Distribution Model of HUL SDM Assignment Ankit Chhabra Sankalp Kohli Abhijit Arora Arpan Mehra Anshum Kawatra Anshul Jindal
(104) (110) (303) (309) (308) (306)
MBA (Tech.) NMIMS, MUMBAI
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Introduction – Hindustan Unilever Limited Hindustan Unilever Limited (‘HUL’), formerly Hindustan Lever Limited (it was renamed in late June 2007 as HUL), is India's largest Fast Moving Consumer Goods company, touching the lives of two out of three three Indians with over 20 distinct categories categories in Home & Personal Personal Care Products and Foods & Beverages. These products endow the company with a scale of combined volumes of about 4 million tonnes and sales of nearly Rs. 13718 crores. HUL is also one of the country's largest exporters; it has been recognized as a Golden Super Star Trading House by the Government of India. The mission that inspires HUL's over 15,000 employees, including over 1,300 managers, is to "add vitality to life." HUL meets every day needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life. It is a mission HUL shares with its parent company, Unilever, which holds 52.10% of the equity. The rest of the shareholding is distributed among 360,675 individual shareholders and financial institutions. HUL owns brands like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond's, Sunsilk, Clinic, Pepsodent, Close‐up, Lakme, Brooke Bond, Kissan, Knorr‐Annapurna,
Kwality Wall's which are household names across the country and span many categories ‐ soaps, detergents, personal products, tea, coffee, branded staples, ice cream and culinary products. These products are manufactured over 40 factories across India. The operations involve over 2,000 suppliers and associates. HUL's distribution network comprises about 4,000 redistribution stockists, covering 6.3 million retail outlets reaching the entire urban population, and about 250 million rural consumers.
We have analyzed the distribution distribution network of HUL from the following aspects: 1) Introduction of the company 2) Distribution Distribution Model 3) The key stakeholders in the distribution model 4) How is the work of these stakeholders monitored? 5) What incentives are given to these stakeholders? 6) What are the key challenges in the distribution model? 7) How are the key challenges challenges tackled by the company? 8) Recommendations Recommendations on whether the company's action plan for tackling distribution distribution challenges is right.
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Distribution Network of HUL of HUL Evolution over Time The HUL’s distribution network has evolved with time. The first phase of the HUL distribution network had wholesalers placing bulk orders directly with the company. Large retailers also placed direct orders, which comprised almost 30 per cent of the total orders collected. The company salesman grouped all these orders and placed an indent with the Head Office. Goods were sent to these markets, with the company salesman as the consignee. The salesman then collected and distributed the products to the respective wholesalers, against cash payment, and the money was remitted to the company. The focus of the second phase, which spanned the decades of the 40s, was to provide desired products and quality service to the company's customers. In order to achieve this, one wholesaler in each market was appointed as a "Registered Wholesaler," a stock point for the company's products in that market. The company salesman still covered the market, canvassing for orders from the rest of the trade. He then distributed stocks from the Registered Wholesaler through distribution units maintained by the company. The Registered
Wholesaler system,
therefore,
increased
the distribution reach of the
company to a larger number of customers. customers. The highlight of the third phase was the concept of "Redistribution Stockist" (RS) who replaced the RWs. The RS was required to provide the distribution units to the company of this period was the establishment of the "Company salesman. The second characteristic characteristic of this
Depots" system. This system helped in transhipment, bulk breaking, breaking, and as a stock point to to minimise stock‐ stock‐outs at the RS level. In the recent past, a significant change has been the replacement of the Company Depot by a system of third party Carrying and Forwarding Agents (C&FAs). The C&FAs act as buffer sto ck‐points ck‐points to ensure that stock‐outs stoc k‐outs did not take place. The C&FA system has also resulted in cost savings in terms of direct transportation and reduced time lag in delivery. The most important benefit has been improved customer service to the RS. The role performed by the Redistribution Stockists includes:
Financing stocks
Providing warehousing facilities
Providing manpower
Providing service to retailers
Implementing promotional activities
Extending indirect coverage
Reporting sales and stock data
Demand simulation and screening for transit damages
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Detail Overview The distribution network of HUL is one of the key strengths that help it to supply most products to almost any place in the country from Srinagar to Kanyakumari. This includes, maintaining favorable trade relations, providing innovative incentives to retailers and organizing demand generation activities among a host of other things. things. Each Each business of HUL portfolio has customized the network to meet its objectives. The most obvious function of providing the logistics support is to get the company’s product to the end customer.
