A RESEARCH REPORT

On

A STUDY ON MARKETING STRATEGIES OF FMCG SECTOR WITH RELATION TO HUL

Submitted in Partial Fulfilment of the requirement For the Award of degree of

MASTER OF BUSINESS ADMINISTRATION

Of

Mahamaya Technical University, Noida

By

ARUN KUMAR
Roll No: 1021270005

2012

United Institute of Management, Greater Noida

DECLARATION

I ARUN KUMAR Roll No. 1021270005 Student of MBA IV th Semester, Year 2011-12 hereby declare that the Research Project Report is titled A Study on Marketing Strategies of FMCG With Relation to HUL being submitted in partial fulfillment for the award of MBA degree by Mahamaya Technical University, Noida is my original work of Research and it has not been submitted to United Institute of Management for the award of any degree.

Date Place... ARUN KUMAR

ACKNOWLEDGEMENT
Through this report, I take the opportunity to express my sincere gratitude and thankfulness to all those who have helped me in making my dissertation report. First of all I would like to thank United Institute of Management, for having such a system in place, where students are given opportunities to learn about their areas of interest. I would like to thank all the MBA faculty for providing with his able guidance and visionary support to me without which this project would not been possible.

ARUN KUMAR (MBA IV Sem.)

PREFACE
This study gives the comprehensive view of the Indian FMCG Sector. The FMCG sector being the fourth largest sector in the economy has the total market size of US$ 13.1 billion. It is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. This sector is characterized by products of day-to-day use, products which are generally treated as low involvement products but still they attract high advertising spend because of the kind of intense competition among the industry players. The Indian FMCG industry has experienced a major slowdown and has been on a recovery path since the past couple of years. This study explains the changing dynamics in the FMCG sector, which has forced the FMCG majors like HUL to revamp their product, marketing, distribution formats to meet the changing customer requirements or preferences. The recovery in the FMCG sector in India is quite broad-based, covering most product categories and companies, although the degree of recovery differs. Importantly, most companies are also demonstrating renewed optimism in the sector by increasing ad spend and investment in new initiatives. The market is not fully appreciative of the sustainability of the recovery and hence will likely be positively surprised. The Toilet soap industry, which is one of the oldest Fast Moving Consumer Goods (FMCG) industries in India, is among the highest penetrated category within FMCG sector reaching an estimated 95% urban and 87% of the rural households. Apart from that, this segment has witnessed an outburst of sales promotion scheme and the tremendous Ad spends as compared to other segments of the FMCG industry. This study also accesses the perceptions of the consumers on these new strategies adopted by various FMCG companies.

TABLE OF CONTENT S

Chapter 1. Chapter 2. Chapter 3. Chapter 4. Chapter 5.

Introduction of the Topic Objectives Company Profile Research Methodology Theory of the topic - Data Analysis - List of Findings & Conclusion

01 - 03 04 - 04 05 - 35 36 - 39 40 - 62 63 - 69 70 - 109 110 111 - 112

Chapter 6. - Limitations - Recommendations Bibliography Annexure

CHAPTER - 1
INTRODUCTION OF THE TOPIC

INTRODUCTION
MARKET OVERVIEW: The overall picture of the corporate sector emerging after the first quarter result shows that the tempo of the Indian economys integrating into the global economy is gathering momentum at a rapid pace. This can be seen from the rise in outsourcing in the Information Technology (IT) and IT-based service sectors, growth in export-import trade and in global acquisitions. Rapid urbanization, increased literacy and rising per capita income, have all caused rapid growth and change in demand patterns, leading to an explosion of new opportunities. Consumption demand for consumer is increasing which can be seen from the improvement in the performance of the fast moving consumer goods (FMCG) companies.

FMCG Industry Trends and Players:Trends:Estimated at around US$ 14.5 billion (approximately Rs.69, 000 crores) in 2011, Indias fast moving consumer goods (FMCG) sector is the fourth largest industrial sector in the countrys expanding economy. It has a strong MNC presence and is characterised by a well established distribution network, intense competition between the organised and unorganised segments and low operational cost. Availability of key raw materials, cheaper labour costs and presence across the entire value chain gives India a competitive advantage. The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped market potential. Burgeoning Indian population, particularly the middle class and the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products. Growth is also likely to come from consumer 'upgrading' in the matured product categories.

