Sip Report of Maneesh

8/9/2019 Sip Report of Maneesh

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SUMMER TRAINING REPORTOn

Project Title :- A Study of Promotional Activities At HULDone By Channel Member

Submitted in partial fulfilment of the requirements ofthe two year

Post Graduate Programme (PGP).

Submitted byMANEESH

KUMAR.

Roll No: PG 20090280Batch: 2009-2011

IILM Institute for HigherEducation


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Introduction

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

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).

Lifebuoy soap in 1895 and other famous brands likePears, Lux and Vim. Vanaspati ghee

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. Unilever holds52.10% equity in the company. The rest of the shareholding is distributed among about

360,675 individual shareholders and financial institutions.

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 economicgrowth. The growth process has been accompanied by judicious diversification, always

in line with Indian opinions and aspirations.

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-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.
http://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/Sunlight_(cleaning_product)http://en.wikipedia.org/wiki/Lifebuoy_(soap)http://en.wikipedia.org/wiki/Pears_soaphttp://en.wikipedia.org/wiki/Pears_soaphttp://en.wikipedia.org/wiki/Lux_(soap)http://en.wikipedia.org/wiki/Vim_(cleaning_product)http://en.wikipedia.org/wiki/Vanaspati_(disambiguation)http://en.wikipedia.org/wiki/Daldahttp://en.wikipedia.org/wiki/Sunlight_(cleaning_product)http://en.wikipedia.org/wiki/Lifebuoy_(soap)http://en.wikipedia.org/wiki/Pears_soaphttp://en.wikipedia.org/wiki/Lux_(soap)http://en.wikipedia.org/wiki/Vim_(cleaning_product)http://en.wikipedia.org/wiki/Vanaspati_(disambiguation)http://en.wikipedia.org/wiki/Daldahttp://en.wikipedia.org/wiki/Kolkata


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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).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.

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 technologybase. 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.

Hindustan Unilever Limited (HUL), formerly Hindustan Lever Limited(it was renamed in late June 2007 as HUL), is India's largest FastMoving Consumer Goods company, touching the lives of two out of

three Indians with over 20 distinct categories in Home & Personal CareProducts and Foods & Beverages. These products endow the companywith a scale of combined volumes of about 4 million tonnes and salesof nearly Rs. 13718 crores.

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

The mission that inspires HUL's over 15,000 employees, including over

1,300 managers, is to "add vitality to life." HUL meets everyday needsfor nutrition, hygiene, and personal care with brands that help peoplefeel good, look good and get more out of life. It is a mission HULshares with its parent company, Unilever, which holds 52.10% of theequity. The rest of the shareholding is distributed among 360,675individual shareholders and financial institutions.


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Hierarchy Of HUL :-

Chairperson - Harish Manwani

MD - Nitin Paranjpe

Directors - A Narayan, Ashok K Gupta, C K Prahalad, D S Parekh, D Sundaram,

Dhaval Buch, Douglas Baillie, Gopal Vittal, Harish Manwani, Nitin Paranjpe, Pradeep

Banerjee, R A Mashelkar, S Ramadorai

S.No Name Designation

1 Harish Manwani Non Executive Chairman

2 D S Parekh Independent Director

3 A Narayan Independent Director

4 S Ramadorai Independent Director

5 R A Mashelkar Independent Director

6 Nitin Paranjpe Managing Director &

Chief Executive Officer

7 Pradeep Banerjee Whole Time Director

Number of people:

Over 65,000 direct & indirect employees

Balance sheet

Sources of Funds

Owners fund Mar 10

Mar

09

Equity share capital 217.99

217.75

Share application money -

-

Preference share capital -

-


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Sources of Funds

Owners fundMar 10

Mar

09

Reserves & surplus 1,842.85

1,220.82

Secured loans 144.65 25.52

Unsecured loans 277.30

63.01

Total 2,482.79

1,527.10

Gross block 2,881.73 2,669.08

Less : revaluation reserve 0.67 0.67

Less : accumulated

depreciation

1,274.95 1,146.57

Net block 1,606.11 1,521.84

Capital work-in-progress 472.07 185.64

Investments 332.62 1,440.81

Current assets, loans &

advances6,040.04 3,681.12

Less : current liabilities &

provisions5,968.06 5,302.30

Total net current assets 71.98 -1,621.18

Miscellaneous expenses notwritten

- -

Total 2,482.79 1,527.10

Book value of unquoted

investments317.30 1,364.36

Market value of quoted

investments71.09 287.83

Contingent liabilities 417.26 494.46

Number of equity

sharesoutstanding (Lacs)21798.76 21774.63


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Profit loss account

Mar ' 10M

ar ' 09

Income

Operating income 20,504.28 13,880.56

Expenses

Material consumed 10,945.71 7,380.72

Manufacturing expenses 598.71 402.99

Personnel expenses 1,152.12 767.81

Selling expenses 3,277.74 2,160.38

Adminstrative expenses 1,565.05 1,092.23

Expenses capitalized - -

Cost of sales 17,539.33 11,804.13

Operating profit 2,964.95 2,076.43

Other recurring income 236.17 180.42

Adjusted PBDIT 3,201.12 2,256.84

Financial expenses 25.32 25.50

Depreciation 195.30 138.36

Other write offs - -

Adjusted PBT 2,980.49 2,092.99

Tax charges 572.94 417.14

Adjusted PAT 2,407.55 1,675.85Non recurring items 40.37 247.95

Other non cash

adjustments48.53 1.67

Reported net profit 2,496.45 1,925.47

Earnigs before

appropriation2,693.95 2,729.12

Equity dividend 1,634.51 1,976.12

Preference dividend - -

Dividend tax 277.78 355.50Retained earnings 781.66 397.50


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PRODUCTS OF HUL

Personal wash

Lux. Lifebuoy, Liril , Hamam, Breeze, Moti , Dove, Pears and Rexona

Laundry

Surf Excel, sun light, Rin ,Wheel & Ala bleech

Dishwasher

Vim

Disinfectants

Domex, cif

Foods

Kissan(Jam,Ketchup,Squashes), Annapurna(Aata and salt), Knorr Soups, Modern Bread

Ice-cream

Kwality Wall's

Bewerages:-

Tea

Brooke bond, Lipton, taj mahal

Coffee

Brooke bond bru

Beauty Products

Fair & Lovely, Lakme, Ponds, Vaseline and AvianceHair-Care

Sunsilk naturals, Clinic , Dove and Lifebouy

Oral-Care

Pepsodent and Close-up

Deo spray

Axe and Rexona

Water Purifier

Pureit

Ayurvedic Personal & health care

Ayush

But we are concentrating on few products like :-

Fair & Lovely (Gorepan se bhi jyada gorapan)

Lux (Purple)


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Pepsodent (Kitanuo se suraksha 24 hrs tak)

Surf Excel (Daag achche hai)

HULs Competitors

Dabur India:

Colgate:

The oral care range

Colgate Toothbrushes,

Colgate Toothpastes, Colgate Toothpowder Colgate Whitening Products.

Personal care range

Palmolive Aroma Bar Soap,

Palmolive Relax Bar Soap,

Palmolive Liquid Hand Wash and

Palmolive Shower Crme


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Palmolive Aroma Shower Gel with three different fragrances:

relax

vitality and

sensual

Household care product offered

Axion Dish Washing Paste Men's Range of Colgate Palmolive

The men's products of Colgate Palmolive

Palmolive shaving cream is

The Irish Sprig Icy Blast deodorant soap

Godrej Consumer

The company is popularly known for its Soaps, Toiletries, Hair Care, Household Care,

and Fabric Care solutions.

Hair color category

Godrej Liquid & Powder Hair Dyes,

Godrej Kesh Kala Oil,

Godrej Renew Coloursoft Liquid Hair Colours, and

Nupur based Hair Dyes.