Distribution System of HUL HUL's products are distributed through a network of 4,000 redistribution stockists, covering 6.3 million retail outlets reaching the entire urban population, and about 250 million rural consumers. There are 35 C&FAs in the country who feed these redistribution stockists regularly. The general trade comprises grocery stores, chemists, wholesale, kiosks and general stores. Hindustan Unilever provides tailor made services to each of its channel partners. It has developed developed customer management and supply chain capabilities capabilities for partnering emerging self‐service stores and supermarkets. Around 2,000 suppliers and associates serve HUL’s 40 manufacturing plants which are decentralized acros s 2 million square miles of territory.
(Fig. 1 – Schematic of HUL’s Distribution Network)
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Distribution at the Villages: The company has brought all markets with populations of below 50,000 under one rural sales organisation. The team comprises an exclusive sales force and exclusive redistribution stockists. The team focuses on building superior availability of products. In rural India, the network directly covers about 50,000 villages, reaching 250 million consumers, through 6000 sub‐stockists. HUL approached the rural market with two criteria ‐ the accessibility and viability. To service this segment, HUL appointed a Redistribution stockist who was responsible for all outlets and all business business within his particular particular town. In the 25% of the the accessible accessible markets markets with low business potential, HUL assigned a sub stockist who was responsible to access all the villages at least once in a fortnight and send send stocks to those markets. This sub‐stockist sub‐stockist distributes the company's products to outlets in adjacent smaller villages using transportation suitable to interconnecting roads, like cycles, scooters or the age‐old bullock cart. Thus, Hindustan Hindustan Unilever is trying to to circumvent the barrier of motorable roads. The company simultaneously simultaneously uses the wholesale channel, suitably incentivising them to distribute company products. The most common form of trading remains the grassroots buy‐and‐sell mode. This enables HUL to influence the retailers stocks and quantities sold through credit extension extension and trade discounts. discounts. HUL launched this Indirect Coverage (IDC) in 1960s. Under the Indirect Coverage Coverage (IDC) (IDC) method, method, company vans were replaced by vans belonging to Redistribution Stockists, which serviced a select group of neighbouring markets.
Distribution at the Urban centres: Distribution of goods from the manufacturing site to C & F agents take place through either the trucks or rail roads depending on the time factor for delivery and cost of transportation. Generally the manufacturing site is located such that it covers a bigger geographical segment of India. From the C & F agents, the goods are transported to RS’s by means of trucks trucks and the products finally make the ‘last mile’ based on the local popular and cheap mode of transport.