Another is the striking contrast between the rural and urban segments - the average consumption by rural households is much lower than their urban counterparts. Low penetration indicates the existence of unsaturated markets, which are likely to expand as the income levels rise. This provides an excellent opportunity for the industry players in the form of a vastly untapped market. Moreover, per capita consumption in most of the FMCG categories (including the high penetration categories) in India is low as compared to both the developed markets and other emerging economies. A rise in per capita consumption, with improvement in incomes and affordability and change in tastes and preferences, is further expected to boost FMCG demand. Growth is also likely to come from consumer "upgrading", especially in the matured product categories. Most Indian FMCG companies focus on urban markets for value and rural markets for volumes. The total market has expanded from US$ 17.6 billion in 1992-93 to US$ 22 billion in 1998-99 at current prices. Rural demand constituted around 52.5 per cent of the total demand in 1998-99. Hence, rural marketing has become a critical factor in boosting bottomlines. As a result, most companies' have offered low price products in convenient packaging. These contribute the majority of the sales volume. In comparison, the urban elite consume a proportionately higher value of FMCGs, but not volume.

PLAYERS:
A distinct feature of the FMCG industry in India is the presence of domestic as well as global players through their subsidiaries (HUL, P&G, and Nestle).

Domestic Players:Britannia India Ltd (BIL):Britannia India Ltd was incorporated in 1918 as Britannia Biscuit Co Ltd and currently the Groupe Danone (GD) of France (a global major in the food processing business) and the Nusli Wadia Group hold a 45.3 per cent equity stake in BIL through AIBH Ltd (a 50:50 joint venture). BIL is a dominant player in the Indian biscuit industry, with major brands such as Tiger glucose, Marie gold, Fifty-Fifty, Good Day, Pure Magic, Bourbon etc. The company holds a 40 per cent market share in the overall organized biscuit market and has a capacity of 300,000 tonne per annum. Currently, the bakery product business accounts for 99.1 per cent of BIL's turnover. The company reported net sales of US$ 280 million in 2002-03. Britannia Industries Ltd (BIL) plans to increase its manufacturing capacity through outsourced contract manufacturing and a Greenfield plant in Uttaranchal to expand its share in the domestic biscuit and confectionery market.

Dabur India Ltd. :Established in 1884, Dabur India Ltd is the largest Indian FMCG and ayurvedic products company. The group comprises Dabur Finance, Dabur Nepal Pvt Ltd, Dabur Egypt Ltd, Dabur Overseas Ltd and Dabur International Ltd. The product portfolio of the company includes health care, food products, natural gums & allied chemicals, pharma, and veterinary products. Some of its leading brands are Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola, Lal Dant Manjan, Pudin Hara and the Real range of fruit juices. The company reported net sales of US$ 218 million in 2003-04. Dabur has firmed up plans to restructure its sales and distribution structure and focus on its core businesses of fast-moving consumer good products and over-the-counter drugs. Under the restructured set-up, the company plans to increase direct coverage to gap outlets and gap towns where Dabur is not present. A roadmap is also being prepared to rationalise the stockists' network in different regions between various products and divisions. Indian Tobacco Corporation Ltd (ITCL);Indian Tobacco Corporation Ltd is an associate of British American Tobacco with a 37 per cent stake. In 1910 the company's operations were restricted to trading in imported cigarettes. The company changed its name to ITC Limited in the mid seventies when it diversified into other businesses. ITC is one of India's foremost private sector companies with a turnover of US$ 2.6 billion. While ITC is an outstanding market leader in its traditional. Businesses of cigarettes, hotels, paperboards, packaging and agriexports, it is rapidly gaining market share even in its nascent businesses of branded apparel, greeting cards and packaged foods and confectionary. After the merger of ITC Hotels with ITC Ltd, the company will ramp up its growth plans by strengthening its alliance with Sheraton and through focus on international projects in Dubai and the Far East. ITC's subsidiary, International Travel House (ITH) also aims to launch new products and services by way of boutiques that will provide complete travel services.

Marico;Marico is a leading Indian Group incorporated in 1990 and operating in consumer products, aesthetics services and global ayurvedic businesses. The company also markets food products and distributes third party products. Marico owns well-known brands such as Parachute, Saffola, Sweekar, Shanti Amla, Hair & Care, Revive, Mediker, Oil of Malabar and the Sil range of processed foods. It has six factories, and sub-contract facilities for production. In 2003-04, the company reported a turnover of US$ 200 million. The overseas sales franchise of Marico's branded FMCG products is one of the largest amongst Indian companies. It is also the largest Indian FMCG company in Bangladesh. The company plans to capture growth through constant realignment of portfolio along higher margin lines and focus on volume growth, consolidation of market shares, strengthening flagship brands and new product offerings (2-3 new product launches are expected in 2004-05). It also plans to expand its international business to Pakistan.

