PROJECT REPORT ON

“Sales (Pre and Post) and Distribution” Effectiveness:A Comparative Study of

Hindustan Unilever limited (HUL)and

Nestle.

&

1

TABLE OF CONTENT

2

EXECUTIVE SUMMARY

3

EXECUTIVE SUMMARY

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.

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.

4

We have done SWOT analysis to know the threat & opportunities of HUL in present market.

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.

5

CHAPTER 1

INTRODUCTION

6

INTRODUCTION:

The FMCG sector seems to have finally joined India Inc's growth party by posting

surprising double-digit growth in sales in the past couple of years. With annual

revenues of Rs 72,000 crore, it is the one of the largest sectors in the Indian

economy. The industry's future prospects look bright, considering rising household

incomes and the spread of modern retail. However, the per capita income level in

India is still very low compared to the developed world. Besides, the penetration

level of many products is also relatively low and several categories remain fairly

unbranded. All these factors provide a huge untapped potential for the industry. 

In contrast to other manufacturing sectors, FMCG is relatively less capital-

intensive, but demands immense skills and expenditure on branding and

distribution. Most companies in the sector create value through product

differentiation, package innovation, and differential pricing and highlighting the

functional aspect of foods. While inflation restricts the industry's growth, many

companies in the sector thrive under inflationary pressures. Most companies pass

on the cost inflation to consumers, via a judicious blend of price hikes, packaged

size reduction and change in product mix. Few consumers react by down-trading to

lower priced products, but most hang on to their preferred brands if price hikes are

moderate. 

7

The research facilitates designing an overall sales and distribution management

strategy for a hypothetical organization in the FMCG sector after an in-depth study

and analysis of two established brands in the FMCG business sector: KNORR

Soup and MAGGI Soup (India).

8

CHAPTER 2

OBJECTIVE

9

OBJECTIVE:

To compare the sales and distribution effectiveness of knorr and Maggi.

To carry out a detailed study of “Logistics Network”: Models, Costs and

Monitoring Systems.

To design a comprehensive sales reporting system for the chosen business

sector.

10

CHAPTER 3

COMPANY PROFILE

11

COMPANY PROFILE

3.1 HINDUSTAN UNILEVER LTD. :

Hindustan Unilever Limited (abbreviated to HUL) (BSE: HUL) formerly

Hindustan Lever Limited is India’s largest consumer products company and has an

annual turnover of over Rs 13,000 crores (calendar year 2007). It was formed in

1933 as Lever Brothers India Limited and came into being in 1956 as Hindustan

Lever Limited through a merger of Lever Brothers, Hindustan Vanaspati Mfg. Co.

Ltd. and United Traders Ltd.. It is headquartered in Mumbai, India and has an

employee strength of over 15,000 employees and contributes for indirect

employment of over 52,000 people. The company was renamed in late June 2007

to “Hindustan Unilever Limited”.

In 2007, Hindustan Unilever was rated as the most respected company in

India for the past 25 years by Business World, one of India’s leading business

magazines. The rating was based on a compilation of the magazines annual survey

of India’s Most Reputed Companies over the past 25 years. HUL is the market

leader in Indian consumer products with presence in over 20 consumer categories

such as Soaps, Tea, Detergents and Shampoos amongst others with over 700

million Indian consumers using its products. It has over 35 brands. Sixteen of

HUL’s brands featured in the AC Nielsen-Brand Equity list of 100 Most Trusted

Brands Annual Survey (2008). According to Brand Equity, HUL has the largest

number of brands in the Most Trusted Brands List. It’s a company that has

12

consistently had the largest number of brands in the Top 50 and in the Top 10

(with 4 brands).

Hindustan Unilever distribution covers over 1 million retails outlets across

India directly and its products are available in over 6.3 million outlets in India, i.e.

nearly 80% of the retail outlets in India. It has 39 factories in the country. Two out

of three Indians use the company’s products and HUL products have the largest

consumer reach being available in over 80 per cent of consumer homes across

India.

The Anglo-Dutch company Unilever owns a majority stake (52%) in

Hindustan Unilever Limited. HUL was one of the eight Indian companies to be

featured on the Forbes list of World’s Most Reputed companies in 2007.

History - Chronology

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

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

13

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.

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 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 1995, HUL and yet another Tata company, Lakme Limited,

formed a 50:50 joint venture, Lakme Unilever Limited, to market Lakme's market-

14

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

Icecream 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 July

1993, Brooke Bond India and Lipton India merged to form Brooke Bond Lipton

India 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 Icecream Group families and in 1995 the Milkfood 100%

Icecream marketing and distribution rights too were acquired.