Godrej Consumers Products

Fairglow,

Cinthol

Godrej No. 1 FAIRGLOW

EZEE (the Liquid Detergent)

Marico

Marico's well-known brands are:

Parachute

Saffola

Sweekar

Hair & Care Nihar

Shanti

Mediker

Revive

Kaya

Sundari


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Aromatic Fiancee

HairCode.

P and G

Fabric Care

Tide: Tide Detergent Tide Bar

Ariel: Ariel Front-O-Mat Ariel 2 Fragrances

Hair Care

Pantene

Olay

Head & Shoulders Rejoice

Baby Care Pampers

Emami

Navratna Oil Navratna Lite Navratna Extra Thanda Navratna Cool Talc Boroplus Antiseptic Cream

Problem:-

HUL have 44% market share in rural market. But they want to growtheir market min. up to 55%. And the problem is that

How should be the promotions in the rural market to grow themarket share.

problem in supply chain

Objective:-

We have objectives: -

1. What is channel design of HUL
http://www.pg-india.com/hp/tide.htmhttp://www.pg-india.com/hp/tidebar.htmhttp://www.pg-india.com/hp/arielfront.htmhttp://www.pg-india.com/hp/ariel2.htmhttp://www.pg-india.com/hp/pampers.htmhttp://www.emamigroup.com/Navratna-Oilhttp://www.emamigroup.com/Navratna-Oilhttp://www.emamigroup.com/Navratna-Litehttp://www.emamigroup.com/Navratna-Extra-Thandahttp://www.emamigroup.com/Navratna-Cool-Talchttp://www.emamigroup.com/Boroplus-Anti-Septic-Creamhttp://www.pg-india.com/hp/tide.htmhttp://www.pg-india.com/hp/tidebar.htmhttp://www.pg-india.com/hp/arielfront.htmhttp://www.pg-india.com/hp/ariel2.htmhttp://www.pg-india.com/hp/pampers.htmhttp://www.emamigroup.com/Navratna-Oilhttp://www.emamigroup.com/Navratna-Litehttp://www.emamigroup.com/Navratna-Extra-Thandahttp://www.emamigroup.com/Navratna-Cool-Talchttp://www.emamigroup.com/Boroplus-Anti-Septic-Cream


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2. What is the Distribution Network of HUL

3. How channel member promotes the products in rural market

Distribution Network ofHUL

Evolution over Time

The HULs distribution network has evolved with time. The first phaseof the HUL distribution network had wholesalers placing bulk ordersdirectly with the company. Large retailers also placed direct orders,which comprised almost 30 per cent of the total orders collected. Thecompany salesman grouped all these orders and placed an indent withthe Head Office. Goods were sent to these markets, with the companysalesman as the consignee. The salesman then collected anddistributed the products to the respective wholesalers, against cashpayment, 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'scustomers. In order to achieve this, one wholesaler in each marketwas appointed as a "Registered Wholesaler," a stock point for thecompany's products in that market. The company salesman stillcovered the market, canvassing for orders from the rest of the trade.He then distributed stocks from the Registered Wholesaler throughdistribution units maintained by the company. The RegisteredWholesaler system, therefore, increased the distribution reach of thecompany to a larger number of customers.

The highlight of the third phase was the concept of "RedistributionStockist" (RS) who replaced the RWs. The RS was required to providethe distribution units to the company salesman. The secondcharacteristic of this period was the establishment of the "CompanyDepots" system. This system helped in transshipment, bulk breaking,and as a stockpoint to minimise stockouts at the RS level. In therecent past, a significant change has been the replacement of theCompany Depot by a system of third party Carrying and Forwarding


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Agents (C&FAs). The C&FAs act as buffer stockpoints to ensure thatstockouts did not take place. The C&FA system has also resulted incost savings in terms of direct transportation and reduced time lag indelivery. The most important benefit has been improved customerservice to the RS.