New distribution channels Project Shakti This model creates a symbiotic partnership between HUL and its consumers. Started in the late 2000, Project Shakti had enabled Hindustan Lever to access 80,000 of India's 638,000 villages. HUL's partnership with Self Help Groups(SHGs) of rural women, is becoming an extended arm of the company's operation in rural rural hinterlands. Project Project Shakti has already already been extended extended to about 12 states ‐ Andhra Pradesh, Karnataka, Gujarat, Madhya Pradesh,
Tamil
Nadu,
Chattisgarh,
Uttar Pradesh,
Orissa,
Punjab,
Rajasthan,
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Maharashtra and West Bengal. The respective state governments and several NGOs are actively involved in the initiative. The SHGs have chosen to partner with HUL as a business
venture, armed with training from HUL and support from government
agencies concerned concerned and NGOs. Armed with micro‐credit, women from SHGs become become direct‐ to‐home distributors in rural markets. The model consists of groups of (15‐20) villagers below the poverty line (Rs.750 per month) taking micro‐credit from banks, and using that to buy our products, which they will then directly sell to consumers. In general, a member from a SHG selected as a Shakti entrepreneur, commonly referred as 'Shakti Amma' receives stocks from the HUL rural distributor. After being trained by the company, the Shakti Shakti entrepreneur entrepreneur then sells those goods directly to consumers and retailers in the village. Each Shakti entrepreneur usually service 6‐10 villages in the population strata of 1,000‐2,000. The Shakti entrepreneurs are given HUL products on a `cash and carry basis.' The following diagram shows the Project Shakti model as initiated by HUL:
Project Streamline To cater to the needs of the inaccessible market with high business potential HUL initiated a Streamline initiative in 1997. Project Project Streamline is an innovative and and effective distribution network for rural areas that focuses on extending distribution to villages with less than 2000 people with the help of rural sub‐stockists/Star sub‐stockists/Star Sellers who are based in these very villages. As a result, the the distribution distribution network directly covers covers as of now about about 40 per cent of the rural population. Under Project Streamline, the goods are distributed from C & F Agents to Rural Distributors (RD), who has 15‐20 rural sub‐stockists attached to him. Each of these sub‐stockists / star sellers is located in a rural market . The sub‐stockists sub‐stockists then perform perform the role of driving distribution in neighboring villages using
unconventional means of transport such as
tractor and bullock carts. Project Streamline being a cross functional initiative, the Star Seller sells everything from detergents to personal products.
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Higher quality servicing, in terms of frequency, credit and full‐line availability, is to be provided to rural trade as part of the new distribution strategy. The diagram in the next page shows the model of Project Streamline:
Hindustan Lever Network (HLN) It is the company's arm in the Direct Selling channel, one of the fastest growing in India today. It already has about several lakh consultants ‐ all independent entrepreneurs, trained and guided by HLN's expert managers. HLN has already spread to over 1500 towns and cities, covering 80% of the the urban population, backed by 42 offices and and 240 service centres centres across the country. It presents a range of customised offerings in Home & Personal Care and Foods. The New Compensation plan for HLN partners provides new exciting ways of earning substantial income in addition to offering rewards like revenue sharing through the innovative concept of “pools”
Mother Depot and Just in Time System In order to rationalise the logistics and planning task, an innovative step has been the formation of the Mother Depot and Just in Time System (MD‐JIT). Certain C&FAs were selected across the country to act as mother depots. Each of them has a minimum number of JIT depots attached for stock requirements. All brands and packs required for the set of markets which the MD and JITs service in a given area are sent to the mother depot by all manufacturing units. The JITs draw their requirements from the MD on a weekly weekly or bi‐ weekly basis.
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Major Stakeholders in the distribution channel 1. HUL Unilever India is the largest FMCG (fast moving consumer goods) firm in India and has the widest reach in the nation with a retail network of 4 million outlets. Levers are implementing an IT system to connect 3,500 stockists in 1200 towns who account for 80 per cent of company sales. Sourcing: HUL promotes sustainable agricultural practices by working with external agencies, farmers/small growers. They have developed a programme that ensures:
Farm owners and workers can earn an income they can live on and also improve their living conditions
Fertility of soil is maintained
Efficiency in water consumption
Certification from independent agencies
Manufacturing: In their manufacturing processes they intend to reduce the carbon footprint of our operations through:
Developing energy efficient production technologies like Ploughshare Mixer Technology
Increasing the use of carbon neutral fuels Implementing a strategy for water is based on the 4-R principle wherein they reduce at source, reuse within process, recycle wherever possible and renew ground water through rain water harvesting.
2. Carrying and Forwarding Agents (CNFs) CFAs’ act as gatekeepers between the manufacturers and end-users. They are considered as an important asset of a company in the overall company’s marketing & positioning strategy and can serve as a key differentiator. Channel experience strongly affects end-user's overall perception of the brand's image. They help in the routing of transactions, adjustment of assortment discrepancy and sortingbreaking down a heterogeneous supply into separate stocks that are relatively homogeneous.