15

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.

o BRANDS

The company has a distribution channel of 6.3 million outlets and owns 35

major Indian brands.[5] Some of its brands include Kwality Wall's ice cream,

Lifebuoy, Lux, Breeze, Liril, Rexona, Hamam, Moti soaps, Pureit Water Purifier,

Lipton tea, Brooke Bond tea, Bru Coffee, Pepsodent and Close Up toothpaste and

brushes, and Surf, Rin and Wheel laundry detergents, Kissan squashes and jams,

Annapurna salt and atta, Pond's talcs and creams, Vaseline lotions, Fair & Lovely

16

creams, Lakmé beauty products, Clinic Plus, Clinic All Clear, Sunsilk and Dove

shampoos, Vim dishwash, Ala bleach and Domex disinfectant.Rexona,Modern

Bread and Axe deosprays

HUL, the largest FMCG Company in India by revenues was formed by

merging three subsidiaries of Unilever in 1956. At present, Unilever Plc holds a

51.6% stake in the company. HUL’s portfolio of products covers a wide spectrum

including soaps, detergents, skin creams, shampoos, toothpastes, tea, coffee and

branded flour.[6] HUL's brands, spread across 20 distinct consumer categories. It

owns 35 major Indian brands. HUL has consistently had the most number of

brands in the Top 10 list for the most trusted brands in India from 2003 to 2008. [7]

Surf Excel, 'Pepsodent and Ponds in Home and Personal Care segment and Lipton,

Kissan and Brooke Bond in Foods and Beverages Segment are some of its top

brands. In 2008, it launched Ponds Age Miracle,Vaseline range of products in skin

care category and Axe-Dark Temptation in personal care segment as part of their

expansion into higher end products

3.1.1   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

17

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

remitted  to  the  company.  

 

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

to  provide  desired  products  and  quality  service  to  the  company's  customers.

In  order  to  achieve  this,  one  wholesaler  in  each  market  was  appointed  as  a

"Registered  Wholesaler,"  a  stock  point  for  the  company's  products  in  that

market.  The  company  salesman  still  covered  the  market,  canvassing  for

orders  from  the  rest  of  the  trade.  He  then  distributed  stocks  from  the

Registered  Wholesaler  through  distribution  units  maintained  by  the  company.

The  Registered  Wholesaler  system,  therefore,  increased  the  distribution  reach

of  the  company  to  a  larger  number  of  customers.  

 

The  highlight  of  the  third  phase  was  the  concept  of  "Redistribution  Stockist"

(RS)  who  replaced  the  RWs.  The  RS  was  required  to  provide  the

distribution  units  to  the  company  salesman.  The  second  characteristic  of  this

period  was  the  establishment  of  the  "Company  Depots"  system.  This  system

helped  in  transshipment,  bulk  breaking,  and  as  a  stockpoint  to  minimise

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

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

and  Forwarding  Agents  (C&FAs).  The  C&FAs  act  as  buffer  stock‐points  to

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

resulted  in  cost  savings  in  terms  of  direct  transportation  and  reduced  time

lag  in  delivery.  The  most  important  benefit  has  been  improved  customer

service  to  the  RS.  

 

18

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.   

3.1.2   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  coutry  from  Srinagar  to

Kanyakumari.  This  includes,  maintaining  favorable  trade  relations,  providing

innovative  incentives  to  retailers  and  organizing  demand  generation  activities

among  a  host  of  other  things.  Each  business  of  HUL  portfolio  has

customized  the  network  to  meet  its  objectives.  The  most  obvious  function  of

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

customer.   

 

Distribution   System   of   HUL  

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

stockists,  covering  6.3  million  retail  outlets  reaching  the  entire  urban

population,  and  about  250  million  rural  consumers.   There  are  35  C&FAs  in

the  country  who  feed  these  redistribution  stockists  regularly.  The  general

trade  comprises  grocery  stores,  chemists,  wholesale,  kiosks  and  general

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

channel  partners.  It  has  developed  customer  management  and  supply  chain

capabilities  for  partnering  emerging  self‐service  stores  and  supermarkets.

19

Around  2,000  suppliers  and  associates  serve  HUL’s  40  manufacturing  plants

which  are  decentralized  across  2  million  square  mile  of  territory.

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

20

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.

 

21

HUL  approached  the  rural  market  with  two  criteria  ‐ the  accessibility  and

viability.  To  service  this  segment,  HUL  appointed  a  Redistribution  stockist

who  was  responsible  for  all  outlets  and  all  business  within  his  particular

town.  In  the  25%  of  the  accessible  markets  with  low  business  potential,

HUL  assigned  a  sub  stockist  who  was  responsible  to  access  all  the  villages

at  least  once  in  a  fortnight  and  send  stocks  to  thoe  markets.   This  sub‐

stockist  distributes  the  company's  products  to  outlets  in  adjacent  smaller

villages  using  transportation  suitable  to  interconneting  roads,  like  cycles,

scooters  or  the  age‐old  bullock  cart.  Thus,  Hindustan  Unilever  is  trying  to

22

circumvent  the  barrier  of  motorable  roads.  The  company  simultaneously  uses

the  wholesale  channel,  suitably  incentivising  them  to  distribute  company

products.  The  most  common  form  of  trading  remains  the  grassroots  buy‐and‐

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

sold  through  credit  extension  and  trade  discounts.  HUL  launched  this

Indirect  Coverage  (IDC)  in  1960s.Under  the  Indirect    Coverage  (IDC)

method,  company  vans  were  replaced  by  vans  belonging  to  Redistribution

Stockists,  which  serviced  a  select  group  of  neighbouring  markets.   