Nirma Limited;Nirma Ltd, promoted by Karsanbhai Patel, is a homegrown FMCG major with a presence in the detergent and soap markets. It was incorporated in 1980 as a private company and was listed in fiscal 1994. Associate companies' Nirma Detergents, Shiva Soaps and Detergents, Nirma Soaps and Detergents and Nilnita Chemicals were merged with Nirma in 1996-1997. The company has also set up a wholly owned subsidiary Nirma Consumer Care Ltd, which is the sole marketing licensee of the Nirma brand in India. Nirma also makes alfa olefin, fatty acid and glycerine. Nirma is one of the most successful brands in the rural markets with extremely low priced offerings. Nirma has plants located in Gujarat, Madhya Pradesh and Uttar Pradesh. Its new LAB plant is located in Baroda and the soda ash complex is located in Gujarat. Nirma has strong distributor strength of 400 and a retail reach of over 1 million outlets. The company reported gross sales of US$ 561 million in 2003-04. It plans to continue to target the mid and mass segments for future growth.

Foreign players;Cadbury India Ltd (CIL):Cadbury Indian Ltd is a 93.5 per cent subsidiary of Cadbury Schweppes Plc, UK, a global major in the chocolate and sugar confectionery industry. CIL was set up as a trading concern in 1947 and subsequently began its operations with the small scale processing of imported chocolates and food drinks. CIL is currently the largest player in the chocolate industry in India with a 70 per cent market share. The company is also a key player in the malted foods, cocoa powder, drinking chocolate, malt extract food and sugar confectionery segment. The company had also entered the soft drinks market with brands like 'Canada Dry' and 'Crush', which were subsequently sold to Coca Cola in 1999. Established brands include Dairy Milk, Perk, Crackle, 5 Star, clairs, Gems, Fructus, Bournvita etc. The company reported net sales of US$ 160 million in 2003. The company plans to increase the number of retail outlets for future growth and market expansion.

Cargill;Cargill Inc is one of the world's leading agri-business companies with a strong presence in processing and merchandising, industrial production and financial services. Its products and geographic diversity (over 40 product lines with a direct presence in over 65 countries and business activities in about 130 countries) as well as its vast communication and transportation network help optimize commodity movements and provide competitive advantage. Cargill India was incorporated in April 1996 as a 100 per cent subsidiary of Cargill Inc of the US. It is engaged in trading in soyabean meals, wheat, edible oils, fertilisers and other agricultural commodities besides marketing branded packaged foods. It has also set up its own anchorage facilities at Rosy near Jamnagar in Gujarat for efficient handling of its import and export consignments.

Coca Cola:Coca-Cola started its India operations in 1993. The Coca-Cola system in India comprises 27 wholly company-owned bottling operations and another 17 franchisee-owned bottling operations. A network of 29 contract-packers also manufactures a range of products for the company. Leading Indian brands Thums Up, Limca, Maaza, Citra and Gold Spot exist in the Company's international family of brands along with Coca-Cola, Diet Coke, Kinley, Sprite and Fanta, plus the Schweppes product range. During the past decade, the Coca-Cola system has invested more than US$ 1 billion in India. In 2003, Coca-Cola India pledged to invest a further US$ 100 million in its operations. Colgate-Palmolive India Colgate Palmolive India is a 51 per cent subsidiary of Colgate Palmolive Company, USA. It is the market leader in the Indian oral care market, with a 51 per cent market share in the toothpaste segment, 48 per cent market share in the toothpowder market and a 30 per cent share in the toothbrush market. The company also has a presence in the premium toilet soap segment and in shaving products, which are sold under the Palmolive brand. Other wellknown consumer brands include Charmis skin cream and Axion dish wash. The company reported sales of US$ 226 million in 2003-04. The company's strategy is to focus on growing volumes by improving penetration through aggressive campaigning and consumer promotions. The company plans to launch new products in oral and personal care segments and is prepared to continue spending on advertising and marketing to gain market share. Margin gains are being targeted through efficient supply chain management and bringing down cost of operations.