The role performed by the Redistribution Stockists includes: Financingstocks, providing warehousing facilities, providing manpower,providing service to retailers, implementing promotional activities,extending indirect coverage, reporting sales and stock data, demandsimulation and screening for transit damages.

Distribution System of HUL

HUL's products, are distributed through a network of 4,000redistribution stockists, covering 6.3 million retail outlets reaching theentire urban population, and about 250 million rural consumers. Thereare 35 C&FAs in the country who feed these redistribution stockistsregularly. The general trade comprises grocery stores, chemists,wholesale, kiosks and general stores. Hindustan Unilever providestailor made services to each of its channel partners. It has developedcustomer management and supply chain capabilities for partneringemerging selfservice stores and supermarkets. Around 2,000suppliers and associates serve HULs 40 manufacturing plants which

are decentralized across 2 million square miles of territory.


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Distribution at the Villages:

The company has brought all markets with populations of below50,000 under one rural sales organisation.The team comprises anexclusive sales force and exclusive redistribution stockists.The teamfocuses on building superior availability of products. In rural India, thenetwork directly covers about 50,000 villages, reaching 250 millionconsumers, through 6000 substockists.


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HUL approached the rural market with two criteria - the accessibility

and viability. To service this segment, HUL appointed a Redistributionstockist who was responsible for all outlets and all business within hisparticular town. In the 25% of the accessible markets with lowbusiness potential, HUL assigned a sub stockistwho was responsibleto access all the villages at least once in a fortnight and send stocks tothose markets. This substockist distributes the company's products tooutlets in adjacent smaller villages using transportation suitable tointerconnecting roads, like cycles, scooters or the ageold bullock cart.

Thus, Hindustan Unilever is trying to circumvent the barrier of

motorable roads. The company simultaneously uses the wholesalechannel, suitably incentivising them to distribute company products.

The most common form of trading remains the grassroots buy and sellmode. This enables HUL to influence the retailers stocks andquantities sold through credit extension and trade discounts. HULlaunched this Indirect Coverage (IDC) in 1960s.Under the Indirect 7Coverage (IDC) method, company vans were replaced by vansbelonging to Redistribution Stockists, which serviced a select group of


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neighbouring markets.

Project Shakti :-

This model creates a symbiotic partnership between HUL and itsconsumers. Started in the late 2000, Project Shakti had enabledHindustan Lever to access 80,000 of India's 638,000 villages .HUL'spartnership with Self Help Groups(SHGs) of rural women, is becomingan extended arm of the company's operation in rural hinterlands.Project Shakti has already been extended to about 12 statesAndhra Pradesh, Karnataka, Gujarat, Madhya Pradesh, Tamil Nadu,Chattisgarh, Uttar Pradesh, Orissa, Punjab, Rajasthan, Maharashtraand 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 HULand support from government agencies concerned and NGOs. Armedwith microcredit, women from SHGs become direct to homedistributors in rural markets. The model consists of groups of (15-20)villagers below the poverty line (Rs.750 per month) taking microcreditfrom banks, and using that to buy our products, which they will then


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directly sell to consumers. In general, a member from a SHG selectedas a Shakti entrepreneur, commonly referred as 'Shakti Amma'receives stocks from the HUL rural distributor. After being trained bythe company, the Shakti entrepreneur then sells those goods directlyto 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 carrybasis.'

Hindustan Lever Network (HLN) :-

It is the company's arm in the Direct Selling channel, one of thefastest growing in India today. It already has about several lakhconsultants all independent entrepreneurs, trained and guided by

HLN's expert managers. HLN has already spread to over 1500 townsand cities, covering 80% of the urban population, backed by 42 officesand 240 service centres across the country. It presents a range ofcustomised offerings in Home & Personal Care and Foods.