Distribution   at   the   Urban   centres:  

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

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

transportatin.  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.

Project   Shakti  

This  model  creates  a  symbiotic  partnership  between  HUL  and  its

consumers.  Started  in  the  late  2000,  Project  Shakti  had  enabled  Hindustan

Lever  to  access  80,000  of  India's  638,000  villages  .HUL's  partnership  with

Self  Help  Groups(SHGs)  of  rural  women,  is  becoming  an  extended  arm  of

the  company's  operation  in  rural  hinterlands.  Project  Shakti  has  already  been

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

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

Maharashtra  and  West  Bengal.  The  respective  state  governments  and  several

23

NGOs  are  actively  involved  in  the  initiative.  The  SHGs  have  chosen  to

partner  with  HUL  as  a  business  venture,  armed  with  training  from  HUL  and

support  from  government  agencies  concerned  and  NGOs.  Armed  with  micro‐

credit,  women  from  SHGs  become  direct‐to‐home  distributors  in  rural

markets.  

The  model  consists  of  groups  of  (15‐20)  villagers  below  the  poverty  line

(Rs.750  per  month)  taking  micro‐credit  from  banks,  and  using  that  to  buy

our  products,  which  they  will  then  directly  sell  to  consumers.  In  general,  a

member  from  a  SHG  selected  as  a  Shakti  entrepreneur,  commonly  referred

as  'Shakti  Amma'  receives  stocks  from  the  HUL  rural  distributor.  After

being  trained  by  the  company,  the  Shakti  entrepreneur  then  sells  those

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

entrepreneur  usually  service  6‐10  villages  in  the  population  strata  of  1,000‐

2,000.  The  Shakti  entrepreneurs  are  given  HUL  products  on  a  `cash  and

carry  basis.'  

The   following   diagram   show   the   Project   Shakti   model   as   initiated

24

Project   Streamline    

To  cater  to  the  needs  of  the  inaccessible  market  with  high

business  potential  HUL  initiated  a  Streamline  initiative  in  1997.  Project

Streamline  is  an  innovative  and  effective  distribution  network  for  rural  areas

that  focuses  on  extending  distribution  o  villages  with  less  than  2000  people

with  the  help  of  rural  sub‐stockists/Star  Sellers  who  are  based  in  these  very

villages.  As  a  result,  the  distribution  network  directly  covers  as  of  now

about  40  per  cent  of  the  rural  population.   

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

Rural  Distributors  (RD),  who  has  15‐20  rural  sub‐stockists  attached  to  him.

Each  of  these  sub‐stockists  /  star  sellers  is  located  in  a  rural  market.  The

sub‐stockists  then  perform  the  role  of  driving  distribution  in  neighboring

25

villages  using  unconventional  means  of  transport  such  astractor  and  bullock

carts.  Project  Streamline  being  a  cross  functional  initiative,  the  Star  Seller

sells  everything  from  detergents  to  personal  products.    

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.    

26

27

o BUSINESS NATURE

HUL is India's largest marketer of Soaps, Detergents and Home Care

products. It has the country’s largest Personal Products business, leading in

Shampoos, Skin Care Products, Colour Cosmetics, and Deodorants. HUL is also

the market leader in Tea, Processed Coffee, branded Wheat Flour, Tomato

Products, Ice cream, Soups, Jams and Squashes.

HUL is also one of the country's biggest exporters and has been recognized as a

Golden Super Star Trading House by the Government of India; it is a net foreign

exchange earner. HUL is India's

Largest exporter of branded fast moving consumer goods. The company's Exports

portfolio includes HUL's brands of Soaps and Detergents, Personal Products,

Home Care Products, Tea and Coffee. HUL is also driving exports in chosen areas

where India has a competitive advantage – Marine Products, Basmati Rice, Castor

Oil and its Derivatives. It is India's largest exporter of Marine Products, and one of

the largest global players in castor.

o CORPORATE PHILOSOPHY

Unilever's mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life.

Our deep roots in local cultures and markets around the world give us our strong relationship with consumers and are the foundation for our future growth. We will bring our wealth of knowledge and international expertise to the service of local consumers - a truly multi-local multinational. 

Our long-term success requires a total commitment to exceptional standards of performance and productivity, to working together effectively, and to a willingness to embrace new ideas and learn continuously.