H J Heinz Co. ;A US$ 8.4 billion American food major, H J Heinz Co comprises 4,000 strong brand buffet in infant food, sauces and condiments. The company was the first to commence manufacturing and bottling of tomato ketchup in 1876. In India, Heinz has a presence through its 100 per cent subsidiary Heinz India Pvt Ltd. Heinz acquired the consumer products division of pharmaceutical major Glaxo in 1994. Heinz's product range in India consists of Complan milk beverage, health drink Glucon-D, infant food Farex and Nycil prickly heat powder, besides the Heinz ketchup range.

Hindustan Unilever Ltd (HUL);Hindustan Unilever Ltd is a 51 per cent owned subsidiary of the Anglo-Dutch giant Unilever, which has been expanding the scope of its operations in India since 1888. It is the country's biggest consumer goods company with net sales of US$ 2.4 billion in 2003. HUL is amongst the top five exporters of the country and also the biggest exporter of tea and castor oil. The product portfolio of the company includes household and personal care products like soaps, Detergents, shampoos, skin care products, colour cosmetics, deodorants and fragrances. It is also the market leader in tea, processed coffee, branded wheat flour, tomato products, ice cream, jams and squashes. HUL enjoys a formidable distribution network covering over 3,400 distributors and 16 million outlets. In the future, the company plans to concentrate on its herbal health care portfolio (Ayush) and confectionary business (Max). Its strategy to grow Includes focussing on the power brands' growth through consumer relevant information, cross category extensions, leveraging channel opportunities and increased focus on rural growth.

Nestle India Ltd (NIL);Nestle India Ltd a 59.8 per cent subsidiary of Nestle SA, Switzerland, is a leading manufacturer of food products in India. Its products include soluble coffee, coffee blends and teas, condensed milk, noodles (81 per cent market share), infant milk powders (75 per cent market share) and cereals (80 per cent market share). Nestle has also established its presence in chocolates, confectioneries and other processed foods. Soluble beverages and milk products are the major contributors to Nestle's total sales. Some of Nestle's popular brands are Nescafe, Milkmaid, Maggi and Cerelac. The company has entered the chilled dairy segment with the launch of Nestle Dahi and Nestle Butter. Nestle has also made a foray in non-carbonated cold beverages segment through placement of Nestea iced tea and Nescafe Frappe vending machines. Exports contribute to 23 per cent of its turnover and the company reported net sales of US$ 440 million in 2003.

Pepsi Co. :PepsiCo is a world leader in convenient foods and beverages, with revenues of about US$ 27 billion. PepsiCo brands are available in nearly 200 markets across the world. The company has an extremely positive outlook for India. "Outside North America two of our largest and fastest growing businesses are in India and China, which include more than a third of the world's population" (Pepsico's annual report). PepsiCo entered India in 1989 and is concentrating on three focus areas - soft drink concentrate, snack foods and vegetable and food processing. PepsiCo's success is the result of superior products, high standards of performance and distinctive competitive strategies.

Procter & Gamble Hygiene and Health Care Limited

Richardson Hindustan Limited (RHL), manufacturer of the Vicks range of products, was rechristened 'Procter & Gamble India' in October 1985, following its affiliation to the 'Procter & Gamble Company', USA. Procter & Gamble Hygiene and Health Care Limited (PGHHCL) acquired its current name in 1998, reflecting the two key segments of its business. P&G, USA has a 65 per cent stake in PGHHCL. The parent also has a 100 per cent subsidiary, Procter & Gamble Home Products (PGHP). The overall portfolio of the company includes healthcare; feminine-care; hair care and fabric care businesses. PGHH operates in just two business segments Vicks range of cough & cold remedies and Whisper range of feminine Hygiene. The detergent and shampoo business has been relocated globally to Vietnam. The company imports and markets most of the products from South East Asian countries and China, while manufacturing, marketing and export of Vicks and sanitary napkins has been retained in India. The company reported sales of US$ 91 million in 2002-03. The parent company has announced its plan to explore further external collaborations in India to meet its global innovation and knowledge needs.

