth of HUL in India is as follows

FMCG came into in existence in 1888 when Sun Light soap was firstly seen at
KOLKATA harbor. It was made by Lever brothers in England.

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After that in 1895 Lifebuoy and after that Lux, Pears and Vim bar.

In 1918 Vanaspati was launched.

Dalda was launched in 1937.

In 1931 Lever brothers made 1st subsidiary in India

In 1933 they joint with Hindustan Vanaspati manufacturing company

In 1935 they joint with united traders limited

All these 3 players mixed together and form HUL in 1957.

HUL offers 10% of its equity to Indian public

Unilever holds 52.10% shares and rest is distributed amongst about 360675 individual
shareholders and financial institutions

Brooke bond is present in India back to 1900 and its Red Label band was launched in
1903. In 1912 it joined with lever brothers.

Unilever acquired LIPTON in 1972

Ponds India ltd is working in India since 1947 and it is acquired by HUL in 1986 by an
international acquisition.

Tata oil Mills Company merged with HUL in 1993.

In 1996 Tata made 50-50% joint venture for LAKME with HUL and in 1998 it was
completely sold to HUL.

HUL made 50-50% joint venture with Kimberley Clark corp. in 1994 as Kimberley clark
lever ltd which makes haggis diapers and kotex sanitary pads.

Unilever established its subsidiary in Nepal as NEPAL UNILEVER LTD.

In 2002 HUL launched AYUSH ayurvedic soap.

In 2004 it came into the water purifier segment and launched PURE-it

In 2007 it formally formed as HUL from HUL that is HINDUSTAN UNILEVER

LIMITED.

To maintain their market leadership, HUL pursues innovative distribution mechanisms to reach
the millions of potential consumers in both urban areas and small remote villages where there is
no retail distribution network, no advertising coverage, and poor roads and transport. HUL
realized from the onset that its sales and distribution network gave it an edge over the
competition, but that rivals would try to match it over time. To maintain their competitive

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advantage, HUL has aggressively extended more deeply in India, moving from large to small
towns, and from urban to semi-urban areas.
In the past, HULs sales forces were separated by geographies and product categories. However,
this organizational structure was ill equipped to manage modern trade, as one regional team
negotiating the terms of trade with an individual franchisee of a national retail chain could never
be as effective as HUL entering a long-term comprehensive contract spanning all product
categories and outlets of the retail chain. Today, HUL has specific account managers dedicated
to large modern trade customers.
General trade consists of the thousands of independent retail and wholesale outlets across the
country. Often called mom and pop shops, each of these stores is considered a distinct
customer and has to be addressed individually. HUL services these outlets through a network of
2,900 stockists. Goods are sent to a local warehouse or carrying and forwarding agent (CFA),
and are then stocked and dispatched to specific retailers upon orders from the HUL stockists.
The stockists are responsible for servicing all the small retail outlets in a specific geographic
area. General trade makes up the majority of HULs sales.
While general trade encompasses both urban and rural markets, serving customers in more
remote areas of India poses unique challenges. Rural markets are scattered over large areas with
low per capita consumption rates. While the aggregate potential of rural markets is large, the
potential of each of the 600+ dispersed markets is very low. As well, rural markets are not
connected to urban centers by air or rail, with road connectivity poor at best. Accessing these
markets, even when feasible, means additional logistics costs to HUL.

Despite the roadblocks, conquering the rural markets is a must for HUL. One out of every eight
people on this planet lives in an Indian village. In comparison to the urban market, which

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consists of roughly 250 million people, the rural market is 775 million people across 638,000
villages. Within ten years, per household consumption in rural India is forecasted to equal
todays urban levels.

To penetrate the rural markets, HUL launched a unique four tier distribution system. Markets
were segmented based on their accessibility and business potential.
1.Direct Coverage: HUL appointed a common stockist to service all outlets within a town and
sell a limited selection of the brand portfolio. Towns consisted of populations of under 50,000
people.
2.Indirect Coverage: HUL targeted retailers in accessible villages close to larger urban markets.
Retail stockists were assigned a permanent route to ensure that all accessible villages in the
vicinity were served at least once a fortnight.
3.Streamline: Streamline leveraged the rural wholesale channel to reach markets inaccessible by
road. Star Sellers were appointed among wholesalers in a particular village. Star Sellers would
purchase stock from a local distributor and then distribute stock to retailers in smaller villages
using local means of transport (e.g. motorcycles, rickshaws).
4.Project Shakti: Project Shakti targeted the very small villages (<2,000) and tapped into preexisting womens self help groups (SHG). Underprivileged rural women were invited to become
direct-to-consumer sales distributors for HUL products. Termed Shakti Ammas (literally
strength mothers), these women represent HUL and sell its home-care, health, and hygiene
products in their villages.
By the end of 2009, Project Shakti network comprised of 45,000 Shakti Ammas covering
100,000 villages across 15 states in the country, cumulatively reaching over 3 million households

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every month. Unilever has replicated Project Shaktis success in other markets such as Sri Lanka
and Bangladesh.

Hindustan Unilever Limited value Proposition

Hindustan Unilever Limited, Unilever's $3.9 billion subsidiary in India. Unilever is the
corporation that produces Axe deodorant, Vaseline, Surf detergent, and Lipton tea, among many
other everyday products.