28

To succeed also requires, we believe, the highest standards of corporate behaviour towards everyone we work with, the communities we touch, and the environment on which we have an impact.

This is our road to sustainable, profitable growth, creating long-term value for our

shareholders, our people, and our business partners.

 

3.2 NESTLE

Nestle India

Nestle’ India is a subsidiary of Nestle’ S.A. of Switzerland. The company insists on honesty,

integrity and fairness in all aspects of its business and expects the same in its relationships.

Nestle India- Presence Across India

Beginning with its first investment in Moga in 1961, Nestlé’s regular and substantial investments

established that it was here to stay. In 1967, Nestlé set up its next factory at Choladi (Tamil

Nadu) as a pilot plant to process the tea grown in the area into soluble tea. The Nanjangud

factory (Karnataka), became operational in 1989, the Samalkha factory (Haryana), in 1993 and in

1995 and 1997, Nestlé commissioned two factories in Goa at Ponda and Bicholim respectively.

Nestlé India is now putting up the 7th factory at Pant Nagar in Uttaranchal.

Nestle’ Story

Nestlé was founded in 1867 on the shores of Lake Geneva in Vevey, Switzerland and its first

product was “Farine Lactée Nestlé”, an infant cereal specially formulated by Henri Nestlé to

provide and improve infant nutrition. From its first historic merger with the Anglo-Swiss

Condensed Milk Company in 1905, Nestlé has grown to become the world’s largest and most

diversified food Company, and is about twice the size of its nearest competitor in the food and

beverage sector.

29

Nestlé’s trademark of birds in a nest, derived from Henri Nestlé’s personal coat of

arms, evokes the values upon which he founded his Company. Namely, the values of security,

maternity and affection, nature and nourishment, family and tradition. Today, it is not only the

central element of Nestlé’s corporate identity but serves to define the Company’s products,

responsibilities, business practices, ethics and goals.

In 2004, Nestlé had around 247,000 employees worldwide, operated 500 factories in approx.

100 countries and offered over 8,000 products to millions of consumers universally. The

Company’s transparent business practices, pioneering environment policy and respect for the

fundamental values of different cultures have earned it an enviable place in the countries it

operates in. Nestlé’s activities contribute to and nurture the sustainable economic development of

people, communities and nations. Above all, Nestlé is dedicated to bringing the joy of ‘Good

Food, Good Life’ to people throughout their lives, throughout the world

Nestle’ Brands

Milk Products & Nutrition

Beverages

Prepared Dishes and Cooking Aids

Chocolates & Confectionary

MILK PRODUCTS AND NUTRITION:

NESTLE EVERYDAY Dairy Winter

NESTLE EVERYDAY Slim

NESTLE’S EVERTDAY Ghee

NESTLE’S MILK MAID

NESTLE’S Fresh and Natural Dahi

30

NESTLE’S Jeera Rita

NESTLE’S MILKMAID Fruit Yoghurt

NESTLÉ Milk

NESTLÉ Slim Milk

BEVERAGES:

NESCAFÉ CLASSIC

NESCAFÉ SUNRISE

NESTLÉ MILO

NESCAFÉ 3 IN 1

NESCAFÉ KOOLREZ

PREPARED DISHES AND COOKING AIDS:

MAGGI 2-MINUTE NOODELS

MAGGI VEGETABLE ATTA NOODELS

MAGGI DAL ATTA NOODELS

MAGGI RICE NOODELS MAIN

MAGGI SAUCES

MAGGI PIZZA MAZZA

MAGGI HEALTHY SOUPS

MAGGI -HEALTHY SOUPS SANJEEVNI

MAGGI MAGIC CUBES

CHOCOLATES & CONFECTIONARY

NESTLÉ KIT KAT

31

NESTLÉ KIT KAT LITE

NESTLÉ MUNCH

NESTLÉ MUNCH POP CHOC

NESTLÉ MILKY BAR

NESTLÉ BAR- ONE

NESTLÉ FUNBAR

NESTLÉ MILK CHOCOLATE

POLO POWER MINT

NESTLÉ ECLAIRS

Turn over in 2009 compared with competitors

32

Market Leader across different Sectors in 2009

33

CHAPTER 4

RESEARCH METHODOLOGY

RESEARCH METHODOLOGY:

34

The data collected for the research involves the use of primary and secondary

sources. This data is substantiated by the use of appropriate secondary sources like

internet and books.

Research is an endeavour to discover answers to intellectual and practical problems through the application of scientific method.

Research is the systematic process of collecting and analyzing information (data) in order to increase our understanding of the phenomenon about which we are concerned or interested.

 

4.1 SIGNIFICANCE OF RESEARCH     : o Research  is done for better decision making ,it throws light on risks

and uncertainty

o Helps in project identification

o Solves investment problems, solves pricing problems and solves allocation problems.