The New Compensation plan for HLN partners provides new excitingways of earning substantial income in addition to offering rewards likerevenue sharing through the innovative concept of pools Mother


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Depot and Just in Time System

In order to rationalise the logistics and planning task, an innovativestep has been the formation of the Mother Depot and Just in TimeSystem (MDJIT). Certain C&FAs were selected across the country toact as mother depots. Each of them has a minimum number of JIT

depots attached for stock requirements. All brands and packs requiredfor the set of markets which the MD and JITs service in a given areaare sent to the mother depot by all manufacturing units. The JITs drawtheir requirements from the MD on a weekly or biweekly basis.

RS Net Initiative :-

The RS Net initiative, launched in 2001, aims at connectingRedistribution Stockists (RSs) through an internet based system. Itnow covers stockists of the Home & Personal Care business and Foods& Beverages in close to 1200 towns and cities. Together they accountfor about 80% of the company's turnover. RS Net is one of the largestB2B ecommerce initiatives ever undertaken in India. It provideslinkages with the RSs own transaction systems, enables monitoring ofstocks and secondary sales and optimises RSs orders and inventorieson a daily basis through online interaction on orders, despatches,information sharing and monitoring. The ITpowered system has beenimplemented to supply stocks to redistribution stockists on acontinuous replenishment basis. Today, the sales system gets to know

every day what HUL stockists have sold to almost a million outletsacross the country. Information on secondary sales is now available onRS Net every day.

RS Net is part of Project Leap. Project Leap begins with the supplierruns through the factories and depots and reaches up to the RSs. Thisensures HULs growth by ensuring that the right product is available atthe right place in the right quantities and at the right time in the mostcosteffective manner. Leap also aims at reducing inventories andimproving efficiencies right through the extended supply chain.

RS Net has come as a force multiplier for HUL Way, the company'sactionplan to not only maximise the number of outlets reached butalso to achieve leadership in every outlet. RS Net has enabledstockists to place orders on a Continuous Replenishment System. Thisin turn has unshackled the field force to solely focus on secondarysales from the stockists to retailers and market activation. It has alsoenabled RSs to provide improved service to retail outlets.


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Simultaneously, HUL is servicing the rural market, key urban outlets,and the modern trade as a single concern.

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).

HUL has a well entrenched high distribution model which comprises ofC&FAs, Redistribution Stockists, wholesalers and retailers (as shownearlier). Hindustan Unilever's distribution network is recognized as oneof its key strengths. Its focuses on Product availability, Brandcommunication, and higher levels of brand experience.

HULs Sales Break up through differentchannels:

Rural Areas 33%

Modern Retail 7%

Urban General Trade 60%

The HUL management realized certain problems with the existingsales model. First, the model was not viable for small towns with smallpopulation and small business. HUL found it expensive to appoint one

stockist exclusively for each town. Secondly, the retail revolution inthe country has changed the pattern the customers shop. Large retailself service shops are becoming commonplace. 13 In response ofthese problems, HUL redesigned its sales and distribution channel andthe new system is known as 'diamond model' in the company. At thetop end of the diamond, there are the self service retail stores whichconstitute 10% of the total FMCG market. The middle, fatter part ofthe diamond represents the profitcenter based sales team. In the


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bottom of the pyramid is the rural marketing and distribution whichaccounts for 20% of the business. As a result of the new distributionplan the company has planned to reduce the number of RS in smalltowns.

Redistribution Stockists:

Total number of RS in Jamshedpur = 3 (at Sakchi, Bistupur, Parsudih).This is going to be reduced to only one with effect from next month ofthis year.

Sales Margin: 4.76% which includes cash discount, unloadingexpenses from depot, distribution expenses to retailers, incentiveschemes & other incidental expenses.

Modes of transport used: Rickshaw, tempo.

Incentive schemes: Before 2000 holiday packages and tours butafter 2000 no nonmonetary incentive for RS.

Software systems and Information System: UNIFY 8.3(Developed by IBM & CMC). This software needs to besynchronized daily and the system updates any information/incentive schemes / sales figures etc to and from the commonshared platform.

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 VijetaScheme).

