1

A PROJECT REPORT ON
“MARKET SEGMENTATION
HUL”

INDEX

SR NO. PARTICULARS PAGE NO.

1 INTRODUCTION 5
2 DIFFERENT MARKET VARIABLES 12
3 APPROACH TO SEGMENTATION 17
AND TARGETING
4 PATTERNS OF MARKET 18
SEGMENTATION
5 COMPANY PROFILE 20
6 SWOT ANALYSIS 31
7 5 P’S OF MARKETING 34
8 HUL MARKETING STRATEGIES 39
9 SUGGESTIONS AND 46
RECOMMENDATIONS
10 CONCLUSION 47
11 BIBLIOGRAPHY 48
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INTRODUCTION

Market Segmentation

Market segmentation is one of two general approaches to marketing; the other is

mass-marketing. In the mass-marketing approach, businesses look at the total
market as though all of its parts were the same and market accordingly. In the
market-segmentation approach, the total market is viewed as being made up of
several smaller segments, each different from the other. This approach enables
businesses to identify one or more appealing segments to which they can profitably
target their products and marketing efforts.

The Market-Segmentation process involves multiple steps. The first is to define the
market in terms of the product's end users and their needs. The second is to divide
the market into groups on the basis of their characteristics and buying behaviors.

Possible bases for dividing a total market are different for consumer markets than
for industrial markets. The most common elements used to separate consumer
markets are demographic factors, characteristics, geographic location, and
perceived product benefits.

Demographic Segmentation involves dividing the market on the basis of statistical

differences in personal characteristics, such as age, gender, race, income, life stage,
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occupation, and education level. Clothing manufacturers, for example, segment on

the basis of age groups such as teenagers, young adults, and mature adults.
Jewelers use gender to divide markets. Cosmetics and hair care companies may use
race as a factor; home builders, life stage; professional periodicals, occupation; and
so on.

Psychographic Segmentation is based on traits, attitudes, interests, or lifestyles of

potential customer groups. Companies marketing new products, for instance, seek
to identify customer groups that are positively disposed to new ideas. Firms
marketing environmentally friendly products would single out segments with
environmental concerns. Some financial institutions attempt to isolate and tap into
groups with a strong interest in supporting their college, favorite sports team, or
professional organization through logged credit cards. Similarly, marketers of low-
fat or low-calorie products try to identify and match their products with portions of
the market that are health-or weight-conscious.

Geographic Segmentation entails dividing the market on the basis of where people
live. Divisions may be in terms of neighborhoods, cities, counties, states, regions,
or even countries. Considerations related to geographic grouping may include the
makeup of the areas, that is, urban, suburban, or rural; size of the area; climate; or
population. For example, manufacturers of snow-removal equipment focus on
identifying potential user segments in areas of heavy snow accumulation. Because
many retail chains are dependent on high-volume traffic, they search for, and will
only locate in, areas with a certain number of people per square mile.

Product Benefit Segmentation is based on the perceived value or advantage

consumers receive from a good or service over alternatives. Thus, markets can be
partitioned in terms of the quality, performance, image, service, special features, or
 4

other benefits prospective consumers seek. A wide spectrum of businesses—from

camera to Automobile Marketers—rely on this type of segmentation to match up
with customers. Many companies even market similar products of different grades
or different accompanying services to different groups on the basis of product-
benefit preference.

Factors used to segment industrial markets are grouped along different lines than
those used for consumer markets. Some are very different; some are similar.
Industrial markets are often divided on the basis of organizational variables, such
as type of business, company size, geographic location, or technological base. In
other instances, they are segmented along operational lines such as products made
or sold, related processes used, volume used, or end-user applications. In still other
instances, differences in purchase practices provide the segmentation base. These
differences include centralized versus decentralized purchasing; policy regarding
number of vendors; buyer-seller relationships; and similarity of quality, service, or
availability needs.

Although demographic, geographic, and organizational differences enable

marketers to narrow their opportunities, they rarely provide enough specific
information to make a decision on dividing the market. Psychographic data,
operational lines, and, in particular, perceived consumer benefits and preferred
business practices are better at pinpointing buyer groupings—but they must be
considered against the broader background. Thus, the key is to gather information
on and consider all segmentation bases before making a decision.

Adopting a market-segmentation approach can benefit a company in several

specific areas. First, it can give customer-driven direction to the management of
current products. Second, it can result in more efficient use of marketing resources.
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Third, it can help identify new opportunities for growth and expansion. At the
same time, it can bring a company the broad benefit of a competitive advantage.

A company cannot serve all customers in a broad market such as computers or soft
drinks. The customers are too numerous and diverse in their buying requirements.
A company needs to identify the market segments it can serve effectively. Here we
will examine levels of segmentation, patterns of segmentation, market segment
procedures, bases for segmenting consumer and business markets, and
requirements for effective segmentation. Many companies are embracing target
marketing. Here sellers distinguish the major market segments, target one or more
of these segments, and develop products and marketing programs tailored to each
instead of scattering.

Market segmentation is the process of identifying key groups or segments within

the general market that share specific characteristics and consumer habits. Once
the market is broken into segments, companies can develop advertising programs
for each segment, focus advertising on one or two segments or niches, or develop
new products to appeal to one or more of the segments.