4.2 Data Collection:

35

Data collection will be done from both Primary as well as Secondary sources.

o Primary data collection: It will be collected by In-Person Interviews as

well as Telephonic Interviews of various personals/managers working in the

organisation and dealer’s/retailer’s etc.

o Secondary data collection: From newspaper, magazines, libraries and

websites.

4.3 Research Design:

The research is descriptive type and accordingly the design is formulated so that

precise and relevant information may be gathered.

4.4 Data Collection tools:

Structured Questionnaires

4.5 Sample design:

The research will be conducted by interviewing various Organisational officials

and the Dealer’s, Retailer’s and Franchisee’s.

Sampling: Simple random and Convenient.

Method Adopted: Personnel Interviews and Telephonic Interviews.

Field: Delhi and NCR regions.

4.6 Sample Size:

36

The target will be to interview at least 3 dealer’s, retailer’s, franchisee’s of

each company and end users as many as possible.

4.7 Data analysis tools and technique:

Mean.

Graphical method (Bar Graph).

Weighted average.

37

CHAPTER 5

COMPARISON OF KNORR AND

MAGGI

KNORR v/s MAGGI:

38

5.1 INTRODUCTION:

Overall soup industry in India – 22 million litres Packaged branded soup – only 0.5 million litres Major players – HUL’s Knorr, Nestle’s Maggi, MTR, and GCMMF’s Masti Knorr products sold in over 87 countries & their punch line is “Good Food Matters”With only soups in India, Knorr resulted in an 18% growthKnorr is No. 1 & holds a majority of market space with 55%

39

Maggi is one of the main brands of Nestle in India & Knorr’s nearest competitorMaggi – first company in to launch packaged soups in India in 1989Maggi’s new punch line “Taste Bhi, Health Bhi” after re-launching its brand

Customer Value:

Knorr soups – a healthy evening snack, not only a starterKnorr soups are low in Cholesterol & Fat with goodness of vegetables Knorr’s perceived value is more than the price of the soupMaggi is more popular for its other products like Noodles, sauces, etc, hence already have a good perceived valueMaggi soups have been re-launched with new flavors with the focus being “Healthy Soups”

Product Strategy:

40

Pricing Strategy:

Knorr soups range between Rs. 29 to Rs. 33 and 34 grams to 68 grams in quantity whereas Maggi’s range being Rs. 29 to Rs. 30 for 40 g to 70 g packsMaggi introduced 1 serving packs of 12 g for Rs. 8 – a first time in India Marginal price increase of Knorr soups in the past few years

Place Strategy:

Knorr soups easily available in almost all super-markets, departmental stores, etc whereas Maggi soups are available mostly in super-markets and very few storesAlmost no presence in the Rural Markets

41

Promotion Strategy:

Effective Ads of Knorr compared to Maggi’s New Indian flavors of Knorr Maggi’s new offer – 20% free in 70 g packs

5.2 SWOT ANALYSIS:

ANALYSIS KNORR SOUP MAGGI SOUPS

STRENGTH Major Market share of about 55%

Wide range of flavors

A perfect alternative for “Home Made Soups” which is convenient

Loyal consumer base

Wide distribution channel

Packs available in various sizes

No added MSG

42

WEAKNESS A smaller distribution channel

No small 1 or 2 serving packs

Presence of MSG

Rural Market presence almost nil

Expectations and standards of Knorr

Poor & ineffective ads

No presence in Rural Markets

Few flavors in the market

OPPORTUNITY Improvement of

ads More healthier

soups

Stronger ads maybe with popular brand ambassadors

Acquire Knorr’s market space

THREATS Presence of local competitors

Pricing competition

Pricing competition with new & existing brands

43

5.3 CONCLUSION OF ABOVE:

Both companies have quite different marketing strategies

Knorr has better Promotional and Place Strategies

Pricing of Maggi Soups are marginally lower than that of Knorr

Maggi Soups are more Healthier than Knorr but need to

increase the range of flavors

Both the brands have huge opportunities in the Rural markets

CHAPTER 644

DATA ANALYSIS

AND

INTERPRETATION

DATA ANALYSIS AND INTERPRETATION:

Finally, an effort was made to extract meaningful information from

analyzed data, which acted as a base for the recommendations.

45

DATA ANALYSIS:

TOP MANAGEMENT

QUE 1) Have you achieved your sales targets for past few years?

YES80%

NO20%

INTERPRETATION

As  FMCG  products  are  generally  Low  Involvement  Products. It’s  said  that HUL  is  able  to  touch  the  lives  of  about  2  out  of  every  3  Indian consumers.  This  achievement  is  due  to  the  sheer  strength  of  its  distribution network  (products  should  be  good  as  always,  otherwise  they  will  find  no buyers  in  the  long  run).

46

2) How you differentiate your product from competitors’ product?