ACCUMULATION -BRINGING SIMILAR STOCKS from different suppliers,
ALLOCATION- breaking down a homogeneous supply into smaller slots &
ASSORTING-Building assortments that are readily consumable.
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In the recent past, a significant change has been the replacement of the Company Depot by a system of third party Carrying and Forwarding Agents (C&FAs). The C&FAs act as buffer stock‐points to ensure that stock‐outs did not take place. The C&FA system has also resulted in cost savings in terms of direct transportation and reduced time lag in delivery. The most important benefit has been improved customer service to the RS.
3. Transportation and Logistics partners Distribution of goods from the manufacturing site to C & F agents take place through either the trucks or rail roads depending on the time factor for delivery and cost of transportation. Generally the manufacturing site is located such that it covers a bigger geographical segment of India. From the C & F agents, the goods are transported to RS’s by means of trucks and the products finally make the ‘last mile’ based on the local popular and cheap mode of transport.
4. Redistribution Stockists The role performed by the Redistribution Stockists includes: Financing stocks, providing warehousing facilities, providing manpower, providing service to retailers, implementing promotional activities, extending indirect coverage, reporting sales and stock data, demand simulation and screening for transit damages.
5. Wholesaler Wholesaler is an intermediary who buys goods for resale usually from company distributors or stockists. He buys from various companies and stocks all major brands in the category in which he operates. He has the ownership of the goods he sells and the operations are run like a typical store where the resellers (could be retailer's themselves or bulk buying individual customers) who come to him with an elaborate list and buy. To answer the question why he survives as an intermediary, he is willing to provide smaller lots of goods, provide credit if needed and is a one stop shop for all the brands in that category. HUL considers it a necessary evil, in an ideal situation they would like to avoid them totally , but the fact is that in spite of the negatives like loss of control, and lack of transparency, they have an important role to play in Indian distribution channels. They are the ones who provide substantial reach for various companies (though the degree of dependence wholesale varies across product categories, like very high in FMCG high volume and low value products) especially in rural markets. In the research we have been a called I have found that rural retailers more than three-quarters of the time rely on the wholesaler for their purchases.
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Companies like HUL have very specific wholesaler-activation plans to push their products through the wholesale channel. And a recent example shared with me was how some companies have been working with the boys who work at the wholesalers, by providing them with very small incentives like taking them out for a pizza treat and other small incentives and have got positive results out of that.
6. Retailers These consist of Urban and rural consumers. While a traditional distribution chain is followed in the urban markets, the rural areas have a new strategy implemented for catering to the rural customers. In recent years, rural markets have acquired significance in countries like China and India, as the overall growth of the economy has resulted into substantial increase in the purchasing power of the rural communities. On account of the green revolution in India, the rural areas are consuming a large quantity of industrial and urban manufactured products. In this context, a special marketing strategy, namely, rural marketing has taken shape. This rural marketing effort is known as iShakti.
Shakti was initiated to reach the massive un-served and under-served markets that cannot be economically and effectively serviced through traditional methods. HUL identifies underprivileged women in villages and these women are trained to become Shakti Entrepreneurs (SEs) i.e. distributors of HUL products in villages to earn a sustainable income through this business.
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HUL invests resources in training these village women to become entrepreneurs by helping them become confident and independent. They are also a source of inspiration for the other women in the community. Hence, besides being a sale, distribution and communication initiative, Shakti is a micro-enterprise initiative that creates livelihoods and improves the standard of life. The Shakti initiative also enables rural consumers to access world class products, thereby reducing the menace of spurious products. Today, it benefits business by significantly enhancing HUL's direct rural reach and enabling communication of HUL's brands effectively in media-dark regions. The products distributed through project Shakti are some of the country's most trusted brands of consumer goods which are specifically relevant to rural consumers. From 17 SEs in 1 state in 2001 to more than 45,000 SEs in 2008, Shakti has indeed come a long way in impacting lives in rural India.