Introduction to Marketing

"Marketing is the process of planning and executing the conception, pricing,

promotion, and distribution of ideas, goods, services, organizations, and events to
create and maintain relationships that will satisfy individual and organizational
objectives." The new definition of marketing, as released by the American
Marketing Association is:-
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Marketing is an organizational function and a set of processes for creating,

communicating and delivering value to customers and for managing customer
relationships in ways that benefit the organization and its stakeholders.

"Marketing is a social and managerial process by which individuals and groups

obtain what they need and want through creating and exchanging products and
value with others." (Kotler & Armstrong 1987)

The Mission of marketing is satisfying customer needs. That takes place in a social
context. In developed societies marketing is needed in order to satisfy the needs of
society's members. Industry is the tool of society to produce products for the
satisfaction of needs.

Marketing is one of the most important functions in business. It is the discipline

required to understand customers' needs and the benefits they seek. Academics do
not have one commonly agreed upon definition. Even after a better part of a
century the debate continues. In a nutshell it consists of the social and managerial
processes by which products (goods or services) and value are exchanged in order
to fulfill the needs and wants of individuals or groups. Although many people seem
to think that "Marketing" and "Advertising" are synonymous, they are not.
Advertising is simply one of the many processes that together constitute
Marketing.

What is Marketing?

The term marketing has changed and evolved over a period of time, today
marketing is based around providing continual benefits to the customer, these
benefits will be provided and a transactional exchange will take place.
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The Chartered Institute of Marketing define marketing as ‘The management

process responsible for identifying , anticipating and satisfying customer
requirements profitability’

If we look at this definition in more detail Marketing is a management

responsibility and should not be solely left to junior members of staff. Marketing
requires co-ordination, planning, implementation of campaigns and a competent
manager(s) with the appropriate skills to ensure success. Philip Kotler defines
marketing as ‘satisfying needs and wants through an exchange process’

Within this exchange transaction customers will only exchange what they value
(money) if they feel that their needs are being fully satisfied, clearly the greater the
benefit provided the higher transactional value an organisation can charge.

P.Tailor of www.learnmarketing.net suggests that 'Marketing is not about

providing products or services it is essentially about providing changing benefits to
the changing needs and demands of the customer’.

Advantages

 Identifies needs and wants of consumers

 Determines demand for product
 Aids in design of products that fulfill consumers needs
 Outlines measures for generating the cash for daily operation, to repay debts
and to turn a profit
 Identifies competitors and analyzes your product's or firm's competitive
advantage
 Identifies new product areas
 Identifies new and/or potential customers
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 Allows for test to see if strategies are giving the desired results

Disadvantages

 Identifies weaknesses in your business skills

 Leads to faulty marketing decisions based on improperly analyzed data
 Creates unrealistic financial projections if information is interpreted
incorrectly
 Identifies weaknesses in your overall business plan

Considerations for Market Segmentation

To identify segments, marketers examine consumers' interests, tastes, preferences,

and socioeconomic characteristics in order to determine their patterns of
consumption and how they will respond to various marketing strategies. The
primary information marketers seek is why consumers purchase specific products
or services but not others. Catalog retailers and direct-marketing firms make up
some of the key users of market segmentation, although many other kinds of
companies and organizations use this technique.

To whom do you sell and how do you promote sales?

Market segmentation, however, works effectively only for certain kinds of

products and services.

First, to determine whether to segment a market, marketers must find out if the
market can be identified and measured, which entails determining which
consumers belong to specific market segments.
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Second, marketers must determine if the segments are large enough to be

profitable. While marketers can easily divide the total market into smaller groups,
these groups might be so small that they do not justify the expenses associated with
market segmentation.

Third, marketers must be able to reach the segments through their advertising. If
the members of a particular segment do not share interest in a common magazine
or television show, for example, then marketers have no way of reaching the
segment and so the segment is superfluous.

Fourth, marketers must gauge the responsiveness of the segments and find out if a
proposed segment would likely respond to a marketing campaign. If it is not
probable that a segment will react to a promotion, then the segment is not useful.

Fifth, marketers must determine if the segments will change in the near future.
Since it takes time to prepare a marketing strategy for specific segment and since it
takes time for market segmentation to be profitable, creating segments where
consumer needs and wants are likely to change would not be productive.

DIFFERENT MARKET VARIABLES

Geographic segmentation

Geographic basis focus on preferences contingent on regional factors, such as

region (e.g., North or South), county, population density, urban or rural location,
and climate. Collecting and analyzing information according to the physical
location of the customer or other data source.
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Geographic segmentation is often used in marketing, since companies selling

products and services would like to know where their products are being sold in
order to increase advertising and sales efforts there.

Geographic segmentation calls for dividing the market into different geographical
units such as nation, states, regions, countries, cities, or neighborhoods . The
company can operate in one or a few geographic areas, or operate in all but pay
attention to local variations .

Demographic Segmentation

Market segmentation based on differences in demographic factors (which normally

match consumer wants and needs) of different groups of consumers. It is one of the
five common segmentation strategies, and aims to define specific niches that
require custom-tailored promotion.