India is the second largest country in the world in terms of population. India has also a large
number of villages; more than 600.000 villages with poor transport infrastructure making
shipments of goods extremely difficult. Most of these villagers dont have access to the very
basic hygiene products like soap, toothpaste, shampoo, etc. Many of them have even never used
a tooth brush or washed their hairs with shampoo. Instead of investing in costly infrastructure,
the Indian government decided to promote entrepreneurship in these villages, targeting women
particularly. Hindustan Unilever saw an opportunity in this program and decided to develop a
business model accordingly. Within their established organization Hindustan Unilever has
created a leadership organization with total freedom for developing the business model.
Hindustan Unilever launched the so-called Shakti Entrepreneurship Program. The value
proposition was to create in each village and surrounding a chain of entrepreneurs for Hindustan
Unilever products. These entrepreneurs (who are selected women) will not only distribute but
also educate these villagers on the use of the different corporal hygiene products provided by
Hindustan Unilever.
NGOs have supported Hindustan Unilever with selecting these underprivileged women, to
become the new Hindustan Unilever distributers and the new promoted entrepreneurs. According

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to Hindustan Unilever, at the beginning, there was a lot of hesitation, since these women were
often illiterate or had no math skills. It turns out they were very quick to learn and smart-within
48 hours they would get it. Their motivation was so high that it compensated for any lack of
ability.
Today H. Unilever employs between 60,000 and 70,000 women entrepreneurs in villages to sell
Unilever products at affordable prices to the Base of the Pyramid (BoP). For the first time,
villagers had access to soap, detergent, and toothpaste. The women entrepreneurs were also
educating their communities on hygiene issues while selling their products - for example, by
explaining how to brush children's teeth - and through community wide health awareness days.

Shakti is a good example of CSR. it created a whole new way of life for 60.000 to 70.000
women, with the opportunity to gain a good living. It had a direct effect on their social stature.
And millions of people had access to personal care and home products. In terms of distribution
and marketing, the business model is using the BoP to distribute products; so the BoP is
definitely part of the solution. And it's self-sustaining from the business it generates.
Hindustan Unilever has managed to create a sustainable business for itself and for the women
distributers, to reach untapped market and to reinforce its brand and its company internal and
external culture. All this by using the BoP in a CSR business model.
Image 1.5 Business Model Picture

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How Hindustan Unilever Limited deliver its value proposition

We assume Hindustan Unilever Limited (HUL)value proposition as follows: Targeting any

person who is willing to pay a higher than ordinary transportation and search cost in order to buy
quality goods to the lowest price.
HUL Products in India
Personal wash: Lux.
Lifebuoy,
Liril ,
Hamam,
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 Breeze,
Moti ,
Dove,
Pears
Rexona

Laundry: Surf Excel,

sun light,
Rin
Wheel
Ala bleech
Beauty Products: Fair & Lovely,
Lakme,
Ponds,
Vaseline
Aviance
Hair-Care: Sunsilk naturals,
Clinic ,
Dove
Oral-Care: Pepsodent

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 Close-up
Deo spray: Axe
Rexona
Foods:-Kissan(Jam,Ketchup,Squashes),
Annapurna (Aata and salt),
Knorr Soups,
Modern Bread
Ice-cream: Kwality Wall's
Bewerages:Tea: Brooke bond,
Lipton,
taj mahal
Coffee: Brooke bond bru
Dishwasher : Vim
Disinfectants: Domex
cif
Water Purifier:-

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 Pureit
Table 4: Category wise sales growth of HUL in India:

Particulars Key
Market Size
Brands
(in Rs Cr.)
Fabric
Surf Excel,
8988
wash
Wheel

Market
Share
37.50%

Rank

Personal
Wash

6632

54.30%

2792
2168

57.30%
54.50%
47.80%

1
1
1

59.70%

22.70%
44.00%
67.50%
29.50%

1
1
1
2

28.10%

Dove,
Lux,
Lifebuoy

Dish wash
Skin
Ponds
Shampoo Sunsilk,
Clinic plus
Talcum
Powder
Packet Tea Red Label
Coffee
Bru
Jams
Toothpaste Pepsodent,
Closeup
Ketchups

COMPETITION IN THE FMCG MARKET

Five main competitive strategies are:
Overall low cost leadership strategy
Best cost provider's strategy
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4452
708
2764

 Broad differentiation strategy

Focused low cost strategy
Focused differentiation strategy
Here competitive strategy varies from sector to sector and company to company. Thus, it is not
easy to predict a single or to find a single strategy for the whole sector. When we come on to
FMCG Sector main strategies lay behind market strategies, cost, and quality strategies. Here in
this report we are going to get information about such type of strategies of FMCG giants.
Competitive Strategies and Comparison with ITC
HUL (Hindustan Unilever Ltd.)
This Company is earlier known as Hindustan Lever Ltd. This is India's largest FMCG sector
company with all type of household products available with it. It has Home & Personal Care
products, and also food and Water Purifier available with it. According to Brand Equity, HUL
has largest no of brands in most trusted brands list 16 of HUL's brands featured in AC-Nielson
Brand Equity list of 100 most trusted brands in 2008 in an annual survey. For the entire year
ending March - 2009 net turnover of company is Rs. 20'239.33 Crore which is 47.99% higher
than 31st December 2007's Rs. 13675.43 Crore driven mainly by domestic FMCG's with net
profit stood at Rs. 2'496.45 Crore.
Products of HUL are: Annapurna; Ayush; Axe; Breeze; Bru; Brooke bond; Clinic; Dove; Fair &
Lovely; Hamam; Liril; Lux; Pears; Ponds; Pepsodent; Pureit; Rexona; Rin; Sunlight; Surfexcel;
Vaseline; Wheel.
ITC Limited
This Company was earlier known as Imperial Tobacco Company of India Ltd. It is Currently
headed by Yogesh Chander Deveshwar. Company mainly operates in the industry like Tobacco,
Foods, Hotels, Stationary and Greeting Cards with the major products constitutes Cigarettes,