7. End User/Consumers User/Consumers They are committed to responsible marketing and have clearly defined principles which guide their communications. Advertising is a way for them to engage with consumers on issues that matter to them. At the same time, we recognise the influence of marketing and advertising on consumers and take our responsibilities seriously. This means ensuring that all claims they make have a sound scientific basis and that all such communication passes the baseline test of being 'legal, decent and honest'. They also carry out scientific assessments of all their products to ensure they are safe.The products are developed as per the guidelines set by Unilever globally. All risk assessments are undertaken by the Safety and Environmental Assurance Centre (SEAC). SEAC's role is to provide independent scientific evidence and guidance so that they can identify and manage:
Risks for consumers, workers and the environment with regard to the safety of products and supply chain technology, and
Environmental impacts, with regard to the sustainability of Unilever's brands, products and supply chain
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Monitoring the Stakeholders Quantitative Measures
COST BENEFIT ANALYSIS Cost benefit can be achieved through development of information technology at the doorsteps of villagers; most of the rural farmers need price information of agri- produce and inputs. If the information is available farmers can take quick decision where to sell their produce, if the price matches with local market farmer no need to go near by the city and waste of money & time it means farmers can enrich their financial strength.
NEED BASED PRODUCTION Supply plays major role in price of the rural produce, most of the farmers grow crops in particular seasons not throughout the year, it causes oversupply in the market and drastic price cut in the agricultural produce. Now the information technology has been improving if the rural people enable to access the rural communication, farmers awareness can be created about crops and forecasting of future demand, market taste. Farmers can equates their produce to demand and supply, they can create farmers driven market rather than supply driven market. If the need based production system developed not only prices but also storage cost can be saved. It is possible now a days the concept of global village. Qualitative Measures
LEVERAGING INFORMATION TECHNOLOG T ECHNOLOGY Y HUL customers are serviced on continuous replenishment. This is possible because of IT connectivity across the extended supply chain of about 2,000 suppliers, 80 factories and 7,000 stockists. This sophisticated network with its voice and data communication facilities has linked more than 200 locations all all over the country, country, including the head head office, branch offices, factories, depots and the key redistribution stockists. They have also combined backend processes into a common Shared Service infrastructure, infrastructure, which supports the units across the country. All these initiatives together have enhanced enhanced operational efficiencies, improved the service to the customers and have brought us closer to the marketplace.
RS NET INITIATIVE: The RS Net initiative, launched in 2001, aims at connecting Redistribution Stockists (RSs) through an internet based system. It now covers stockists of the Home & Personal Care business and Foods & Beverages in close to 1200 towns and cities. Together they account for about 80% of the company's turnover. RS Net is one of the largest B2B e‐commerce initiatives ever undertaken in
India. It provides
linkages
with
the
RSs’
own
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transaction systems, enables monitoring of stocks and secondary sales and optimises RS’s orders orders and inventories inventories on a daily basis through through online interaction on
orders,
despatches, information sharing and monitoring. The IT‐powered IT‐powered system has been implemented
to
supply
stocks
to
redistribution
stockists
on
a
continuous
replenishment basis. Today, the sales system gets to know every day what HUL stockists have sold to almost a million outlets across the country. Information on secondary sales is now available on RS Net every day.
ADEXA ICOLLABORATION SUITE In 2000, HUL identified improved supply chain management as a critical business priority
and launched
a
comprehensive initiative,
“Project Leap,”
tasked
with
increasing supplier/distributor responsiveness, responsiveness, reducing inventory buffers, and optimizing planning and scheduling. HUL chose the Adexa iCollaboration suite for facilitating centralized monitoring of the SCM, live customer /supplier collaboration, and integrating demand and distribution planning with production scheduling. With the aggregated view of data provided by the iCollaboration suite, HUL was able to combine sales and distribution efforts on the diverse product lines, which resulted in significant savings on the cost side for inventories and distribution. HUL updates inventory positions, shipments and customer orders on a daily basis with these software packages and can get a pulse on the market real time.