Demographics include personal characteristics such as gender, age, marital status,

social attributes (such as ethnicity and religion), and income level.

In demographic segmentation , the market is divided into groups on the basis of

variables such as age , family life cycle , gender , income , occupation , education ,
religion , race , generation , nationality , and social class. Demographic variables
are the most popular bases for distinguishing customer groups. One reason is that
consumer wants, preferences, and usage rates are often associated with
demographic variables. Another is that demographic variables are easier to
measure.

 Age and Life-Cycle Stage

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Consumer wants and abilities change with age. Age and life cycle can be tricky
variables. For example, the Ford Motor Company designed its Mustang automobile
to appeal to young people who wanted an inexpensive sports car . But Ford found
that many mustangs were purchased by older buyers. It then realized that its target
market was not the chronologically young but the psychologically young.

 Life Stage

Person in the same part of the life cycle may differ in their life stage. Life stage
defines a person’s major concern, such as going through a divorce, going into a
second marriage, taking care of older parents, deciding to cohabit with another
person, deciding to buy a new home, and so on.

 Gender

Men and women tend to have different attitudinal and behavioral orientations,
based partly on genetic makeup and partly on socialization practices.

Gender differentiation has long been applied in clothing, hairstyling, cosmetics and
magazines. The automobiles industry is beginning to recognize gender
segmentation, since there are now more women car owners, some manufacturers
are designing features to appeal to women, although they stop short of advertising
the cars as women’s cars.

 Income
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Income segmentation is long- standing practice in such products and services

categories as automobiles, boats, clothing, cosmetics, and travel. However, income
does not always predict the best customers for a given product.

 Generation

Many researchers are now turning to generation segmentation. Each generation is

profoundly influenced by the times in which it grows up- the music, movies,
politics, and defining events of that period. Demographers call these groups
“cohorts”.

 Social Class

Social class has a strong influence on preference in cars, clothing, home,

furnishings, leisure activities, reading habits, and retailers. Many companies design
products and services for specific social classes.

Psychographic Segmentation

The division of a heterogeneous market into relatively homogeneous groups on the

basis of their attitudes, beliefs, opinions, personalities and lifestyles; sometimes
called "State-of-Mind" Segmentation.

Personality the distinctive character of an individual; used as a basis for the

psychographic segmentation of a market in which individuals of relatively similar
personality, with similar needs or wants, are grouped into one segment.

In psychographic segmentation, buyers are divided into different groups on the

basis of lifestyle or personality or values. People within the same demographic
group can exhibit very different psychographic profiles.
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 Lifestyle

People exhibit many more lifestyles than are suggested by the seven social classes.
People differ in attitudes, interest, activities, and these affect the goods and
services they consume. Companies making cosmetics and furniture are always
seeking opportunities in lifestyles segmentation, but lifestyle segmentation does
not always work.

 Personality

Markers have used personality variables to segment markets. They endow their
products with a “brand personality” that corresponds to a target consumer
personality. The company utilizes product features, services, and image making to
transmit the product’s personality.

 Values

Some markers segment by core values. Core values go much deeper than behavior
or attitude, and determine, at a basic level, people’s choices and desires over the
long term.

Behavioral Segmentation

Market segmentation based on differences in the consumption behavior of different

groups of consumers—their life-styles, patterns of buying and using, patterns of
spending money and time, etc. One of the five common segmentation strategies, its
objective is to define specific niches that require custom tailored promotion. In
behavioral segmentation, buyers are divided into groups on the basis of their
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knowledge of, attitude toward, use of, or response to a product. Many marketers
believe that behavioral variables-occasions, benefits, user status, usage rate, loyalty
status, buyer-readiness stage, and attitude—are the best starting points for
constructing market segments.

 Occasions

Buyers can be distinguished according to the occasions when they develop a need,
purchase a product, or use a product. Occasions segmentation can help firms
expand product usage. For example in Pakistan tea is usually consumed at
breakfast. A company can consider occasions of critical life events or transitions-
marriage, childbirth, illness, relocation, career change—as giving rise to new
needs.

APPROACH TO SEGMENTATION AND TARGETING

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Patterns of Market Segmentation

Market segments can be build up in many ways, one way is to identify preference
segments. For example cookies buyers are asked how much they value sweetness
and saltiness in biscuits as two product attributes. Three different patterns can
emerge.

1. Homogeneous Preferences: shows a market where all the consumers have

roughly the same preferences. The market shows no natural segments. We
would predict that existing brands would be similar and cluster around the
middle of the scale in both sweetness & saltiness.

2. Diffused Preferences: At the other extreme, consumer preferences maybe

scattered throughout the space, indicating that customers vary greatly in their
preferences. The first brand to enter the market is likely to position in the
center to appeal to the most people.
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3. Clustered Preferences: The market might reveal distinct preference

clusters, called natural market segments. The first firm in this market has
three options. It might position in the center, hoping to appeal to all groups.
It might position in the largest market segment (concentrated marketing).It
might develop several brands, each positioned in a different segment. If the
first firm developed only one brand, competitors would enter and introduce
brands in the other segments.

BENEFITS AND DRAWBACKS

Benefits of Market Segmentation

 Better marketing job and efficient use of marketing resources.