70%

10%

15%

5%

SalesBetter Value Technology Brand Association Investing in Future

Major competitors1. Dabur2. Jhandu3. Johnson &Johnson4. Cavin Care5. Procter & Gamble6. Britannia7. ITC

Better Value

The first step was to ensure that they offer world class quality and real differentiation backed by technology to give them the advantage over low priced competition. They have invested over Rs.400 crores, or 5% of sales, in the last three years to upgrade the brands.

In several cases they reduced prices to make the brands more affordable. Better quality and more affordable prices have increased the value to the consumer.

47

They have also launched several low unit size and price packs for single use to make the brands more accessible to all income groups. For example, they are the first to introduce a branded toothpaste in a tube at Rs.5 and a branded quality shampoo in a bottle at Rs.5.

Bigger Role in Consumers’ Lives

Perhaps the most significant change has been to move the brands beyond merely making functional claims to playing a bigger and deeper role in the lives of consumers. In the case of Lifebuoy, it was only when they associated it with the promise of health and protection against disease that it claimed a larger space in the consumer’s mind..

Similarly, in the laundry market, Surf Excel went well beyond the benefit of ‘great clean’ by saving two buckets of water with every wash.

Both Lifebuoy and Surf Excel have succeeded because they are relevant to two key concerns of the Indian housewife: family health and the scarcity of water.

Technology, the Key Differentiator

Their brands and sound understanding of the local consumer are supported by a world class Research and Development capability. They have over 200 of the brightest scientists and technologists based in India.

Our Acorns: Investing in our Future

Their entry into Water Purifiers, through Pureit, shows great promise. Pureit delivers 100% protection against all water-borne diseases.In urban India, Hindustan Lever Network (HLN) is their direct selling initiative selling a special range of products.

SALES FORCE

48

3)How you are appraised?

33%

67%

SalesNONMONETARY MONETARY

INTERPRETATIONHUL follows a very rigid structure to appraise their employees as discussed above. Related to monetary or non monetary methods followed by HUL. It has various rewarding Non monetary beneficial programs for its sales force which gives esteem and recognition to its employees in the organizational hierarchy.

4) Does your company support you through enough advertisements?

49

YES20%

NO80%

Sales

INTERPRETATION

If you look at the analysis, large section of people said no reason being company is less focusing on advertisement ,where as more and more focusing is on sales and distribution People are more aware about HUL, so company is not focusing on advertisement as its already a reknown brand.

CHANNEL PARTNERS

5) Do you think HUL products have enough demand in market?

50

75%

20% 5%

SalesYES NO CANT SAY

INTERPRETATION

HUL products are more in demand as compared to other brands, reason being:

FAMILIARITY AVAILABILITY VALUE FOR MONEY

51

CHAPTER 7

FINDINGS

FINDINGS

The Crisis of Declining Markets

52

Through the nineties, the FMCG markets grew at almost 15% per annum in value.

Suddenly, in 2000, FMCG market growth stalled and then declined for the next

four years. It is important to understand why this happened.

The rapid opening up of the economy resulted in many new avenues of expenditure

for the consumer’s growing income. A sharp drop in interest rates from 18% to

8% led to explosive demand for consumer durables like white goods, two-wheelers

and automobiles. After all, one could drive out of a car showroom in a Maruti 800

with a down payment of only Rs. 2000. The home ownership market grew

exponentially as the average age of a home loan borrower dropped from 50 in 1999

to 30 in 2004. Mobile phone ownership and usage exploded due to its amazing

lifestyle and convenience benefits as well as lower prices. Entertainment, Leisure

and Travel sectors also boomed.

The lure of new avenues of expenditure in products and services led to consumers

restricting their expanse on FMCG. It is not that they bathed less often or brushed

their teeth less often or indeed washed their clothes less often. But they did

downtrade to lower priced substitutes from higher quality brands. For example, a

consumer buying six tablets of Lux in a month went to buying three of Lux and

three cheaper brands. Or a consumer buying Surf Excel for her clothes mixed it

with a cheaper powder. As a result of this shift in spending patterns, the FMCG

market declined in value in the last four years creating a major challenge for

growth.

The new Hindustan Lever: Focused on FMCG

In 2000, 75% of our sales came from FMCG businesses. The rest came from

several non-FMCG businesses which were not profitable, and did not offer

53

prospects for long-term leadership. Besides, they were a drain on the core FMCG

business, both in terms of resource and focus.

They decided to disengage from all non-FMCG or commodity businesses. In all,

we have divested and discontinued 15 businesses including Animal Feeds,

Speciality Chemicals, Nickel Catalyst, Adhesives, Thermometers, Seeds,

Mushrooms etc. with sales of Rs.1,750 crores as in 1999.

Today they are a focused on FMCG company with our branded business

accounting for over 90% of sales, consisting of 35 brands across 20 categories.

These will be their main engines of growth, with higher levels of resource

concentration, be it technology, people talent or media spend.