PEST ANALYSIS OF FMCG SECTOR

Section 0.2 Section 0.1 Political

Economic

home economy situation home economy trends overseas economies and trends general taxation issues taxation product/services specific to

ecological/environmental issues current legislation home market future legislation European/international legislation regulatory bodies and processes government policies government term and change trading policies funding, grants and initiatives home market lobbying/pressure groups

seasonality/weather issues market and trade cycles specific industry factors market trends routes and distribution

international pressure groups

customer/end-user drivers interest and exchange rates

Section 0.3

Social

Section 0.4

Technological

lifestyle trends demographics consumer attitudes and opinions media views law changes affecting social factors brand, company, technology image consumer buying patterns fashion and role models major events and influences buying access and trends ethnic/religious factors advertising and publicity

competing technology development research funding associated/dependent technologies replacement technology/solutions maturity of technology manufacturing capacity maturity and

information and communications consumer mechanisms/technology technology legislation innovation potential technology access, licencing. buying

DEMAND ANALYSIS
The Indian FMCG sector is the fourth largest sector in the economy and the demand for FMCG products is set to boom by almost 60 per cent by 2007 and more than 100 per cent by 2015. Rapid urbanization, increased literacy and rising per capita income, have all caused rapid growth and change in demand patterns, leading to an explosion of new opportunities. This will be driven by the rise in share of middle class (defined as the climbers and consuming class) from 67 per cent in 2003 to 88 per cent in 2015. The boom in various consumer categories, further, indicates a latent demand for various product segments. For example, the upper end of very rich and a part of the consuming class indicate a small but rapidly growing segment for branded products. The middle segment, on the other hand, indicates a large market for the mass end products. India's per capita disposable income, currently at US$ 556 per annum, will raise to US$ 1150 by 2015 - another FMCG demand driver. Demand Analysis of various segments of the FMCG industry is done below: The personal care and detergents segment in India has grown at a CAGR of 7-8 per cent in the past 3 years. While the premium products of the industry, consisting of cosmetics, skin care products, fragrances, deodorants and antiperspirants, and shaving products, are growing at above 10 per cent due to low penetration levels, the mass market segments like detergents, oral care products, hair care products and toilet soaps have already achieved high penetration levels and are registering a slowdown in demand growth. The latter segments also compete with the price- competitive unorganised segment, which also restricts value growth. The oral care market, which grew by 10 per cent in the past, has slowed down in recent years, due to high penetration levels. Demand in this segment is expected to grow at about 8 per cent, driven by rural demand. Value growth is likely to be under pressure due to penetrative pricing for the rural market and slow growth in urban demand.

The hair care industry, which was growing at 8-9 percent, is also expected to register a slower growth of 6-7 per cent in future, due to high penetration levels and competition from unbranded hair oils. Value growth in the segment is expected to be derived largely through the sale of value-added products. The demand for toilet soaps will be restricted to 5 per cent over the medium term, as current penetration levels are already high. However, since the growth will occur on a higher base, the quantum of increase will remain stable. Value growth in the industry is likely to be driven by the migration of consumers from low-end products to upper segments. The demand growth for detergents has slowed down in the past few years from historic levels of 7-8 per cent, due to high penetration rate. Future demand growth is estimated at 4-5 per cent. However, since the growth would occur on a higher base, the quantum of increase would remain stable. Value growth is likely to be driven by the migration of consumers from lowerend products to the upper segments. The Chairman of Hindustan Unilever, after the results announcement for F12/00, outlined to the investment community his plans for the company and the path for sustainable profitable growth. Two things clearly emerged from his talk: 1. A greater focus on existing businesses rather than new businesses 2. Profit growth rather than top line growth is likely to drive future management action

A Change in Strategy;The last few years of HULs growth was driven inorganically through acquisitions and venture into new businesses. The much harped about Millennium Growth Plan of the company was also based on the same path of growth through expansion. But in sharp contrast to his predecessor Dadiseth, Bangas growth plan appears to be based on Contraction rather than Expansion. For once there was no mention of new brand launches.

Thrust on a few brands will mean better growth and higher profitability;The 30 brands have that been identified cover all key categories and all segments in each category. The selected brands account for more than 2/3rd of total FMCG brand sales of the company. And what is more important is that the profit contribution of these brands is even greater. So a scenario is created where one will see a greater resource allocation be it marketing, innovation or people support towards these 30 brands. The advertising and marketing support spread over fewer brands is likely to be more efficient, and will drive volume growth. And stronger growth in the more profitable brand portfolio will aid margin expansion.

More efficient utilization of resources;Besides rationalization, a few brands would be migrated, i.e. these brands would receive a regional rather than a national support, in its specific region of strength. Where the brands can neither be milked nor migrated, the company is also open at the option of divesting the same. So, Hindustan Unilever is talking of divesting rather than acquiring brands.