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packed foods, hotels, and apparels. For the entire year ending Mar-2009 the turnover of company
is at Rs. 15388 Crore which is 10.3% higher than previous year's Rs. 13947.53 Crore, driven
mainly by robust 20% growth in non cigarette FMCG business with net profit stood at Rs. 3324
Crore.
Analysis of Both Companies
HUL & ITC are major companies in FMCG market in India. When we compare both companies
on the basis of their strategies i.e. , their competitive strategies in the present market. When we
look at the present segment breakup for both of the companies then we came to know that their
different products vary too much in the market. Now let us take a comparative analysis of both
the companies under some heads:
HUL
Hindustan Unilever (HUL) is the largest pure-play FMCG Company in the country and has one
of the widest portfolio of products sold via a strong distribution channel. It owns and markets
some of the most popular brands in the country across various categories, including soaps,
detergents, shampoos, tea and face creams.
ITC
ITC is not a pure-play FMCG company, since cigarettes is its primary business. It is diversifying
into non-tobacco. FMCG segments like foods, personal care, paper products, hotels and agribusiness to reduce its exposure to cigarettes.
Performance
After stagnating between 1999 and '04, the company is back on the growth track. In the past
three years, till 2008 HUL's net sales have witnessed a CAGR of 11%, while net profit has
posted a CAGR of 17%.

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Despite diversification, ITC's reliance on cigarettes is still huge. The tobacco business
contributes 40% to its revenues, and accounts for over 80% of its profit. This cash-generating
business has enabled it to take ambitious, but expensive bets in new segments and deliver modest
profit growth.
Overall Strategy:
HUL always believes in customer friendly products with major emphasis on low cost overall
without compromising on the quality of the product. They are leveraging the capabilities and
scale of the parent company and focusing on the value of execution. The entire product portfolio
is also being tweaked to include premium offerings such as Pond's Age Miracle and dove
shampoo in skin and hair care. HUL introduced Project Shakti to penetrate the rural market.
Overall Strategy:
HUL always believes in customer friendly products with major emphasis on low cost overall
without compromising on the quality of the product. They are leveraging the capabilities and
scale of the parent company and focusing on the value of execution. The entire product portfolio
is also being tweaked to include premium offerings such as Pond's Age Miracle and dove
shampoo in skin and hair care. HUL introduced Project Shakti to penetrate the rural market.
ITC is focusing on delivering value at competitive prices. Its tremendous reach through extensive
distribution chain has been a competitive advantage. Additionally, the company's e-choupal
model for direct procurement is well known under which ITC partners with over 100,000
farmers for spices and wheat procurement and an even larger number for oilseeds. This kind of
rural pedigree is hard to beat.
Growth Drivers
HUL has been launching new products and brand extensions, with investments being made
towards brand-building and increasing its market share. HUL is also streamlining its various

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business operations, in line with the One Unilever' philosophy adopted by the Unilever group
worldwide. Introduction of premium products and addition of new consumers via market
expansion will be HUL's growth drivers.
ITC's backward integration to ensure that its products pass efficiently from the farms to
consumers has helped it to cut down supply and procurement costs. ITC's non-cigarette FMCG
business leverages the large distribution network the company has developed by selling
cigarettes over the years. A rich product mix, along with ramp-up of investments in its new
sectors, will be instrumental in charting ITC's growth path.
Risk for both the companies
For HUL
Being an MNC operating in India, HUL is more conservative in its strategies than its Indian
counterparts. Moreover, given increasing competition, it faces the risk of being overtaken by
domestic players in various categories. Prolonged inflation may lead to margin contraction, in
case HUL is not able to pass on this burden to consumers. The company's large size also poses a
problem, since it does not give HUL the agility to address the competition it faces from national
and regional players.
For ITC
Increased regulatory clamps on tobacco, along with rising tax burden, pose a business risk for
ITC. So, it has started an ambitious diversification plan, which has its own set of risks. With its
foray into the conventional FMCG space, ITC has entered the high-clutter branded products
market. This will burden its resources in terms of ad spend and brand-building. Creating brand
recall and building market share in new products are ITC's key challenges. Export ban and rising
crop prices pose a threat for its agri-business, taxing its margins.
HUL AND P&G

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Procter & Gamble was founded in 1837 by William Procter, a British citizen who immigrated to
the United States. The company first sold candles. Procter & Gamble Co. (P&G, NYSE: PG) is a
Fortune 500 American multinational corporation headquartered in Downtown Cincinnati, Ohio
that manufactures a wide range of consumer goods. As of mid 2010, P&G is the 6th most
profitable corporation in the world, and the 5th largest corporation in the United States by market
capitalization, surpassed only by Apple, Exxon Mobil, Microsoft, and Wal-Mart. It is 6th in
Fortune's Most Admired Companies 2010 list.
P&G is credited with many business innovations including brand management and the soap
opera.
According to the Nielsen Company, in 2007 P&G spent more on U.S. advertising than any other
company; the $2.62 billion spent by P&G is almost twice as much as that spent by General
Motors, the next company on the Nielsen list.