Building blocks of a strong Foods business

In Foods, there is enormous growth potential in leading the evolution of consumers

to branded and processed foods. Over the last few years they have focused on

putting in place the building blocks of a strong Foods business. Historically their

Foods business was fragmented and lacked scale. It was often commoditized with

low margins. They recognized that changing food habits would require

considerable investment, which the current business simply could not afford.

Therefore they divested the non-value added parts like Vanaspati. They have

consolidated theuir portfolio and improved the gross margins by over 13% through

product mix and cost reduction. They have also cleared the supply chain of all old

stock and geared up for fresh availability on shelf. Today, their Foods business has

a healthy gross margin and a supply chain driven by freshness. The Foods business

will now invest for growth through relevant innovation.

54

FMCG still offers enormous potential

As the largest FMCG player it was up to them to reverse the downtrading to realize

its true growth potential. They could achieve this by raising the bar and becoming

world class in what their brands offered and how they worked. Nothing less would

do.

Penetration levels in several of the categories and consumption levels in all of the

categories is low by any comparison. Across the world, they are seeing a strong

correlation between income levels and the size of FMCG markets. Over the next

10 years, per capita income in India is likely to touch China’s current levels. At

those levels, the FMCG market will be over Rs.100,000 crores from a current

value of Rs.40,000 crores. This is an opportunity that they have to seize.

Portfolio of Strong Brands

Their main challenge was to reverse the downtrading in the categories and re-

establish the relevance of their brands in the mind of the consumer. In 2000, they

had 110 brands, many undifferentiated and lacking scale. They chose to focus on

35 power brands covering all consumer appeal and price segments. They are

already seeing the benefits. Six brands – Brooke Bond, Lifebuoy, Lux, Fair &

Lovely, Rin and Wheel – have emerged as mega brands in the last five years, each

with sales of more than Rs.500 crores.

Better Value

The first step was to ensure that they offer world class quality and real differentiation

backed by technology to give them the advantage over low priced competition. They

55

have invested over Rs.400 crores, or 5% of sales, in the last three years to upgrade the

brands.

In several cases they reduced prices to make the brands more affordable. Better

quality and more affordable prices have increased the value to the consumer.

They have also launched several low unit size and price packs for single use to make

the brands more accessible to all income groups. For example, they are the first to

introduce a branded toothpaste in a tube at Rs.5 and a branded quality shampoo in a

bottle at Rs.5.

Bigger Role in Consumers’ Lives

Perhaps the most significant change has been to move the brands beyond merely

making functional claims to playing a bigger and deeper role in the lives of

consumers. They had to move from selling a soap or a detergent to something far

more important and central to the consumer’s life. How often have we heard someone

say, “A soap is a soap is a soap!” Or indeed, “All detergents clean clothes as well”.

In the case of Lifebuoy, it was only when they associated it with the promise of

health and protection against disease that it claimed a larger space in the consumer’s

mind. It moved from being a mere soap to a health essential. Today Lifebuoy, their

oldest brand, has grown at over 15% for the last three years.

Similarly, in the laundry market, Surf Excel went well beyond the benefit of ‘great

clean’ by saving two buckets of water with every wash. Imagine the importance of

that benefit to consumers in cities, who often get running water for only a couple of

hours a day. Surf Excel is one of their fastest growing brands today.

56

Both Lifebuoy and Surf Excel have succeeded because they are relevant to two key

concerns of the Indian housewife: family health and the scarcity of water.

In addition to the growing consciousness of health, consumers today are looking for

ways to look good and feel good so that they can get much more out of life. In short,

consumers are seeking Vitality in their lives. Their portfolio of 35 power brands is

uniquely positioned to offer nutrition, hygiene and personal care benefits and thereby

deliver Vitality.

Technology, the Key Differentiator

Their brands and sound understanding of the local consumer are supported by a world

class Research and Development capability. They have over 200 of the brightest

scientists and technologists based in India.

Their recent reorganization leverages the talent pool from across 16 global technology

centres, of which four are in India. In all, they have over 4,000 high quality minds

across Unilever working relentlessly to provide new benefits that make a real

difference to the consumers.

Winning with Customers

Hindustan Lever has historically had a strong bond with its customers. They have

strengthened this and reinvented the way they manage their distribution channels and

their customers. The sales structure has been transformed to leverage scale and build

expertise in servicing Modern Trade and Rural Markets. They have also de-layered

their sales force to improve the response times and service levels.

57

Their 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. They have also combined backend processes into a common

Shared Service infrastructure, which supports the units across the country. All these

initiatives together have enhanced operational efficiencies, improved the service to the

customers and have brought us closer to the marketplace.

The Transformation: Investment in the Future

To ensure that Hindustan Lever remains competitive in the long-term, they have made

significant investments in product quality, pricing and marketing. As mentioned

earlier, the investment in product quality alone has been in excess of Rs. 400 crores,

or 5% of our sales.