New product initiatives put on the backburner;The management did not even discuss, until asked, the status on the nine growth engines that had been previously identified as growth drivers. Already the management has brought down to five the viable options from the nine identified earlier. These are in the areas of Confectionery, Consumer Healthcare, Mineral Water, Direct-To-Home (DTH) distribution and a unique distribution model for rural markets. But the management is still testing and is going rather slow on the new initiatives. The final decision on the entry into these categories will be taken only after rigorous testing of waters throughout the current year. This essentially means that one is unlikely to see the company venturing into these areas in the very immediate term. To sum up Bangas words, the focus will be on "To do what you know best". And that probably is what is required for the company in the current scenario, where competition is at its heels in every segment of operation. Rather than divert resources towards new areas, it makes sense to focus on existing businesses, grow them and make them profitable. And that is what is going to be HULs three pronged thrust in the coming year. Grow the FMCG business - by expanding the market itself, by growing the companys share in the market, by generating demand though innovating new channels of consumption, by leverage on existing brand equity by offering services to the customer. Work towards making the foods business profitable - Huge investments have been made in developing new food categories and setting up a distribution infrastructure in place for the foods business. Now that the base for the business has been laid, the company expects to drive the profitability of these businesses. Besides the traditional beverages and oils and fats business, the new categories of staple foods, culinary products and bakery products (acquired through Modern Foods) are likely to contribute to the growth. Strengthen the non-FMCG business by acquiring technology support -The non-FMCG product categories include chemicals, fragrances & flavours, specialty chemicals, thermometers, etc The Company is taking steps to secure world class technology support in these areas for future growth. This could mean a divestment of these businesses to a separate joint venture in the long term.

ANALYSIS 0F THE STRATEGY:

Will this strategy work? The outlined strategy is a significant deviation from the path followed by the company in the past. Rather than grow in breadth at a fast pace, the new strategy appears to be focusing on consolidation of the already expanded businesses, before moving on. And this appears appropriate given the current economic and competitive environment. The overall market demand growth is likely to be constrained by adverse economic factors such as poor agricultural and industrial growth. On the other hand, HUL faces stiff competition from both MNCs at the premium end and the local low cost producers at the popular end. The proposed measures are likely to lead to the following gains: 1. A greater marketing and management focus on rationalized product portfolio would lead to better growth rates for those brands 2. The contribution to profit of the 30 brands being higher, overall profitability would rise, as these brands grow at a faster pace. 3. While the overall expenditure on branding and sales promotions be lower as the number of brands supported decline; also more efficient brands would receive greater support 4. Cost cutting initiatives extended across the supply chain as well as a conscious effort towards lowering fixed overheads would aid margin expansion. 5. A slowdown in investments in new businesses, and improved profitability in existing businesses would mean that ROCE growth would be faster. We feel that given the economic and competitive environment. HUL stands a much better chance of improving its operating and financial performance with the outlined strategy. At the current price of Rs216, the stock trades at 36x F12/00 earnings. A 25% growth in profitability appears achievable as the portfolio rationalization will drive margin expansion. Lower restructuring costs would also aid higher net profit growth. On an estimated F12/01 EPS of Rs7.4, we set a one-year price target of Rs296, which would yield a 37% return.

DEMAND PROJECTION
Fast Moving Consumer Goods (FMCG) sector will witness more than 50 per cent growth in rural and semi-urban India by 2010, according to an analysis carried out by the Associated Chambers of Commerce and Industry of India. In totality, it is projected to grow at a CAGR (compounded annual growth rate) of 10 per cent and increase its market size to Rs 100,000 crore from the present level of Rs 48,000 crore. The growing penchant of rural and semi-urban folks for FMCG products will be mainly responsible for this development, as manufacturers will have to deepen their concentration for higher sales volumes. In the rural and semi-urban areas, FMCG market penetration is currently less than 1 per cent in general as against its total growth rate of about 6.2 per cent. The analysis is based on the feedback obtained from various district industry centres all over the country on the future demand-supply situation of FMCG products. Indian rural market with its vast size and demand base offered a huge opportunity that FMCG companies cannot afford to ignore. With 128 million households, the rural population is nearly three times the urban. Though the rural and semi-urban demand of FMCG products will grow, it will put a severe pressure on the margins of manufacturers of FMCG products due to cut-throat competition, finds the analysis. Companies in the sector to benefit will include known names such as Nirma, HUL, Dabur, ITC, Godrej, Britannia, Coca-Cola, Pepsi, among others. Rural market may be alluring but it is not without problems such as low per capita disposable incomes and large number of daily wage earners. Some of the other problems associated with rural markets are acute dependence on the vagaries of the monsoon, seasonal consumption linked to harvests, festivals and special occasions, poor roads and power problems. The other difficulty that FMCG companies are likely to face is that of logistics. India's 627,000 villages are spread over 3.2 million sq km. Delivering products to the 750 million Indians living in rural areas will be a tough task. The net profit of HUL for the full year fell to Rs 1,197.36 crore (Rs 11.97 billion) from Rs1771.79 (Rs 17.71 billion) last year.