P&G was named 2008 Advertiser of the Year by Cannes International Advertising Festival.
Proctor & Gamble is a leading member of the U.S. Global Leadership Coalition, a Washington
D.C.-based coalition of over 400 major companies and NGOs that advocates for a larger
International Affairs Budget, which funds American diplomatic and development efforts abroad.
Consumer Understanding
No company in the world has invested more in consumer and market research than P&G. We
interact with more than five million consumers each year in nearly 60 countries around the
world. P&G invest more than $350 million a year in consumer understanding. This results in
insights that tell us where the innovation opportunities are and how to serve and communicate
with consumers.
Innovation

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P&G is the innovation leader in this industry. Virtually all the organic sales growth delivered in
the past nine years has come from new brands and new or improved product innovation. We
continually strengthen our innovation capability and pipeline by investing two times more, on
average, than our major competitors. In addition, we multiply our internal innovation capability
with a global network of innovation partners outside P&G. More than half of all product
innovation coming from P&G today includes at least one major component from an external
partner. The IRI New Product Pacesetter Report ranks the best-selling new products in our
industry in the U.S. every year. Over the past 14 years, P&G has had 114 top 25 Pacesetters
more than our six largest competitors combined. In the last year alone, P&G had five of the top
10 new product launches in the U.S. and 10 of the top 25.
Brand-Building
P&G is the brand-building leader of this industry. It has built the strongest portfolio of brands in
the industry with 22 billion-dollar brands and 20 half-billion-dollar brands. Eleven of the billiondollar brands are the #1 global market share leaders of their categories. The majority of the
balances are #2.
Go-to-Market Capabilities
It has established industry-leading go-to-market capabilities. P&G is consistently ranked by
leading retailers in industry surveys as a preferred supplier and as the industry leader in a wide
range of capabilities including clearest company strategy, brands most important to retailers,
strong business fundamentals and innovative marketing programs.
Scale
Over the decades, we have also established significant scale advantages as a total company and
in individual categories, countries and retail channels. P&Gs scale advantage is driven as much
by knowledge-sharing, common systems and processes, and best practices as it is by size and

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scope. These scale benefits enable us to deliver consistently superior consumer and shareholder
value.
P&G follows Connect + Develop strategy which enables to bring innovations to life faster, more
economically and more sustainably.
HUL AND P&G ADVERTIESMENT WAR
The new campaign started by Rin, a product of Hindustan Unilever Limited. It is a direct attack
on the Tide Naturals product by Procter & Gamble. Note that when It is said a direct attack it
means an uncensored visual shows the competitor product and then highlights how the other
product is better then the former. The sequence of the ad is as follows
1. Two ladies are standing on a bus stop, waiting to pick their kids from the school bus.
2. Both are carrying their shopping basket/bag with them.
3. Lady 1 has Tide Naturals in her bag.
4. Lady 2 has Rin in her bag
5. Both ladies have a look at each others bag and Lady 1 boasts that Tide has a good
fragrance and provide better whiteness/brightness to the clothes
6. In the meantime, the school bus arrives and its shown that the white shirt of Lady 2s
kid is strikingly brighter and whiter then the Lady 1s kid.
7. Lady 1 gets astonished by the whiteness seen.
8. Lady 2s kid reacts by asking he mother, as to why is the other lady so observant and
amazed
9. There is a disclaimer during the ad that the analysis has been done by an independent
agency
10. Its then claimed that now there is promotional price of Rs. 25 on Rin as opposed to
the earlier Rs. 35.

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As it can be noticed, there is a direct mention of the competitor product along with the visuals.
This one seems to be an absolute direct attack. It is difficult to say if the ad will continue on TV.
Tide would definitely come out with a protest. However, I think the damage is already done. The
main point about the reduced price of Rin would definitely catch the consumers eye benefiting
HUL.
Strategic growth summary of HUL
HUL prioritized opportunities which build upon the existing assets and capabilities. It avoided
spreading their management thinly. For example: HUL first made its sales and distribution
channel & supply chain management in manufacturing and selling wheat flour and utilized it into
the selling breads produced by wheat flour.

HUL is more focused on the innovations Example: In 1995 launched KISSAN

ANNAPURNA staple foods with the message staple food including iodized salt

Serving Rural population: In 2000 the 32% of the sales were from rural sector but in 2010
it is more than 50%.

It follows direct communication from the customers.

It believes in expanding the portfolio.

Each category has a different set of supply chain, production and consumer decision
making process issuing associated with it.

Strategies - market entry: (Kissan Annapurna iodized salt)

In 1995 HUL launched Kissan Annapurna iodized salt at that time only 10% of 6.5 million ton of
salts were branded and refined HUL identified it and launched the KISSAN ANNAPURNA
SALT.