In addition there has been the cost of defending their market position. Recently an

international competitor attacked their laundry business led by a price reduction of as

much as 50%. They acted with speed and determination leveraging all their past

experience in India and internationally. They have been able to fully protect their

market leadership and share, albeit sacrificing short-term profit. They made this

necessary trade-off as market share is the best means of sustaining future profit. Over

time, their stronger market positions will surely lead to greater long-term profit.

Despite these significant investments to strengthen the long-term competitiveness and

the costs of defending the strong market position, they still remain one of the most

profitable companies in the country.

58

59

CHAPTER 8

RECOMMENDATIONS

RECOMMENDATIONS:

1. HUL should focus more on their promotional activities as it the

major cause of dissatisfaction amongst its channel members.

2. HUL should cut on its order processing time which is at present 45-

60 days which is quite huge for an established brand.

60

3. As Nestle is targeting a niche market it should make it’s products

like Maggi more widely available in the market.

61

CHAPTER 9

CONCLUSION

Conclusion

It can be concluded that Hindustan Uniliver has a wide range of coverage

area both in the rural and the urban area. Hindustan Uniliver is one of the

leading fast moving consumer good company which operate in a systematic

manner.

62

In recent years, the FMCG sector declined due to down trading. Also

because of presence of large number of companies trying to seize this

opportunity, this force the old HLL for the change and thus, their

transformation has resulted in a new HLL, which has successfully faced this

challenge and reversed this trend.

The new Hindustan Lever see an exciting opportunity for growth.Today,

these are stronger and more relevant to the consumer than ever. 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.

Hindustan uniliver manage there sales/channel partner/distribution network

in an efficient manner. Though it was popular but its advertising expenditure

was also huge.

63

CHAPTER 10

BIBLIOGRAPHY

BIBLIOGRAPHY

BOOKS

Kothari, C.R., 2005 Research Methodology, Wishwa Prakashan, India. Kotler, Philip. 2005, Marketing Management, Prentice hall India. Marketing Management, ICFAI University Press

64

Magazines

Business Today Investors India Business World Economic Times Business Standard

WEBSITES

www.hll.com www.fmcg.com www.economictimes.com www.marketwatch.com

65

CHAPTER 11

APPENDIX

APPENDIXQuestionnaire for Sales force A

Name : _________________ place : _________________

1. How much targets you are given?______________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2. Are your targets are achievable?o Yes

o No

66

3. How you are appraised?o Monetary

o Non-monetary

4. Are you given enough incentives?o Yes

o No

5. Does your company support you through enough advertisements?o Yes

o 2No

6. Are you able to achieve targets given to you?o Yes

o No

7. Do you need any other supports in your working?______________________________________________________________________________________________________________________________________________________________________________________________________________________________________

8. Are you given chance to participate in decision making?o Yes

o No

9. Are Your problems are properly considered by management?o Yes

o No

10. Are you given proper working environment?o Yes

o No

67

11. Any suggestions you have to improve sales? ______________________________________________________________________________________________________________________________________________________________________________________________________________________________________

QUESTIONAIRE FOR TOP MANAGEMENT B

Name : _________________ place : _________________

1. What are your sales plans for current years?______________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2. How you have decided this target?o Assumptions

o Primary data

68

o Secondary data

3. Have you achieved your sales targets for past few years?o Yes

o No

4. What methods you use to motivate your sales force?o Offers/Bulk buying schemes

o Monetary methods

o Non-monetary methods

5. When you do appraisals of your sales person in year?o Beginning

o End of the year

6. Do you reward your sales personals on achieving targets?o Yes

o No

7. What methods you use to keep watch on sales personals activities?______________________________________________________________________________________________________________________________________________________________________________________________________________________________________

8. Is your sales force is appropriate according your plans?o Yes

o No

9. Does your sales force have enough knowledge about competitor’s products? o Yes

o No

69

10. How you differentiate your product from competitors’ product ?

Questionnaire For channel partners C

Name : _________________ place : _________________

1. Which kind of Outlet do you follow?o Exclusive wholesaleo Semi wholesaleo Family grocero Mass retailo Chemisto Super Value Store

2. Which of the following HUL Skin product you keep in your store?

70

o Fair & Lovelyo Ponds Dream Flower o Vaselineo Pears Soapo Lakme Sunscreeno Ponds White Beauty

3. How much is your annual revenue from HUL products?

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________

4. Do you receive order timely?o Yes

o No

5. Are you given offers in off seasons?o Yes

o No

6. Are enough promotion is arranged by you?o Yes

o No

7. How much re-order quantity you have for HUL products?

________________________________________________________________________________________________________________________________________________

8. Are you given enough discounts on bulk buying?o Yes

o No

9. Do you pass some discount to retailer on bulk buying? o Yes

o No

71

10. Do you think HUL products have enough demand in market?o Yes

o No

72