Field Sales Force: To meet the ever‐changing ever‐changing needs of the consumer, HUL has set up a distribution network that ensures availability of all their products, in all outlets, at all times. This includes, maintaining favourable trade relations, providing innovative incentives to retailers and organizing demand generation activities among a host of other things. The important activities that HUL field sales force does are (i) target chasing and (ii) reporting on a daily basis. Account information is maintained on palmtops given by HUL. During our research and informal survey of HUL field sales force, we came to know that for the last two years, training is not being given at all to the sales force. HUL has limited the network channel selling to categories of Home & Personal Care (HPC) and Food products with exclusive brands for this channel. That is, these particular brands (products) are all exclusive to HLN, specifically developed for the Direct Selling channel, and not availabl available e in the the retail retail channel channel.. The general gener al trade tra de comp rises grocery stores, stores, chemists, wholesaler, kiosks and general stores. Hindustan Hindustan Unilever services each with a tailor‐made mix of services.
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Incentives given to channel partners Redistribution Redistribution Stockists:
Sales Margin: 4.76% which includes cash discount, unloading expenses from depot, distribution distribution expenses to retailers, incentive schemes schemes & other incidental expenses.
Modes of transport used: Rickshaw, tempo.
Incentive schemes: Before 2000 holiday packages and tours but after 2000 n o non‐monetary incentive for RS.
Selling Operations : RSs sells the goods to ‐ o
Wholesaler (gets 1.5 % max. discount from RS)
o
Retailers (gets 1.0% max. discount from RS)
Wholesaler: Gets cash discounts and other schemes promoted by HUL (gets points under Vijeta Scheme). The wholesaler gets bulk discounts when he orders in bulk. Most of the bigger wholesalers get these discounts since their orders are huge and they in-turn supply to major retailers of a particular region.
Retailers:
Sales Margin: Depends on the product o
Soap, detergents ‐
8% on MRP
o
Cosmetics
‐
10% on MRP
o
Food items
‐
8% on MRP
Incentive schemes: Company programs (Scheme Discounts + Cash Discounts) TPR schemes based on Sales (1 % to 4 %). Vijeta scheme is not for retailers.
Key challenge faced in the distribution network The main challenge of HUL is to cater to the needs of seven million distinct outlets across India and 59 percent of these stores are in rural India. HUL directly serves over 1 million stores and has a network of over 7000 stockists and distributors. HUL caters to a huge audience for which it has to route its goods through C&F, Stockists and Retail outlets. The main challenge lies in maintaining a consistent Demand and Supply so 13 | P a g e
that the customers do not face any problem. HUL C h a l l e n g e l i e s i n r e a c h i n g t h e c u s t o m e r s
C&F
Stockists
CSD Canteens
Consumer
Retail Outlets
Modern Trade
Consumer
Consumer
U
Steps taken by the company to tackle challenges HUL has taken the following initiatives to improve its distribution network: Setting up of a full‐scale sales organisation comprising key account management and an d act iv atio at ion n to impact, impact, fully engage engage and service service modern modern retailers retailers as as they emerge. emerge.
Servicing Channel partners and customers with continuous daily replenishment.
Leveraging scale and building expertise to service Modern Trade and Rural Markets.
Delayering of sales force to improve response times and service levels.
Revamping of its sales organisation in the rural markets to fully meet the emerging needs and increased purchasing power of the rural population. HU L’s L’s distribution network in rural India already directly covers about 50,000 villages, reaching about 250 million consumers through about 6,000 sub stockists.
Implementation of supply chain system that connects stockists across the country, and also includes a back‐ back‐end end system connecting suppliers, all company sites and stretching right up to stockists. IT tools have been deployed for connectivity across
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the extended supply chains. Backend processes have been combined into a common Shared Service infrastructure.
Launching of Project Shakti through which the company is able to extend its operations in villages. HUL has also included several NGOs and state governments as the initiative helps rural women to improve their financial position.
Launching of HUL Network to leverage the channel of direct selling by presenting customized offerings in 11 home and personal care and food categories. Started in 2003, it already has a base of 300,000 3 00,000 consultants across across the country.
