COMPETATIVE STRATEGY OF HUL V/S ITC

B y: Click to edit Master subtitle style Group IV Jiten Shah Rahul Kumar Alok Birewar Darshan Patil Sumit Tomar

INTRODUCTION

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Competitive Strategy consists of move of companies in order to attract customers. With stand competitive pressures and strengthen an organizations market position. The main objective of Competitive Strategy is to generate a competitive advantage, increase the loyalty of customers and to beat competitors.

FIVE MAIN COMPETITIVE STRATEGIES ARE:

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Overall low cost leadership strategy Best cost providers strategy 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

What are HUL and ITC Ltd.?

HUL (Hindustan Unilever Ltd.)

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This Company is earlier known as Hindustan Lever Ltd. This is Indians 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.

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HUL cont..

16 of HULs brands featured in ACNielson Brand Equity list of 100 most trusted brands in 2010 in an annual survey. For the entire year ending March - 2011 net turnover of company is Rs. 20239.33 Crore which is 47.99% higher than 31st December 2009s Rs. 13675.43 Crore driven mainly by domestic FMCGs with net profit stood at Rs. 2496.45 Crore.

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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, packed foods, hotels, and apparels. For the entire year ending Mar-2011 the turnover of company is at Rs. 15388 Crore which is 10.3% higher than previous years Rs. 13947.53 Crore, driven mainly by robust 20% growth in non cigarette FMCG business with net

Analysis of Both Companies

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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.

HUL Segment Breakup

ITC

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Segment Breakup

4/28/12 COMPARATIVE ANALYSIS OF BOTH THE COMPANIES UNDER SOME HEADS:

HUL

ITC

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 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 agri-business to reduce its exposure to cigarettes.

PERFORMANCE

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After stagnating between 1999 and 04, the company is back on the growth track. In the past three years, till 2010 HULs net sales have witnessed a CAGR of 11%, while net profit has posted a CAGR of 17%. Despite diversification, ITCs reliance on cigarettes is still huge. The tobacco business

Risk for both the companies

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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

HUL

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 ITCs key challenges. Export ban and

OVERALL STRATEGY
HUL

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ITC

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

ITC is focusing on delivering value at competitive prices. Its tremendous reach through extensive distribution chain has been a competitive

Growth Drivers
HUL

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ITC

The Company has been launching new products and brand extensions, with investments being made towards brandbuilding and

ITCs backward integration to ensure that its products pass efficiently from the farms to consumers has helped it to cut down supply and procurement

Findings

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ITC works in the market with the qualitative style. In the Bhopal city ITC have 2800 out lets. In these, outlets are cover by the Sales man according to his beat. Compare to HUL, ITC has less demand but promotional activities of ITC, above the land and below the land day by day aware to customer about ITCs personal care product. ITC dont have any schemes like HUL

Suggestions

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We want to suggest few scheme to the ITC for Modern Trade, for wholesaler, for the retailer. This can be helpful to increase the sales of ITC. For modern trade scheme is ITC ZONE. In the market most of the customers are not aware about to ITC & ITCs entire personal care product and visibility problem and also customer aware about the consumer scheme.

Why this scheme?

Suggestions (cont)

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For wholeseller scheme is Rocket Singh

Why this scheme?

Wholesalers are totally interested in the margin or full demanded products in market right now ITCs personal care products are in the growth stage if we are give margins to sale quantity then sale will be increased by wholeseller.

Suggestions (cont)

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For the retailer scheme is ITCS PARTNERS

Why this scheme?

ITCs personal care products are in good quality but the ITCs personal care product need a push by the shop keeper. ITCS PARTNERS in this we give certificate of excellence to the shopkeeper with margin. This scheme is based on also quantitative sale.

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Conclusion

HULs 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 the small and medium term. ITCs growth story is still evolving. ITC is eyeing the pie which HUL and other FMCG players currently enjoy. Though risky, the companies business model will pay off in the long run. ITC has proved its expertise in the cigarettes, hotels, paper

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