OBJECTIVES OF THE STUDY

1. To evaluate current consumer sales promotion schemes in toilet soap market. 2. To get an insight into retailers views regarding the schemes being offered in toilet soap category and consumer perceptions. 3. To study consumer perceptions regarding various promotion schemes in this category and responses toward them.

CHAPTER 2
COMPANY PROFILE

COMPANY PROFILE Introduction:Hindustan Unilever Limited (HUL), a 51%-owned subsidiary of Anglo-Dutch giant Unilever, has been prying its way into India since 1888. India's largest consumer goods company, HHL markets products such as beverages, food, and home and personal care goods. Its brands include Kwality Wall's ice cream, Lifebuoy soap, Lipton tea, Pepsodent toothpaste, and Surf laundry detergent. HUL markets atta (a type of meal), maize, rice, salt, and specialty chemicals, and its export division ships castor oil and fish. The company also sells bottled water and over-the-counter healthcare products. Hindustan Unilever Limited (HUL) is India's largest fast moving consumer goods company, with leadership in Home & Personal Care Products and Foods & Beverages. HUL's brands, spread across 20 distinct consumer categories, touch the lives of two out of three Indians. They endow the company with a scale of combined volumes of about 4 million tonnes and sales of Rs.10, 000 crores. The vision that inspires HUL's 32,400 employees (40,000 including Group Companies), including about 1,425 managers, is to meet everyday needs of people everywhere - to anticipate the aspirations of our consumers and customers and to respond creatively and competitively with branded products and services which raise the quality of life. This objective is achieved through the brands that the company markets.

Business Nature:HUL is India's largest marketer of Soaps, Detergents and Home Care products. It has the countrys 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 Coffe.

Market leading brands:HULs brands have become household names. The companys strategy is to concentrate its resources on 30 national power brands, and 10 other brands which are strong in certain regions. The top five brands together account for sales of over Rs.3000 crores. Some of the big brands in Soaps and Detergents are Lifebuoy, Lux, Liril, Hamam, Breeze, Dove, (all soaps), Surf Excel, Surf, Rin, Wheel (the number one detergent brand in India, and HUL's largest), 501, Sunlight (all detergents). HUL also markets the Vim and Domex range of Home Care Products.

In the Personal Products business, HUL's Hair Care franchises are Clinic, Sunsilk and Lux shampoos; the company markets Nihar oil. In Oral Care, the portfolio comprises Close-up and Pepsodent toothpastes and toothbrushes. In Skin Care, HUL markets Fair & Lovely Skin Cream and Lotion, the largest selling Skin Care Product in India; a brand developed in India, it is now exported to over 30 countries. It has been extended as an Ayurvedic cream, an under-eye cream, a soap and a talc, in line with the strategy to take brands across relevant categories. The other major Skin Care franchises are Ponds, Vaseline, Lakme and Pears. In Colour Cosmetics, HUL markets the Lakme and Elle-18 ranges. In Deodorants, the key brands are Rexona, Axe, Denim and Pond's, while the Talc brands are Pond's, Liril, Fair & Lovely, Vaseline and Lifebuoy. Axe and Denim are HULs franchises for Mens toiletries.

SWOT ANALYSIS OF HUL

STRENGTHS: Strong brand portfolio. Consumer understanding. R&D ability. Distribution reaches. High quality manpower.

WEAKNESSES: Increased consumer spends on education, consumer durable, entertainment, travel, etc resulting in lower share of wallet for FMCG. Limited success in changing the eating habits of people. Complex supply chain configuration and unwieldy number of stock keeping units (SKUs) with dispersed manufacturing locations. Price costs in the plantation positioning in some categories that allows for low price competition and high social business.