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Firstly it launched in the few cities of the country for test marketing and then for all.

Shifted from purity- a product attribute to Health consumer benefit (As a

positioning strategy)

Tried to shift the consumers from unbranded to brand.

Started Using IODINE as a marketing strategy as there were other salts including iodine
but no one was focused on that. HUL started it.

Started endorsement through trusted government agencies.

In 2002 it has made iodine patented in 80 countries.

Strategic Shifts
In the past 10 years, HUL has made four shifts in its business strategy, targeted at boosting
growth and reach

POWER BRANDS: Strategy in 2000. Focusing on fewer brands, 30 of them, and

showering marketing attention on them.

MASSTIGE: Strategy in 2005-06. Making premium brands (prestige) attainable for a

larger section of consumers (mass).

ONE UNILEVER: Strategy in 2007. Building leadership position in fast-growing

markets.

PUMP UP THE VOLUMES: Strategy in 2010. Global CEO Paul Polman is pushing the
Indian operations chasing value growth to deliver on the volumes as well.

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Table No: 5 Income Statements (Rs. Million)

INCOME STATEMENT (RS MILLION)

Y/E
Net Sales
Other Operating
Income
Total Revenue
Change (%)
COGS
Gross Profit
Operating Exp
EBIDTA
Change (%)
Margin (%)
Depreciation
Int. and Fin.
Charges
Other Income
Recurring
Pro fit before
T axes
Change (%)
Margin (%)
Tax
Deferred Tax
Tax Rate (%)
Profit after Taxes
Change (%)
Margin (%)
Non-rec.
(Exp)/Income
Reported P AT

7-Mar FY09
FY10
FY11E FY12E
136,754 202,393 173,844 190,848 213,504
1,937
3,622
1,838
3,298
138,691 206,016 175,683 194,147
13
48.5
-14.7
10.5
72,685 108,379 88,498 101,159
66,006 97,636 87,185 92,987
45,281 67,235 60,612 66,314
20,724 30,402 26,573 26,673
13.7
46.7
-12.6
0.4
14.9
14.8
15.1
13.7
1,384
1,953
1,814
2,006

3,608
17,112
11.8
112,531
104,581
73,424
31,157
16.8
14.4
2,132

255

253

75

112

91

2,379

2,056

1,692

1,457

1,623

21,464
15.3
15.7
3,643
389
18.8
17,432
13.2
12.7

30,251
40.9
14.9
5,244
0
17.3
25,007
43.5
12.4

26,376
-12.8
15.2
5,644
475
23.2
20,256
-19
11.7

26,013
-1.4
13.6
5,463
468
22.8
20,082
-0.9
10.5

30,557
17.5
14.3
6,417
550
22.8
23,590
17.5
11

1,824
19,256

-43
24,965

-144
20,112

0
20,082

0
23,590

Brand Management at HUL

HUL has a large brand portfolio consisting of nearly 110 bands. In every product line, it has built
a number of brands over a period of time. Quite a few brands have come to its fold from the
parent company. It has also acquired several ongoing brands from the market. HUL also
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vigorously pursues brand extension strategy. And concurrently, HUL undertakes line pruning
and brand restructuring and consolidation, based on marketing compulsions. HUL is also playing
the rejuvenation and re-launch game. With great benefit the corporate-level endeavors at
business expansion and diversification are also throwing new challenges on the brand strategy
front. HUL lends itself for a proper understanding of the complexity of the brand management
task. We shall examine how HUL handles the complex demands in brand management. Such an
array of brands is the outcome of a conscious corporate strategy by HUL. As a corporate, HUL
wants to be a leader in every one of its businesses and the strategy is to fight on the strength of
the competitive advantage arising from the possession of strong brands. It is this strategy that is
getting reflected in the development of a multitude of strong brands. If we take the business of
bathing soaps, as an example, HUL has the objective of being a national player (not a niche or a
regional marketer) and the leader therein. HUL also wants about 30 per cent of the corporate
income to come from this line.
So, HUL opted for the strategy of developing quite a few strong brands in this line, and among
them they cover different market segments and price points. Dove, Lux, Liril, Rexona, Pears and
Lifebuoy are the outcome of such a well planned brand strategy implemented over time.
Lifebuoy is 100 years old and Liril 15 years old. In fact, HUL has about 10 brands of toilet soaps
each having good volume of sale to its credit . The point is that decisions on brand portfolio are a
fundamental expression of the companys objectives and strategy governing a given business.
HUL Locates Positioning Opportunities:
HUL methodically goes about the task of developing a brand portfolio across a product category.
It first identifies the various positioning opportunities across benefits, target groups and price
points. Existing brads are mapped across these positioning opportunities, and gaps for possible
new offers are explored.The company then estimates the likely volumes for each of the possible