 Small firm with limited resources can compete effectively in one or two
market segments.
 A company can design products that really match the market demands.
 Advertising media can be used more effectively toward each segment of
market.

Drawbacks of Market Segmentation

 It is an expensive proposition in both the production and marketing of

products.
 Segmentation increases marketing expenses in several ways i.e. Inventory
cost goes up, advertising cost goes up, administrative expense goes up.
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COMPANY PROFILE

INTRODUCTION

Hindustan Unilever Limited (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.
The company’s Turnover is Rs. 20, 239 crores (for the 15 month period – January
1, 2008 to March 31, 2009).

Hindustan unilever limited is a subsidiary of Unilever, one of the world’s leading

suppliers of fast moving consumer goods with strong local roots in more than 100
countries across the globe with annual sales of €40.5 billion in 2008. Unilever has
about 52% shareholding in HUL. Hindustan Unilever was recently rated among the
top four companies globally in the list of “Global Top Companies for Leaders” by
a study sponsored by Hewitt Associates, in partnership with Fortune magazine and
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the RBL Group. The company was ranked number one in the Asia-Pacific region
and in India.

The mission that inspires HUL's more than 15,000 employees, including over
1,400 managers, is to “add vitality to life". The company meets everyday 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 about 52 % of the equity.

Type Public company BSE: 500696

Industry Fast Moving Consumer Goods FMCG)

Founded 1933

Headquarters Mumbai, India

Key people Harish Manwani (Chairman), Nitin Paranjpe

(CEO and Managing Director)

Products Home & Personal Care, Food & Beverages

Revenue 17,873.44 crore (US$3.97 billion) (2009-

2010) [1]

Net income 2,202.03 crore (US$488.85 million)

Employees Over 65,000 direct & indirect employees

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Parent Unilever Plc (52%)

Website www.hul.co.in

VISION AND MISSION

Vision of Hindustan unilever limited

Unilever products touch the lives of over 2 billion people every day – whether
that's through feeling great because they've got shiny hair and a brilliant smile,
keeping their homes fresh and clean, or by enjoying a great cup of tea, satisfying
meal or healthy snack.

A clear direction

The four pillars of our vision set out the long term direction for the company –
where we want to go and how we are going to get there:

• We work to create a better future every day

• We help people feel good, look good and get more out of life with brands and
services that are good for them and good for others.

• We will inspire people to take small everyday actions that can add up to a big
difference for the world.

• We will develop new ways of doing business that will allow us to double the size
of our company while reducing our environmental impact. We've always believed
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in the power of our brands to improve the quality of people’s lives and in doing the
right thing. As our business grows, so do our responsibilities. We recognise that
global challenges such as climate change concern us all. Considering the wider
impact of our actions is embedded in our values and is a fundamental part of who
we are.

Purpose & principles of hul

Our corporate purpose states that to succeed requires "the highest standards of
corporate behaviour towards everyone we work with, the communities we touch,
and the environment on which we have an impact."

History of HUL

In the summer of 1888, visitors to the Kolkata harbour noticed crates full of

Sunlight soap bars, embossed with the words "Made in England

by Lever Brothers". With it, began an era of marketing branded Fast Moving
Consumer Goods (FMCG).

Soon after followed Lifebuoy in 1895 and other famous brands like Pears, Lux and
Vim. Vanaspati was launched in 1918 and the famous Dalda brand came to the
market in 1937.

In 1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspati

Manufacturing Company, followed by Lever Brothers India Limited (1933) and
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United Traders Limited (1935). These three companies merged to form HUL in
November 1956; HUL offered 10% of its equity to the Indian public, being the first
among the foreign subsidiaries to do so. Unilever now holds 52.10% equity in the
company. The rest of the shareholding is distributed among about 360,675
individual shareholders and financial institutions.

The erstwhile Brooke Bond's presence in India dates back to 1900. By 1903, the
company had launched Red Label tea in the country. In 1912, Brooke Bond & Co.
India Limited was formed. Brooke Bond joined the Unilever fold in 1984 through
an international acquisition. The erstwhile Lipton's links with India were forged in
1898. Unilever acquired Lipton in 1972 and in 1977 Lipton Tea (India) Limited
was incorporated.
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PRODUCTS OF HUL
 23

Pond's (India) Limited had been present in India since 1947. It joined the
Unilever fold through an international acquisition of Chesebrough Pond's USA in
1986.

Since the very early years, HUL has vigorously responded to the stimulus of
economic growth. The growth process has been accompanied by judicious
diversification, always in line with Indian opinions and aspirations. The

liberalisation of the Indian economy, started in 1991, clearly marked an inflexion

in HUL's and the Group's growth curve. Removal of the regulatory framework
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allowed the company to explore every single product and opportunity segment,
without any constraints on production capacity.

Simultaneously, deregulation permitted alliances, acquisitions and mergers. In one

of the most visible and talked about events of India's corporate history, the
erstwhile Tata Oil Mills Company (TOMCO) merged with HUL, effective from
April 1, 1993. In 1996, HUL and yet another Tata company, Lakme Limited,
formed a 50:50 joint venture, Lakme Unilever Limited, to market Lakme's market-
leading cosmetics and other appropriate products of both the companies.
Subsequently in 1998, Lakme Limited sold its brands to HUL and divested its 50%
stake in the joint venture to the company.