Retailers:

Total retailer base in Jamshedpur: Approximately 1070. Sales Margin: Depends on the product

o Soap, detergents 8% on MRPo Cosmetics 10% on MRPo Food items 8% on MRP

Incentive schemes:


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Company programs (Scheme Discounts + Cash Discounts)TPR schemes based on Sales (1 % to 4 %)Vijeta scheme is not for retailers.

Promotional Strategies

MerchandisingPurchase Decisions of customers are affected by several set of factors. Marketers have

found Shelving and Arrangement of products can affect the decisions of customers to a

considerable extent. The consumer items such as the FMCG products can be placed in

the store in a manner to attract the attention of the consumer and hence generate more

sales. The intention of marketers is to sell maximum number of products to a customer

once he enters the store. This is carefully planned by placing the products at particular

(planned) positions that will gather maximum attention of the customer and will attractthe customer to buy it.

The findings were that-

A. 69% of all FMCG products are purchased on impulse.

B. 13% more money is spent by an average shopper when they are exposed to excellent

merchandising. This is over and above the amount they intend to spend on shopping trip.

C. 72% of all brand decisions are made in-store.

So when the decisions are made before the shelves there might be some attributes by

which purchase decisions are made in-store. Many marketers hence use the concept of

in-store merchandising by shelving and arranging the products in a store. This concept is

also used to increase awareness of company or brand image, to create or reinforce

perceptions of key brand image associations and to create experiences and evoke

feelings.

Retail stores hence concentrate on the impulse and planned purchases of the customer.

-Impulse purchases include purchase of goods such as Candy/gum, Beer, CarbonatedSoft Drink, Chips, Greeting cards, Desserts, Ice Cream, Newspapers/Magazines, etc.

-Planned purchase items include Baby food, Bread, Coffee, Eggs, Laundry Detergent,

Meat, Milk, Poultry, etc.

Thus retailers have found that placing butter at a shelf near to that of Bread had

increased the sales of both bread and butter. This works fine for impulse purchases. In

case of planned purchases retailers try to place the items far to each other and include

impulse goods in between as the customer will find the shelf where the planned good is


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placed and at the mean time will be attracted towards the impulse goods. Hence

increasing the sales of the retail store as whole.

VISUAL MERCHANDISING

Definition:

Visual merchandisingis creating merchandise display to communicate store's fashion Message to

prospective customers.It involves activity of promoting the sale of goods, especially by their presentation in retail outlets. This

includes combining product, environment, and space into a stimulating and engaging display to encouragethe sale of a product or service, promotion of latest collection and to attract appropriate buyers.

The management decides as to the Image store design to reflect, products store is going to sell, movementof customers and how to create warm, friendly and approachable atmosphere for its potential customers.

Visual merchandising is one of the final stages in trying to set out a store in a way that customers will find

attractive and appealing and it should follow and reflect the principles that underpin the stores image.

Visual merchandising is the way one displays 'goods for sale' in the most attractive manner with the endpurpose of making a sale. "If it does not sell, it is not visual merchandising."

Initiatives taken to Improve the DistributionNetwork :-

HUL has taken the following initiatives to improve its distributionnetwork:

1. Setting up of a full-scale sales organisation comprising keyaccount management and activation to impact, fully engage andservice modern retailers as they emerge.

2. Servicing Channel partners and customers with continuous dailyreplenishment.

3. Leveraging scale and building expertise to service Modern Trade

and Rural Markets.

4. Delayering of sales force to improve response times and servicelevels.

5. Revamping of its sales organisation in the rural markets to fullymeet the emerging needs and increased purchasing power of therural population. HULs distribution network in rural India already


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the wholesaler and HUL to grow the business by earning pointsand redeeming them.

Suggestion & Analytical Framework :-

We tried to analyze HULs distribution network in the light of 20 mostsignificant variables that affect the distribution part of channelmanagement for any organization in the business of marketing &selling of goods. The variables, their explanations and their impact onthe HULs distribution network are given below

1. Number of ConsumersIn retail business dominated by traditional stores like Kirana Storesetc (Indian retail business falls in this category), higher the no. ofconsumers, higher will be the no. of channel intermediaries. The

implication of this is that there will be many layers in the channel insuch a situation and managing such a complex distribution networkby keeping tabs on every player will be a huge task. Moreover,

Transport & Logistics (T&L) support provided by the organizationneeds to be well organized.

