A Study on Sale and Distribution Management of

Hindustan Unilever Limited

Presented by

Introduction…..

• Hindustan Unilever Limited (‘HUL’), formerly Hindustan Lever Limited (it was renamed in late June 2007 as HUL).

• India's largest Fast Moving Consumer Goods company• HUL is also one of the country's largest exporters• The mission that inspires HUL's over 15,000 employees, including

over 1,300 managers, is to "add vitality to life.“• HUL meets everyday needs for nutrition, hygiene, and personal care

with brands that help people feel good, look good and get more out of life.

• Products endow the company with a scale of combined volumes of about 4 million tones and sales of nearly Rs. 13718 corers

• 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.

Food Brands

A good honest scoop of daily pleasure.

Lipton has a range of vitality teas that truly encompass the goodness of tea.

India’s favorite cup of tea, the great taste of Red Label brings people closer together and strengthens relationships.

Brooke Bond Taaza lifts me people unshackles the mind, allowing them to see and realize possibilities.

Brooke Bond Taj Mahal is an exclusive selection of teas for the discerning consumer.

Partnering with the mom in nurturing her dreams, Annapurna Atta is aimed at helping her provide wholesome tasty nutrition to her family.

Playful banter, a little mischief, serious conversation… there’s no time for young couples like the time spent sharing a cup of 3 Roses.

Ek cup Bru aur mood ban jae…

With Kissan, good food is loved not shoved!

Kissan Amaze Brainfood is speci - fically designed for the mental development of kids.

Knorr helps families make meal times special, nutritious, tasty and healthy.

Home Care Brands

Active Wheel de "Mehnat se Aazadi" Freedom from painful & tiring laundry

Cif- the best cleaner to let you shine.

The world’s largest fabric conditioner brand.

The sheer power of Domex bleach gives you the confidence you need, eradicating all known germs.

Rin provides ‘best in class whiteness’ which is demonstrable.

Sunlight is a color care brand

Giving your kids the freedom to get dirty and experience life, safe in the knowledge that Surf Excel will remove those stains

Created in 1885, the Vim brand is still innovating and using the magic of natural ingredients to create unbeatable results over a hundred years later.

Personal Care Brands

Rexona gives you 24 hour protection from sweat and body odour and therefore the confidence to handle whatever the day has in store.

Dove stands for real beauty. All around the world, Dove is making complete therapy for your hair.

Pears – the purest and most gentle way to skincare!

Lux believes in passion for beauty. It continues to be a favorite with generations of users for a sensuous experience of luxury.

Awaken, and enliven your senses with a Liril bath.

Lifebuoy is available in multiple variants in soaps and specialist formats such as liquid hand wash, catering to the entire family.

Holistic skin care experiences perfected over the ages to deliver healthy, beautiful skin

Breeze, with the goodness of glycerine gives soft, fragrant and smooth skin.

Personal Care Brands

New Clear with Essential Oils, guarantees Zero dandruff and leaves your hair feeling fabulous.

Clinic Plus is India’s largest selling shampoo and has won the trust the millions of families across India.

Freshness that brings you Closer Pepsodent India is committed to improve the overall Oral health of Indians.

Sunsilk encourages young women in India to live for today. Sunsilk helps you transform the beauty of your hair instantly because LIFE CAN'T WAIT!!

Dove stands for real beauty. All around the world, Dove is making complete therapy for your hair.

Distribution System• Distribution system’s focus to enable easy

access to their brands, touch consumers with a three-way convergence - of product availability, brand communication, and higher levels of brand experience.

• The most obvious function of distribution system is to provide the logistics support to get the company’s product to the end customer.

• The another important role of this system is to maintain the information flow between company to consumer.

• HUL's products, are distributed through a network of about 7,000 redistribution stockists covering about one million retail outlets.

• The general trade comprises grocery stores, chemists, wholesale, kiosks and general stores.

• Company provides tailor made services to each of its channel partners.