HUL formed a 50-50 joint venture with the US-based Kimberly Clark Corporation
in 1994, Kimberly-Clark Lever Ltd, which markets Huggies Diapers and Kotex
Sanitary Pads. HUL has also set up a subsidiary in Nepal, Unilever Nepal Limited
(UNL), and its factory represents the largest manufacturing investment in the
Himalayan kingdom. The UNL factory manufactures HUL's products like Soaps,
Detergents and Personal Products both for the domestic market and exports to
India.

The 1990s also witnessed a string of crucial mergers, acquisitions and alliances on
the Foods and Beverages front. In 1992, the erstwhile Brooke Bond acquired
Kothari General Foods, with significant interests in Instant Coffee. In 1993, it
acquired the Kissan business from the UB Group and the Dollops Ice-cream
business from Cadbury India.

As a measure of backward integration, Tea Estates and Doom Dooma, two

plantation companies of Unilever, were merged with Brooke Bond. Then in 1994,
Brooke Bond India and Lipton India merged to form Brooke Bond Lipton India
 25

Limited (BBLIL), enabling greater focus and ensuring synergy in the traditional
Beverages business. 1994 witnessed BBLIL launching the Wall's range of Frozen
Desserts. By the end of the year, the company entered into a strategic alliance with
the Kwality Ice-cream Group families and in 1995 the Milk-food 100% Ice-cream
marketing and distribution rights too were acquired.

Finally, BBLIL merged with HUL, with effect from January 1, 1996. The internal
restructuring culminated in the merger of Pond's (India) Limited (PIL) with HUL
in 1998. The two companies had significant overlaps in Personal Products,
Speciality Chemicals and Exports businesses, besides a common distribution
system since 1993 for Personal Products. The two also had a common management
pool and a technology base. The amalgamation was done to ensure for the Group,
benefits from scale economies both in domestic and export markets and enable it
to fund investments required for aggressively building new categories.

In January 2000, in a historic step, the government decided to award 74 per cent
equity in Modern Foods to HUL, thereby beginning the divestment of government
equity in public sector undertakings (PSU) to private sector partners. HUL's entry
into Bread is a strategic extension of the company's wheat business. In 2002, HUL
acquired the government's remaining stake in Modern Foods.

In 2003, HUL acquired the Cooked Shrimp and Pasteurised Crabmeat business of
the Amalgam Group of Companies, a leader in value added Marine Products
exports.

HUL launched a slew of new business initiatives in the early part of 2000’s.
Project Shakti was started in 2001. It is a rural initiative that targets small villages
populated by less than 5000 individuals. It is a unique win-win initiative that
catalyses rural affluence even as it benefits business. Currently, there are over
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45,000 Shakti entrepreneurs covering over 100,000 villages across 15 states and
reaching to over 3 million homes.

In 2002 In 2002, HUL made its foray into Ayurvedic health & beauty centre
category with the Ayush product range and Ayush Therapy Centr es. Hindustan
Unilever Network, Direct to home business was launched in 2003 and this was
followed by the launch of ‘Pure-it’ water purifier in 2004.

In 2007, the Company name was formally changed to Hindustan Unilever Limited
after receiving the approval of share holders during the 74th AGM on 18 May
2007. Brooke Bond and Surf Excel breached the the Rs 1,000 crore sales mark the
same year followed by Wheel which crossed the Rs.2,000 crore sales milestone in
2008.

On 17th October 2008, HUL completed 75 years of corporate existence in India

REVIEW OF LITERATURE

Hindustan Unilever Limited is the Indian arm of the Anglo-Dutch company –

Unilever. Both Unilever and HUL have established themselves well in the Fast
Moving Consumer Goods (FMCG) category. In India, the company offers many
households brands like, Dove, Lifebuoy, Lipton, Lux, Pepsodent, Ponds, Rexona,
Sunsilk, Surf, Vaseline etc. Some of its efforts were also rewarded when four of
HUL brands found place in the ‘Top 10 brands’ list for the year 2008 published in
The Economic Times.
 27

Unilever was a result of the merger between the Dutch margarine company,
Margarine Unie, and the British soap-maker, Lever Brothers, way back in 1930.
For 70 years, Unilever was the undisputed market leader but now faces tough
competition from Proctor & Gamble and Colgate-Palmolive.

HUL is also known for its strong distribution network in India. In order to further
strengthen its distribution in the rural areas and to empower the local women, HUL
launched a Project Shakti in 2000 in a district in Andhra Pradesh. The idea behind
this project was to create women entrepreneurs and provide them with micro-credit
and training in enterprise management, which would enable them to create self-
help groups and become direct-to-home distributors of HUL products. Today
Project Shakti is present across 80,000 villages in 15 states and is helping many
underprivileged women earn their livelihood.

As the per-capita income of India is increasing along with the Indian population.
So, the future for the FMCG Companies is bright. To analysis the past performance
& the future demand of HUL, FMCG products we have considered following
points:

 We have a listed the different FMCG product lines of HUL.