Implication for HUL

HULs key strength lies in managing its distribution network in India.HUL is Indias largest FMCG company with unmatched distribution

network, which is built over a century focusing on traditional retail.HUL's distribution network comprises about 4,000 redistributionstockists, covering about 6.3 million retail outlets reaching theentire urban population, and about 250 million rural consumers inIndia. Its said that HUL is able to touch the lives of about 2 out ofevery 3 Indian consumers. This achievement is due to the sheerstrength of its distribution network (products should be good asalways, otherwise they will find no buyers in the long run). For acomparison, P&G, worlds largest FMCG major, does not find its

name in the list of top 5 FMCG majors in India as its strength lies inmanaging modern retail (biggest example, WalMart), but nottraditional retail.

2. Geographic Dispersion of Consumers Again, this is closely relatedwith the previous variable, more so in a large, geographicallydiverse country like in India. With the increase in this dispersion


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level, more intermediaries and more layers are required in thedistribution network so as to effectively reach the length & breadthof the country. Obviously the T&L management for such anorganization would be critical to accomplish this.

Implication for HUL

For a country as geographically diverse as India, panIndianpresence & market leadership can only be possible when productsreach even the remotest parts of the country. HUL is very successfulin achieving and maintaining this reach due to its distributionnetwork.

3. Frequency of Purchase If the frequency of purchase is high,then transport intensity in the last mile (i.e., from distributor toretailers) increases manifold. For FMCG products, as a thumb rule

we can take that the mean time between two purchases is ~ 90days. With the introduction of smaller form factor packaging forFMCG goods (Re.1 / shampoo sachets being a very good example),the transport intensity increased further.Implication for HUL

HUL has about 4000 redistribution stockists, who supply to approx.6.3 million outlets across India. Since manufacturing is done at 40plants around the country, rationalizing the logistics and planning isa huge task. An innovative step in that regard has been the

formation of the Mother Depot and Just in Time System (MDJIT).Certain C&FAs were selected across the country to act as motherdepots. Each of them has a minimum number of JIT depots attachedfor stock requirements. All brands and packs required for the set ofmarkets which the MD and JITs service in a given area are sent tothe mother depot by all manufacturing units. The JITs draw theirrequirements from the MD on a weekly or biweekly basis andsupply to stockists in that area, who, in turn, supply to retailers.

4. Tendency to Postpone PurchaseIf the tendency to postpone purchase is lesser, then the product willbe easier to distribute. For example, products/services like FireExtinguishers, Life Insurance etc. are such that though these areneeded, the overall tendency for the consumers is to postpone thepurchases these products/services can be termed as necessaryevil. For this kind of products, regular reinforcement in the mindsof consumers becomes necessary, sales field force becomes critical


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and use of expert field force is commonplace.

Implication for HUL

Since FMCG products are used regularly and these products are notnecessary evils, distribution network of HUL does not require any

expert field force to sell its products. Only the recent diversificationof HUL into Home Water Purification business (Pure It brand)needs dedicated field sales force.

5. Level of Familiarity/Knowledge (of consumer) about the ProductIf the level of familiarity of consumer with the product is higher,lower will be the importance of field sales force and higher will bethe importance of channel.

Implication for HUL

Since FMCG goods are very much familiar to consumers, channeland its different members are very much important to HUL and fieldsales forces function is mostly limited to channel management andensuring availability of products.

6. Degree of Brand Loyalty

If the consumers are more brand loyal, then less push will berequired from the channel members to sell the products as therewill be sufficient pull or demand from the consumers. This implies

that for products with loyal customer base, efforts from the channelmembers can be much lesser for final offtake to happen which inturn leads to lesser margins to the channel members for thoseproducts. For faster moving products (mostly due to brand pull),retailers may not be averse to slightly lesser margins as rotation ofthe products is high and thus his/her ROI is protected.