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opportunity and the financial viability and sustainability of the propositions in the long term. If
some of these gaps look promising, HUL goes ahead with the plans. It examines the existing set
of brands with the company, the product technologies available, the benefits that can be provided
and other considerations that have a bearing on the companys long term interests in the
business. Finally, if the company decides to go in for the new offer, a decision has to be taken as
to whether new brands should be created or extensions if existing brands should be preferred or
ongoing brands from the market acquired.
HUL hires brands to capture new opportunities: Towards the close of the 1990s, HUL found that
the germicide segment of the soap market was growing fast, with RCIs Dettol antiseptic soap
leading it. HUL did not have suitable offer in its stable to capture a share of this segment.
Lifebuoy was not strictly meeting the particular benefit. HUL knew that launching and
developing a new brand would take a lot of time and resources, and the company would miss the
market if it chose this route. HUL did not have the product formula either to enter this segment.
It was in this background that HUL decided to hire the Savlon brand from J&J. Savlon was a
successful antiseptic lotion, a competitor to Dettol lotion. Just as the Dettol soap owed its origin
to the success of the Dettol lotion, HUL assessed that a Savlon antiseptic soap could be
successfully extended from the Savlon lotion. It entered into an agreement with J&J for the use
of Savlon brand name and the product formula, and launched the Savlon antiseptic soap. HUL
very deftly managed successfully new brand launch and merged as a challenger to Dettol soap.
J&J secures a good royalty from HUL for lending the brand. It is a potentially win-win
arrangement for both companies. Repositioning and rebranding HUL has done the process of
repositioning the brands. Few of them as follows;

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SUNSILK: Sunsilk co-creations , collaboration with 7 pioneer global hair experts

BREEZE: New fragrances over the world, new look more colors, packaging

Rexona: relaunched it with the coconut moistening

Lifebuoy hand sanitizer: kills 99.99% germs in 15 seconds

Fairness cream: Fair & lovely multivitamin

Close-up: peppermint splash

Pepsodent toothbrush: 25% flexibility.

Conclusion & Recommendations

HUL's up-and-running business model is a treat for investors seeking exposure in the FMCG
segment. The company has delivered in the past and has the potential to do better in future. In
short term. HULs growth story is evolving.
ITC is eyeing the pie which HUL and other FMCG players currently enjoy. Though risky, the
company's business model will pay off in the long run. ITC has proved its expertise in the
cigarettes, hotels, paper and agri-businesses. Investors who want to bank on its execution ability
in FMCG can consider the stock with a long-term horizon.
According to us the companies should continue with their CSR and also continue with their
strategies. The thing that needs to be changed is that, ITC should go for more diversification in
Non cigarette segment (FMCG) while HUL should come up with the new strategies that could
take the new product forward to create a new segment. A recommendation For HUL is that it
should focus on rural area more.

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CASE 2: DABUR INDIA

Introduction:
Dabur India Limited has marked its presence with significant achievements and today commands
a market leadership status. Dabur story of success is based on dedication to nature, corporate and
process hygiene, dynamic leadership and commitment to their partners and stakeholders. The
results of our policies and initiatives speak for themselves.

Leading consumer goods company in India with a turnover of Rs. 5,283 Crore (FY12)

2 Major strategic business units (SBU) - Consumer Care Business and International
Business Division (IBD)

2 Subsidiary Group companies - Dabur International and NewU and several step down
subsidiaries: Dabur Nepal Pvt Ltd (Nepal), Dabur Egypt Ltd (Egypt), Asian Consumer
Care (Bangladesh), Asian Consumer Care (Pakistan), African Consumer Care (Nigeria),
Naturelle LLC (Ras Al Khaimah-UAE), Weikfield International (UAE) and Jaquline Inc.
(USA)

17 ultra-modern manufacturing units spread around the globe

Products marketed in over 60 countries

Wide and deep market penetration with 50 C&F agents, more than 5000 distributors and
over 3.4 million retail outlets all over India

Milestones
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Dabur India Ltd. made its beginnings with a small pharmacy, but has continued to learn and
grow to a commanding status in the industry. The Company has come a long way in popularising
and making easily available a whole range of products based on the traditional science of
Ayurveda. And Dabur has set very high standards in developing products and processes that
meet stringent quality norms. As it grows even further, Dabur will continue to mark up on major
milestones along the way, setting the road for others to follow...

Milestones To Success

1884 - Established by Dr. S K Burman at Kolkata

1896 - First production unit established at Garhia

1919 - First R&D unit established

Early 1900s - Production of Ayurvedic medicines

Dabur identifies nature-based Ayurvedic medicines as its area of specialisation. It is the first
Company to provide health care through scientifically tested and automated production of
formulations based on our traditional science.

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1930 - Automation and upgradation of Ayurvedic products manufacturing initiated

1936 - Dabur (Dr. S K Burman) Pvt. Ltd. Incorporated

1940 - Personal care through Ayurveda

Dabur introduces Indian consumers to personal care through Ayurveda, with the launch of Dabur
Amla Hair Oil. So popular is the product that it becomes the largest selling hair oil brand in
India.

1949 - Launched Dabur Chyawanprash in tin pack

Widening the popularity and usage of traditional Ayurvedic products continues. The ancient
restorative Chyawanprash is launched in packaged form, and becomes the first branded
Chyawanprash in India.

1957 - Computerisation of operations initiated

1970 - Entered Oral Care & Digestives segment

Addressing rural markets where homemade oral care is more popular than multinational brands,
Dabur introduces Lal Dant Manjan. With this a conveniently packaged herbal toothpowder is
made available at affordable costs to the masses.

1972 - Shifts base to Delhi from Calcutta

1978 - Launches Hajmola tablet

Dabur continues to make innovative products based on traditional formulations that can provide
holistic care in our daily life. An Ayurvedic medicine used as a digestive aid is branded and
launched as the popular Hajmola tablet.