Starting of franchised Lakme Beauty Salons and Ayush Therapy centres to offer standardized services, in line with the strategy to leverage the equity of its brands through relevant services.
Finding out Innovative ways to reach out to its consumers, particularly in rural areas by leveraging non‐conve non‐conventional ntional media like wall paintings, cinema vans, weekly markets (haats), fairs and festivals.
Initiating the concept of Super Value Stores (SVS) in urban areas to partner traditional stores to provide a range of services ranging from managing their inventory to setting up POS (point of sale) banners. banners. In addition addition to this, to boost up traditional retail in the face increasing in‐roads made by large, modern modern retailing chains like Spencer’s, Spen cer’s, Reliance Fresh etc (where HUL is squeezed harder for discounts), HUL started restructuring some of the selected SVSs into the form of self‐service retail shops a la modern retails. This is to protect & maintain the competitive advantage that HUL has over its biggest competitors in the other markets (e.g., P&G), with its very deep distribution reach through traditional retail.
Launching the Unicare scheme with upmarket pharmacies and retailers to sale its premium brands.
Undertaking several initiatives for traditional channels in order to improve its capabilities at the front‐ front ‐end by developing skills for stockists' sales force. Under 'Project Dronacharya', the FMCG major continuously imparted training to over 10,000 stockist salesmen.
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Launching
of
several
promotional
schemes
for
existing
wholesalers
and
distributors. For instance, it has started the ‘Vijeta ‐ Rishta Jeet Ka’ scheme last year to provide a platform for the wholesaler and HUL to grow the business by earning points and redeeming them.
RECCOMENDATIONS Pure It needs a dedicated sales-force Pure it, the water purifier from HUL has a very big service component attached to it, which they are not able to provide customers. HUL needs to manage the distribution of this workforce better and needs to ensure up to the t he mark performance. Pure it being a low cost water purifier has a lot of potential customers waiting in rural areas; HUL should market it effectively in rural areas in order to tap that market. Non conventional marketing strategies should be used like installing insta lling a free purifier in Sarpanch’s house in the village which will give them a champion who will help them further increase the sales.
Co-Creation P&G has a customer connect initiative, which it exercises all over the world in order to ensure their House of Quality. HUL also should come up with some such strategy, which will help it to satisfy customer needs in a better manner.
Basket Sales
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When we look at all the above brands, most of us would be using more than 60 % of these brands in their respective categories. Have we ever wondered where do the remaining 40% brands in our consumption come? They come from HUL competitors i.e. P&G, ColgatePalmolive. When we were discussing about HUL for the project, we were wondering if there is anything wrong with the FMCG giant. After some brainstorming, when we couldn’t find anything drastically different, we paid attention to devising a new strategy which could help us increase HUL’s revenue and give it an edge over intense competition sprawling up. The organized retail, as many recent researches have pointed out, are growing at a rapid rate. HUL covers maximum portion of shelves at these retail stores and has products for all income segments. We would suggest HUL to start bundling its products in a big way and kill the competition. HUL should create a package for Upper Middle Class, another one for Semi-urban areas and one for the lower income group or for rural areas. Following distribution will give you a better idea:For instance, consider the following basket of product for the upper middle class:-
Example: Upper-Middle Class (Urban Areas)
Fabric Wash
Personal Wash
Hair Care
Foods
Beverages
Skin-Care
Oral Care 17 | P a g e
A similar package in Rural sector will include products like Wheel, Lifebuoy, Sunsilk, Ruby Tea and other similar products. This packaging will help them take on the rivals in a better manner. HUL recently collated its distributors for all the three different divisions, now the products can be collated at the distributors and forwarded to retailers in a basket. It’s now become easy for HUL to follow such strategies.
REFERENCES
HUL Website (http://www.hul.co.in/ http://www.hul.co.in/))
HUL CLSA Conference, Investor Presentation (24
www.wikipedia.org
th
Sept., 2008).
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