HLL:Segmenting the consumer Tea market

Submitted By

Ahemed Mujthaba

Hindustan Lever limited

• Hindustan Lever Limited (HLL) is India's largest Fast moving consumer goods company.

• HLL touches the lives of two out of three Indians with over 20 distinct categories in home & personal care products and food & beverages.

• HLL,a company with a scale of combined volumes of about 4 million tonnes and sales of over Rs. 13,000 crores.

• 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.

History

• HLL 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 June 2007 to “Hindustan Unilever Limited”.

The case study explains how HLL understood the primary position in the Indian market where they got the strong base in the beverage category.

• In 1998, HLL recorded sales of Rs.1,565 crores in the beverages category, where HLL was the market leader in both tea and coffee businesses.

• In 1999, HLL’s revenues from tea sales dropped sharply to Rs.1,310 crores.

• This prompted the company to understand the tea market more closely and study the customer preferences.

Target Groups Of HLL

Popular Segmant Economy Segmant

Premium Segment

Popular brands: - A1 - TigerEconomy Brands: - Brooke Bond Red Label

- Lipton TaazaHigh End brands:

- Brook Bond Taj Mahal - Lipton Yellow label

• Indian Market Research Bureau (IMRB) conducted a study to evaluate the tea consumption patterns of customers.

• That study found that tea drinking varied to 3 status of social class.

• The low income class, Middle class, Upper income group

• The lower income group drank tea to get energy.

• The middle class income group drank tea for relaxation.

• The upper class income group consume tea for social reasons.

HLL used the finding to refocus its brand to suit the needs of each segment.

o A1 and tiger were repositioned with strong flavor so that It would provide energy.

o Lipton taaza was relaunched in a new nitrogen flushed pack which retains the freshness of tea power for a long period. Taaza was also repositioned as a product that provides relaxation.

o In the premium segment, to attract the upper-class income group customer company roped in leading tabla player zakir hussain to endorse Taj Mahal brand

• HLL found nearly 30% of tea business comes from out-of-the-home consumption which was an untapped market for brand players.

• Roadside tea stalls and vending machines play a major role in the tee consumption.

• HLL found that tea shop vendors had different needs than the end consumer. They demand for tea which have strong flavor and gives more number of cups

• HLL supplied quality tea to the vendor on daily basis. HLL created a unique distribution channel by 800-1000 cycles deliver to the stalls.

• The company set up “Good Life” club. the vendors who join will get incentives and freebies for every purchase. Hence the buyer has an incentive to purchase more of the product.

• HLL focused on the vending machine business.

• The company increased the number of vending machines from the present20,000 units that are located at airports, offices, railway stations across the country, to 25,000 units by the end of the year 2000 and 75,000 units by the end of the year 2003

• HLL tapped the growing youth market through vending machines, by adding new variants to plain tea and coffee like flavored tea, cold coffee, and espresso coffee.

• Apart from these, the company introduced Lipton iced tea which competes directly with Coke and pepsi.

• To promote that brand, company started sponsoring music shows and other such youth-related events to attract youngsters.

Thank you!