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1979 - Dabur Research Foundation set up

1979 - Commercial production starts at Sahibabad, the most modern herbal medicines
plant at that time

1984 - Dabur completes 100 years

1988 - Launches pharmaceutical medicines

1989 - Care with fun

The Ayurvedic digestive formulation is converted into a children's fun product with the launch of
Hajmola Candy. In an innovative move, a curative product is converted to a confectionary item
for wider usage.

1994 - Comes out with first public issue

1994 - Enters oncology segment

1994 - Leadership in health care

Dabur establishes its leadership in health care as one of only two companies worldwide to launch
the anti-cancer drug Intaxel (Paclitaxel). Dabur Research Foundation develops an eco-friendly
process to extract the drug from its plant source

1996 - Enters foods business with the launch of Real Fruit Juice

1996 - Real blitzkrieg

Dabur captures the imagination of young Indian consumers with the launch of Real Fruit Juices a new concept in the Indian foods market. The first local brand of 100% pure natural fruit juices
made to international standards, Real becomes the fastest growing and largest selling brand in
the country.
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1998 - Burman family hands over management of the company to professionals

2000 - The 1,000 crore mark

Dabur establishes its market leadership status by staging a turnover of Rs.1,000 crores. Across a
span of over a 100 years, Dabur has grown from a small beginning based on traditional health
care. To a commanding position amongst an august league of large corporate businesses.

2001 - Super specialty drugs

With the setting up of Dabur Oncology's sterile cytotoxic facility, the Company gains entry into
the highly specialised area of cancer therapy. The state-of-the-art plant and laboratory in the UK
have approval from the MCA of UK. They follow FDA guidelines for production of drugs
specifically for European and American markets.

2002 - Dabur record sales of Rs 1163.19 crore on a net profit of Rs 64.4 crore

2003 - Dabur demerges Pharmaceuticals business

Dabur India approved the demerger of its pharmaceuticals business from the FMCG business
into a separate company as part of plans to provider greater focus to both the businesses. With
this, Dabur India now largely comprises of the FMCG business that include personal care
products, healthcare products and Ayurvedic Specialities, while the Pharmaceuticals business
would include Allopathic, Oncology formulations and Bulk Drugs. Dabur Oncology Plc, a
subsidiary of Dabur India, would also be part of the Pharmaceutical business.

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Maintaining global standards

As a reflection of its constant efforts at achieving superior quality standards, Dabur became the
first Ayurvedic products company to get ISO 9002 certification.

Science for nature

Reinforcing its commitment to nature and its conservation, Dabur Nepal, a subsidiary of Dabur
India, has set up fully automated greenhouses in Nepal. This scientific landmark helps to produce
saplings of rare medicinal plants that are under threat of extinction due to ecological degradation.

2005 - Dabur aquires Balsara

As part of its inorganic growth strategy, Dabur India acquires Balsara's Hygiene and Home
products businesses, a leading provider of Oral Care and Household Care products in the Indian
market, in a Rs 143-crore all-cash deal.

2005 - Dabur announces bonus after 12 years

Dabur India announced issue of 1:1 Bonus share to the shareholders of the company, i.e. one
share for every one share held. The Board also proposed an increase in the authorized share
capital of the company from existing Rs 50 crore to Rs 125 crore.

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2006 - Dabur crosses $2 bln market cap, adopts US GAAP.

Dabur India crosses the $2-billion mark in market capitalisation. The company also adopted US
GAAP in line with its commitment to follow global best practices and adopt highest standards of
transparency and governance.

2006 - Approves FCCB/GDR/ADR up to $200 million

Moving forward on the inorganic growth path, Dabur India decides to raise up to $200 million
from the international market through Bonds, FCCBs, GDR, ADR, QIPs or any other
securities.The capital raised will be used to fund Dabur's aggressive growth ambitions and
acquisition plans in India and abroad.

2007 - Celebrating 10 years of Real

Dabur Foods unveiled the new packaging and design for Real at the completion of 10 years of
the brand. The new refined modern look depicts the natural goodness of the juice from freshly
plucked fruits.

2007 - Foray into organised retail

Dabur India announced its foray into the organised retail business through a wholly-owned
subsidiary, H&B Stores Ltd. Dabur will invest Rs 140 crores by 2010 to establish its presence in
the retail market in India with a chain of stores on the Health & Beauty format.

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2007 - Dabur Foods merged with Dabur India

Dabur India decides to merge its wholly-owned subsidiary Dabur Foods Limited with itself to
extract synergies and unlock operational efficiencies. The integration will also help Dabur
sharpen focus on the high growth business of foods and beverages, and enter newer product
categories in this space.

2008 - Acquires Fem Care Pharma

Dabur India acquires Fem Care Pharma, a leading player in the women's skin care market.
Besides an entry into the high-growth skin care market with an established brand name FEM,
this transaction also offers Dabur a strong platform to enter newer product categories and
markets.

2009 - Dabur Red Toothpaste joins 'Billion Rupee Brands' club

Dabur Red Toothpaste becomes the Dabur's ninth Billion Rupee brand. Dabur Red Toothpaste
crosses the billion rupee turnover mark within five years of its launch.