Retailers ROI = Margin * Rotation

Investment

For a FMCG player with a nonestablished brand, margins tochannel members and point of sale (POS) advertising are bothimportant.

Implication for HUL

As HUL enjoys leadership position in many FMCG segments likeSoaps, Detergents, Personal Care products etc with strong brands


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with continuous pull, HUL has less to worry about margins tochannel members or POS advertising. But this situation can changeconsiderably in the face of rise of a significant competitor havingalmost the same reach as HUL has (e.g., ITC as its eating intoHULs market share continuously since it entered FMCG segment).

7. Level of Involvement (LOI) Level of involvement (i.e., time &effort spent by the consumer) generally depends on the productcost. If LOI is higher, lower is the importance of availability andmore critical is the

supply of information as consumer decision process depends more onelaborate information search

Implication for HUL

As FMCG products are generally Low Involvement Products, HUL hasto bother more on ensuring availability of the products, rather thansupply of information.

8. Purchased as a Basket of GoodsThe products which are generally bought together by consumers asa basket of goods (e.g., Rice, Flour powder, Cooking oil etc at the

beginning of the month) are to be made available together for finalofftake.

Implication for HUL

This aspect partly applies to HULs products as some products likeshampoos, soaps, detergents may fall in a basket. Efficientdistribution network of HUL ensures availability of all such productsat each selling point (individual retailer).

9. Present of Expert Influencer in the Decision Making Process Rolesof sales field force vary depending upon whether expert influencer(e.g., doctors) is present in the process or not. If present, thenconsumer buying behavior may become subcontracted and theexpert influencer becomes another customer of the network, apartfrom the enduser. In that situation two groups of sales force areneeded to cater to both the segments.


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Implication for HUL

For FMCG goods, role of expert influencer is limited. But companiestry to associate brands with regulatory bodies/authorities and showadvertising with experts commenting upon superior virtues of aproduct in an attempt to make the buying behaviour shift from

picking/variety

seeking to subcontractedand make consumers more loyal to thebrand. These are true for HUL also (e.g., Ponds Intitute).

10. Time Band Associated with the Purchase of the Product If thereis seasonality/cyclicity for the demand or purchase of the product

(examples newspaper, milk are most on demand in the 1st three

hours of the day; cooking oil, rice etc )

24 grocery items are most on demand in the 1st week of themonth), then high T&L and infrastructural requirements areneeded for the last mile for the time band when demand ismaximum. It is possible to have idle capacity in the areasmentioned above outside the peak required time band.

Implication for HUL

For some of the products of HUL, the above stated variable is

significant. For example, in Food segment, Branded Atta Annapurna; in segments like Laundry Detergents, Shampoo & HairOil etc. this element of demand time band exist to a certain extent.

This underscores the importance of T&L for HUL as the transport

intensity between distributors and retailers increases in the 1st &

4th week of a month for the products mentioned above. This is overand above the regular replenishment of stocks at retailers done bydistributors. Festivals like Holi etc. may also increase the demand

for personal care items like soaps, shampoos etc for a short periodand distribution network should be geared up not to miss any suchopportunity.

11.Negative or Positive Reinforcing Product Negative reinforcingproducts are those which are bought to avoid/reduce the problem(ex. insurance, washing machine, car battery etc). Positive


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reinforcing products are those which gratify the senses (ex. Perfumes, Chocolates, Vacation etc). Shopping experience becomesa critical aspect for positive reinforcing products to reaffirm thepositive feelings.

Implication for HUL

Axe & Rexona deodorants are distinctly positive reinforcingproducts from HUL, including others like Lux, Lakme etc.So theseare seen in most shopping malls etc. with high visibility displays toreaffirm the feelings. Consumers are willing to pay higher for thesebrands.

Documents

Sip Report of Maneesh