• HUL is using the point of purchase method for much higher level of direct contact, through in-store facilitators, sampling, education and experience.

Distribution System

Distribution System

• 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

• Each business of HUL portfolio has customized the network to meet its objectives

Distribution System of HUL

• 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.

• Developed customer management and supply chain capabilities for partnering emerging self‐service stores and supermarkets. Around 2,000 suppliers and associates serve HUL’s 40 manufacturing plants which are decentralized across 2 million square miles of territory

• Focuses on short supply chain for distribution.• Meet every need of people everywhere.• Build segments & market for the future• Emphasis on Direct selling, Franchisee to reach

everyone .

Marketing Strategies for Urban Areas

Marketing Strategies for Rural Areas

• For long term benefit HUL started PROJECT STREAMLINE in 1997.

• Appointed 6000 sub–stockists that directly covers about 50000 villages & 250million customers.

• Integrate, economic, environment, & social objective with Business Agenda.

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 stockiest and 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‐

Rural Distribution Model of HUL

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

• HUL appointed a Redistribution stockist who was responsible for all outlets and all business within his particular town

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 and the products finally make the ‘last mile’ based on the local popular and cheap mode of transport

Schematic of HUL’s Distribution Network

HUL

New distribution channels

• Project Shakti 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 Streamline Project Streamline is an innovative 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 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

Hindustan Lever Network (HLN)

• It is the company's arm in the Direct Selling channel, one of the fastest growing in India today

• It 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 urban population, backed by 42 offices and 240 service centres across the country

• It presents a range of customised offerings in Home & Personal Care and Foods

Channel Design

• Hindustan Lever Limited (HUL) has two types of channel selling ‐

i. Regular (traditional) retail channel, ii.Direct Selling Channel in the name of Hindustan

Lever Network (HLN).

Channel structureRedistribution stockists:-

• Sales Margin: 4.76% which includes cash discount, unloading expenses from depot, distribution expenses to retailers, incentive schemes & other incidental expenses.

• Modes of transport used: Rickshaw, tempo.

• Incentive schemes: Before 2000 holiday packages and tours but after 2000 no non‐monetary incentive for RS.

• .

• Areas of Operations: Marked for each of the 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). Retailers: • Total retailer base in chennai : Approximately 1070.

• 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.

Initiatives Taken to Improve The Distribution Network

• Setting up of a full scale sales organization comprising key account ‐ management and activation to impact, fully engage and service modern retailers as they emerge.

• Servicing Channel partners and customers with continuous daily replenishment.

• Leveraging scale and building expertise to service Modern Trade and Rural Markets.

• Delaying of sales force to improve response times and service levels• Launching the Unicare scheme with upmarket pharmacies and retailers to sale

its premium brands. • Launching of several promotional schemes for existing wholesalers and

distributors.

Field Force Management

• In HUL, the field force is evaluated using QOC (Quality of Contribution). It consists of 4 components ‐

• 1. Secondary Sale (Max points = 2.5) • 2. Eco (Max points = 0.5) • 3. Focus (Max points = 0.5) • 4. FCS (Max Points = 0.5)

Non Monetary Methods

• Based on the QOC various awards are distributed to the field persons at the end of every month. These awards are also known as ‘MOC Star’ awards.

• If QOC score > 4.5 - The person is eligible for 7 star award

• If QOC score > 4 - The person is eligible for 5 star award

• If QOC score > 3.5 -The person is eligible for 3 star award

Financial AnalysisMarketing Expenses As stated earlier also, marketing expenses here include the

following – - Commissions - Rebates 29 - Discounts - Sales promotional - Expenses on direct selling agents - Entertainment expenses etc. Distribution Expenses • Distribution expenses include the outward freight cost to the

company.

Evolution of HUL’s distribution Network

• The first phase of the HUL distribution network had wholesalers placing bulk orders directly with the company

• The highlight of the third phase was the concept of "Redistribution Stockist" (RS) who replaced the RWs