2010 - Dabur makes its first overseas acquisition

Dabur makes its first overseas acquisition, buying Hobi Kozmetik Kozmetik Group, a leading
personal care products company in Turkey, for $69 million.

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2010 - Dabur acquired 100% equity in Namaste Lab

Dabur acquired 100% equity in Namast Laboratories LLC of the US for $100 million. This
marks Daburs entry into the fast-growing ethnic hair care products market in U.S., Europe and
Africa.

2010 - Dabur Chyawanprash Launched Orange & Mango Flavours

Dabur launches Indias first fruit-flavoured Chyawanprash. Dabur Chyawanprash was launched
in Orange and Mango flavoured variants.

2010 - Dabur Amla Hair Oils enters Limca Book of Records

Dabur Amla Hair Oils enters Limca Book of Records for achieving a record feat of hosting the
longest ever non-stop head massage marathon.

2011 - Dabur enters professional skin care market

Dabur enters professional skin care market with the launch of OxyLife Professional Facial Kit,
created exclusively for professional use.

2011 - Dabur launches its first-ever online shopping portal

Dabur India Ltd. launches its first-ever online shopping portal www.daburuveda.com With this,
Dabur is the first Indian FMCG company to launch a dedicated online shopping portal for its

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beauty products range. The portal will be the online gateway for consumers to know, understand,
buy and gift the exclusive Dabur Uveda range of skincare products.

2011 - Dabur India acquires 30-Plus from Ajanta Pharma

Dabur India Ltd acquired Ajanta Pharmas over-the-counter energizer brand 30-Plus.

2011 - Dabur to enter Sri Lanka

Dabur India Ltdsets up new subsidiary in Sri Lanka Dabur Lanka (Pvt.) Ltd. The company will
establish a new export-oriented manufacturing facility for producing a range of fruit-based
beverages in Gampaha, north of Colombo.

2011 - Dabur enters Almond Hair Oil market

Dabur India Ltd launches Dabur Almond Hair Oil, a one-of-its-kind product that offers superior
nourishment for 100% damage-free hair.

2012 - Dabur crosses Billion-Dollar turnover mark

Dabur India Ltd surpassed the Billion-Dollar Turnover mark during the 2011-12 fiscal to end the
year with Net Sales of Rs 5,283.17 Crore.
Dabur Sustainability
At Dabur, environment and nature is the lifeline of our business. With a portfolio of Ayurveda
and nature-based products, conservation of nature & natural resources is deep rooted in our
organizational DNA, and in every aspect of our ever-growing business.

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We, at Dabur, have not merely incorporated the concept of sustainability into the core of our
business but have, in fact, expanded it to encompass our aspirations and responsibilities to the
society and to the environment. It is this concept that inspires us to optimize our business
performance to tackle the new and growing challenges of environment and technology.

It is a concept on which we aspire to build an organization that will continue to increase value for
all our stakeholders for generations to come, through intensive focus on Conservation of Energy
and Technology Absorption, along with Health, Safety and Environment Protection.
Conservation of Energy

Dabur has been undertaking a host of energy conservation measures. Successful implementation
of various energy conservation projects have resulted in a 13.8% reduction in the Companys
energy bill in the 2008-09 fiscal alone. What was noteworthy was the fact that this reduction has
come despite an 8-9% volume increase in manufacturing, and an average 11.7% increase in cost
of key input fuels.

The host of measures key among them being use of bio-fuels in boilers, generation of biogas
and installation of energy efficient equipment helped lower the cost of production, besides
reduce effluent and improve hygiene conditions & productivity
Technology Absorption

Dabur has also made continuous efforts towards technology absorption and innovation, which
have contributed towards preserving natural resources. These efforts include:

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Minimum use of water in process by pre-concentration of herbal extract and reduction in

concentration time
Uniform heating in VTDs by hot water as against steam earlier, resulting in 30% reduction in
bulk wastage by using non-stick coating and formulation change.
Improvement in water treatment plant through introduction of RO (Reverse Osmosis) system
for DM water, reutilization of waste water from pump seal cooling and RO reject waste-water
management.
Introduction of water efficient CIP system with recycling of water in fruit juice manufacturing.
Development of in-house technology to convert fruit waste into organic manure by using the
culture Lactobacilus burchi
The Company has achieved a host of significant benefits in terms of product improvement, cost
reduction, product development, import substitution, cleaner environment and waste disposal,
amongst others.

Health Safety & Environmental Review

Renewing the commitment to Health Safety and Environment, Dabur has formulated a policy
focusing on People, Technology and Facilities. A dedicated Safety Management Team has also
been put in place to work towards the prevention of untoward incidents at the corporate and unit
level, besides educate & motivate employees on various aspects of Health, Safety and
Environment.

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The Company is also continuously monitoring its waste in adherence with the pollution control
norms. In pursuance of its commitment towards the society, efforts have also been initiated to
conserve and maintain the ground water level. The efforts include implementation of rainwater
harvesting, which has delivered encouraging results and has put the company on the path to
becoming a Water-Positive Corporation.

Dabur also initiated a Carbon Foot Print Study at the unit level with an aim to become a carbon
positive Company in years to come.

At Dabur, we are committed to sustainable development throughout our diverse operations. And,
we will strive to translate the good intentions into concrete and lasting results, contributing to the
ultimate good of the society.

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