 We have done competitor’s analysis in which the market share of top

FMCG companies are analysed & the market share of HUL’S different
categories product are analysed with comparison to its competitors.
 Then performance analysis is made by taking 10 year financial data from
1998-2007. The profit & sales growth is analysed We have done SWOT
analysis to know the threat & opportunities of HUL in present market.
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 The future opportunities for FMCG products are taken into consideration by
analyzing the increased per capita income & increased disposable income to
forecast the future demand of HUL.

SWOT ANALYSIS

STRENGTHS

 Hindustan Unilever Limited (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..
 29

 Due to its long presence in India – has deep penetration – 20 consumer

product category, over 15,000 employees, including over 1,300 managers, is
to "add vitality to life."

 The company derives 44.3% of its revenues from soaps and detergents,
26.6% from personal care products, 10.5% from beverages, and the rest from
foods, ice creams, exports, and other products.

 Low cost of production due to economic of scale. That means higher profits
and / or more competitioners. Better market penetration.

 HUL is also one of the country's largest exporters; it has been recognised as
a Golden Super Star Trading House by the Government of India.

Weakness

 Strong competitors and availability of substitute products

 Low export levels

 High price of some products

 High advertising cost

Opportunities

 Increasing per capita national income resulting in higher disposable income.

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 Growing middle class and growing urban population.

 Increasing gifts cultures.

 Increasing departmental stores concept – impulse @ at cash counters.

 Globalization.

Threats

 HUL's tea business has declined marginally, reason is that, cost pressure is
likely due to rising crude and freight costs.

 Tax and regulatory structure.

 Mimic of brands.

 Removal of import restrictions resulting in replacing of domestic brands.

PEST ANALYSIS

P:
 since the budget range is decontrolled, no political effects are envisaged.

E:
 increasing per capita income resulting in higher Disposable income
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 Growing middle class/urban population – increase in Demand

 Low cost of production – better penetration

S:
 Per capita consumption expected to increase – fashion

 Increasing gifts culture – increase in demand

T:
 Will have to reinforce technology to international levels Once India is a
“fully free” economy

FIVE P’S OF MARKETING

Product

Satisfaction suffices. But delight dazzles the average company will compete for
customer by conforming to her expectation consistently. But the winner will
surpass them by constantly exceeding her expectation, delivering to her door step
additional benefits which she would never have imagined possible. Hindustan
Unilever Ltd(HUL) offer such product. The wide variety products offered by the
company include: The company’s popular product’s include:
 32

• Bathing soaps : Lux, Lifebuoy, Liril, Hamam, Breeze, Dove, Pears and Rexona

• Laundry items : Surf Excel, Rin and Wheel

• Skin care: Fair & Lovely, Pond’s and Vaseline

•Hair care: Sunsilk and Clinic

• Oral care: Pepsodent and Close up

• Deodorants : Axe and Rexona

• Colour cosmetics : Lakme

• Ayurvedic: Ayush

• Tea: Brooke Bond and Lipton

• Coffee : Bru

• Foods: Kissan, Annapurna and Knorr

• Ice cream:kwality walls

Pricing

Make no mistake. Second P of marketing is not another name for blindly lowering
prices and relying on this strategy alone to increase sales dramatically.

The strategy used by Hindustan Unilever Ltd(HUL) is for matching the value that
customer pays to buy the product with the expectation they have about what the
production is worth to them.

Hindustan Unilever Ltd(HUL) has launched various products which cater to all
customer segments. So every customer segment has different price expectation
 33

from the product. Therefore maximizing the returns involves identifying right price
level for each segment, and then progressively moving through them.

Physical Distribution –

“Place” BRAND ISN’T THE ONLY ANY MORE.Marketers and finance manager
need a new term to evaluate their business:

Distribution Equity. It takes much more time and effort to build, but once built,
distribution equity is much together to erode.

The fundamental axiom of Indian consumer market is this:

You can set up a state-of –the-art manufacturing facility, hire the hottest strategies
on the block, swamp prime television with best Ads, but the end of it all, you
would be know of selling your products. The cardinal task before the Indian
market is managing is to shoe-horn its product on retail shelves. Buyers are paying
for distribution equity not brand equity and market shares.

Why does the company need distribution equity more anything in India? With
technology and competitive pressure slash in it is becoming increasing difficult for
marketers to retain a unique product differentiation for ling period. In a product
and price parity situation, the brand that sells more is the one that reaches the
highest number of customers.

India – The operations involve over 2,000 suppliers and associates. HUL's
distribution network, comprising about 4,000 redistribution stockists, covering 6.3
million retail outlets reaching the entire urban population, and about 250 million
rural consumers.television has already primed and population for consumption, and
the marketer who can get to the to the consumer ahead of competition will give a
hard – to – overtake lead.
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Looking at the low penetration of few products, a distribution expansion would

itself being incremental volume. The other reason is arch rival Procter & Gamble
Co. reaches more than a million retailers. This increase in distribution is going to
be accompanied by reduction in channel costs. Hindustan Unilever Ltd(HUL)
marketing costs, at 18% of total costs, is much higher than Procter & Gamble Co.
The company is looking to reduce this parity level. At Hindustan Unilever
Ltd(HUL), they believe that selling FMCG is it like selling soft drinks.

Promotion

If an advertisement is to communicate effectively, the receiver must at least half

want it to, and be prepared too take step toward the sender. Effective advertising is
rarely hectoring or loudly explicit…. It often both attracts and generates arm
feelings. More often than not, a successful campaign has a stronger element of the
unexpected a quality that good advertising shares with much worthwhile literature.

To penetrate into the inner recesses of her memory, communication must first
ensure exposure, grab her attention evoke her comprehension, grab her acceptance
and then extract retention competing with thousands of other units of
communication trying to do the same.

Finding showed that the adults felt too conscious to be seen consuming a product
actually meant for children. The strategic response address the emotional appeal of
the band to the child within the adult.Naturally, that produced just the value
vacuum that Hindustan Unilever Ltd(HUL)was looking to fill.

Thereafter it was the job of the advertising to communicate customer the

wonderful feeling that he could experience by re-discoursing the careful, unself
conscious, pleasure – seeking child within himself – a graft these feeling onto the
Ad campaign like “hasso to khul k hasso for close up”, “cream bathing bar for
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dove soap” and daag ache hai for surf excel” have been sure shot winner with
the audience.

It has also launched Pureit, a home water purifier which supplies drinking water
without boiling/need of electricity , As well as outdoor and radio ads, ad agency
contract has created communication for cinemas and even ATM machines for the
brand.

It’s a combination of spiffing up its key brand, researching and improving the
newer products that haven’t taken off,supported with high ad – spends that
Hindustan Unilever(Ltd) hopes will see it emerges stronger after the current
slowdown, as well as expand the market.

Positioning

In the 1970s consumers were ready to pay “more for more”, and luxury goods
flourished. In the 1980s, consumers began to demand “more for same”, and the
discounting era grew strong. Today’s consumer demanding “more for less”, and
the winner will be that super value marketers…. Some of today’s most successful
companies recognize those customers are more educated and able to recognize true
customer value…

Positioning is simply concentrating on an idea – or – even a word defines that

company in the mind of the consumer. It is more efficient to market one successful
concept to one large group of people than 50 product or service ideas to 50
separate group

Positioning is a must when customer attitude have changed and product have
strayed away from the consumer’s long standing perception of them… Hindustan
Unilever(Ltd) is an anchor in sea of consumer products. As a variety of
 36

competitive claims assails her senses, today customer uses complicated decision
making process to assess the alternative before making a purchase.

Since Hindustan Unilever(Ltd) is more clearly associated with a particular set of

attributes in terms of benefits and prices, the quicker becomes her search process.
Positioning of individual product:

 Lifebuoy is ‘one of Unilever’s oldest brands’ with more than a hundred-year

history, as www.unilever.com informs. “Lifebuoy has become more than
just a red bar of soap – today the brand provides hygiene and health
solutions for families

 Fair & Lovely, a hot-selling “fairness” cream, which promises a lighter skin
tone for many of India’s complexion-conscious consumers

HINDUSTAN UNILEVER’S MARKET SEGMENTATION

 Market place for any product is comprised of many different segments of

consumers, each with different needs and wants. Markets segmentation
can be defined in a number of ways such as:

 Demographic variables (e.g. Consumers are groups, gender, material

states income etc…)
 37

 The lifestyle of consumers (i.e. their interests and activities) the benefits
which consumers look for in a product or on the occasions when the
product might be consumed.

 Hindustan Unilever(Ltd) takes into account all these factors when

producing a range of products. It targets different segments within the
market, such as the:

 Break segment – products which are normally consume as a snatched

break and often with tea and coffee.

 Impulse segment – these products are often purchase on impulse, used

these and then. They include product such as close up.

 Take home segment – this describes product that are normally

purchased in supermarkets, taken home consumed at a later stage.

HUL SEGMENTATION

As per values and lifestyle segmentation, HUL divides the consumers into three
segments: Striving, Aspiring and Affluent. The target segments of HUL’s key
brands as per this segmentation method are shown in the figure below (Source:
HUL Company Presentation).
 38

CATEGORY WISE SALE GROWTH OF FMCG SECTOR OF HUL IN IN

INDIA

CATEGORY PERCENTAGE

SOAPS AND DETERGENTS 19.3%

PERSONAL PRODUCTS 22.4%

 39

ICE CREAM 15.7%

PROCESSED FOODS 13.7%

BEVERAGES 13.6%

OTHERS 19.4%

HUL hair care segmentation

Mumbai: In an attempt to consolidate its position in the haircare segment, India’s

largest consumer products company Hindustan Unilever Ltd (HUL) will launch
more products from the portfolio of its parent Unilever Plc., introduce new
products at both the low-end and the high-end of the price spectrum, and
strengthen its distribution network.
“In the developed market, we have a varied range of haircare products beyond
shampoos and conditioners. We will bring these into India sooner than later,” said
N. Rajaram, general manager and category head for haircare, HUL.
According to Rajaram, the company believes there is “opportunity” in the top- and
bottom-end of the market.
In May 2007, HUL launched Dove shampoo from Unilever’s portfolio.
The same year, the company also launched shampoo sachets priced at 50 paise
each in an effort to increase penetration and usage of the product in rural and poor
households.
Until these launches HUL’s presence in shampoos has largely been restricted to so-
called mid-priced shampoos with its Clinic and Sunsilk brands and their variants.
The company has, meanwhile, discontinued the herbal shampoo brand, Ayush, at
the retail level. It is now available only at the Ayush therapy centres.
 40

Globally, Unilever sells hair sprays, gels and styling aids, besides shampoos and
conditioners under brands such as Vibrance, Suave, Lux and Axe. Lux and Axe are
present in India as well but are confined to categories such as bathing soaps, gels
and body spray.
The changes seem to have worked for the company. According to research firm
AC Nielsen, HUL’s share in the haircare business went up by one percentage point
from 47% in the first quarter of 2007 to 48% in the December quarter. In
comparison, its nearest rival Procter and Gamble’s (P&G) share fell from 25% to
23.3%.
The segment is important to HUL. It contributed 7.5% to the company’s total
revenues of Rs13,718 crore in 2007 and around 26% by revenues to its personal
products business, which in turn accounted for 46% of HUL’s net profit in 2007. In
2007 (HUL’s accounting year ends in December), the company grew revenues
13.3% (compared with the previous year) to Rs13,718 crore and net profit of
14.5% to Rs1,769 crore.
“The biggest growth factor (for the company) last year was the launch of Dove, a
high-margin product. HUL managed to connect with the urban consumer by the
sheer quality and positioning of the product. It should further consolidate its status
in the segment this year,” said Unmesh Sharma, an analyst at Mumbai-based -
brokerage firm Macquarie Securities.
Despite the growth in market share, HUL faces stiff competition in the Rs2,200
crore by sales market for haircare.
Besides multinational firms such as P&G and L’Oreal, many local companies such
as Dabur India Ltd, Marico Ltd and CavinKare Pvt. Ltd have brands in various
price points. And new players such as ITC Ltd and Godrej Consumer Products Ltd
have also entered the market.
HUL rural segment, as our rivals (such as P claims that its rivals cannot match its
 41

reach. “We still dominate the&G) cannot match our wide distribution network in
the villages,” said Rajaram.
The company has tweaked this distribution network— premium products are now
being sold through modern or organized retail outlets, while the lower- and middle-
end products will continue to be sold through local or kirana stores.
Analysts say that despite all this, HUL will have to watch for competition. Dabur,
for instance, increased its market share by two percentage points in 2007 to 6%,
according to AC Nielsen. “The category is getting crowded and bigger players
such as ITC could be a threat for the market leader in the near future,” said
Sharma.
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SUGGESTIONS AND RECOMMENDATIONS

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 As it is obvious from the study the products of HUL have approached the
high water mark of sale in the global consumer market. However, there are
genuine reasons to observe that they have yet to attain the cutting edge status
on many counts. In thisregard a few suggestions can be made to give the
required boost to the marketingprospects of HUL products. These can be
summed up as follows:
 An attempt should be made by HUL management to tap all the
potentialsoffered by the global market by devoting a more substantial,
efficient and better equipped resource base. This task can be accomplished
in the first place by implementing a stronger and more ending distribution
channel for various products so that even those sections of consumers who
are not accessible so easily, can be covered with greater ease.
 Efficient infrastructural base coupled with better and more
comprehensiveadvertising strategies should be resorted to; though HUL is
presently surfingahead of others on the path of taking some great initiatives
it should be moreconcerned about it for the purpose of corporate image
building.
 The price structure for various products should be more within the limit of
affordability for consumers; the grassroots consideration in this regard
should notbe ignored. Here, the policy of loco-centric rather than uniform
price structurewould certainly be more advantageous.
 HUL should go for more planned and sensible marketing and
advertisingstrategies with a view to accomplishing the task of global brand
image buildings.

CONCLUSION
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In recent years, the FMCG sector declined due to downtrading. Also because of
presence of large number of companies trying to seize this opportunity, this force
the old HUL for the change and thus, their transformation has resulted in a new
HUL, which has successfully faced this challenge and reversed this trend. It has
done so by substantially strengthening their brands and building capabilities. This
has already begun to yield benefits and they are returning to growth. Volume
growth is being followed by value growth, which in turn is bringing profit growth.

India is one of the most exciting markets offering great potential.Over the next 10
years, the per capita income in India is likely to double. In FMCG, there is an
opportunity to catalyze penetration, increase usage, and upgrade consumers. As a
result, the FMCG market is expected to grow to over Rs.100,000 crores from its
current base of Rs.40,000 crores.

The new Hindustan Lever see an exciting opportunity for growth. They have 35
powerful brands covering all segments, with leading market positions in most.
Today, these are stronger and more relevant to the consumer than ever. The people
are energized by the scale of the opportunity and determined to seize it. The scale
of the business and operations gives them the resources needed.They are delivering
good services and the changes they brought in the products are well taken by the
customers, by this they are generating sustainable profitable growth

BIBLIOGRAPHY
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WEBSITES

www.hul.co.in

www.fmcg.com

www.google.com

www.economictimes.com

BOOKS

Kothari ,CR, research methodology

Philip kotler, marketing management