OPPORTUNITIES: Market and brand growth through increased penetration especially in rural areas.

Brand growth through increased consumption depth and frequency of usage across all categories.

Upgrading consumers through innovation to new levels of quality and performance.

Emerging modern trade to be effectively used for introduction of more upscale personal care products.

Growing consumption in out of home categories.

Positioning HUL as a sourcing hub for Unilever companies elsewhere and leveraging the latest IT technologies.

THREATS: Low-priced competition now being present in all categories.

Grey imports.

Changes in fiscal benefits and unfavorable prices in oils, tea commodity, etc.

TOILET SOAP INDUSTRY IN INDIA Implicative Study:Toilet soap industry is one of the oldest Fast Moving Consumer Goods (FMCG) industries in India. It is among the highest penetrated category within FMCG sector reaching an estimated 95% urban and 87% of the rural households. In value terms the industry is worth Rs.45000 million and in volume terms it is worth .53 million (in 2001 as reported by Operations Research Group (ORG) Survey). The main characteristic of the industry was severe competition and high level of brand proliferation. The industry witnessed 7% decline in value in year 2001. There were 45 leading national brands. None of the national brands had more than 5% market share and many more regional and unorganized sector/local brands. Hindustan Unilever was the market leader with about 30 (number) of toilet soap brands with a total market share of 67% in 2000-2009 in organized sector as seen from Table below, which gives the lead players and their respective market share

The leading brands in the market are Dove, Pears, Lux, Dettol, Liril, Rexona, Lifebouy, Nirma, Palmolive and Hamam. The industry had witnessed many innovative sales promotion activities in the recent past. Numerous factors were responsible for such a phenomenon. The reasons are: The market being sluggish, companies were trying to increase market share in stagnant to declining (volume terms) market in order to retain consumers, to encourage switching, to induce trials and liquidate excessive inventories. With the presence of so many brands the competition had increased severally leading to fight for market share and shelf space. Hence, sales promotion activities in toilet soap industry posed a very interesting study and consumer and retailer perceptions thereof.

The brands in popular segments were found to be frequently promoted as there was intensive price competition in this segment. The brands could also be classified based on medicinal benefits, cosmetic benefits, perfumes, natural/herbal properties. After posting a modest single digit growth in 1997-2000, figures for the first seven months of this year suggest that the market for toilet soaps has actually shrunk.

Estimates about the extent of the decline of market size vary. Hindustan Unilever, which straddles the category with a 59.9 per cent market share by value, says the market shrank by 4.4 per cent in value terms in the first half of 2001. The Indian Soaps and Toiletries Manufacturers Association, puts the decline at 1 per cent. Other industry sources suggest that the extent of `de-growth' in the first eight months of 2001 could be as high as 7 per cent. This is despite the fact that this usually sleepy category has seen a spate of new players debut new offerings in recent times. Over the past couple of years, Nirma has launched a slew of low-priced soaps under the banner of Nima and Nirma Beauty. Godrej Consumer, a longstanding player, has relaunched old brands such as Cinthol, apart from new ones such as FairGlow, Allcare, and Nikhar. But if the shrinking market size suggests that Indian consumers have actually been cutting back on their use of toilet soaps, this is not really the case. In volume terms, the market for toilet soaps has continued to show a growth of 6 per cent in the first eight months of 2001. The major players have certainly managed to sell more toilet soaps by volume. But price competition in the segment and a slew of promotional campaigns has reduced the effective realisations per unit sold. This has probably neutralised the gains from volume expansion. Theories about the reasons for the shrinking the market size varies.

Low-priced brands:Industry players commonly attribute the `de-growth' in the soap market to downtrading. Toilet soaps are among the highest penetrated products within the FMCG market, reaching an estimated 95 per cent of the urban and 87 per cent of the rural households. The fairly high contribution from the rural market makes this category sensitive to the fortunes of the agricultural economy. The prolonged drought in the North and West of the country (until 2000) and the sharp fall in farm disposable incomes (brought on by falling farm product prices) has probably persuaded low-income households to downtrade, that is, switch from high- to low-priced brands. HUL too appears to endorse the phenomenon of downtrading. ``There has been an intersectoral shift in the soap market, with consumers downtrading from premium and popular to discount soaps'', explains the company's spokesperson. However, Mr Hoshedar K. Press, Godrej Consumer Care, begs to differ. ``We think consumers have already pre-committed their incomes for instalments on durables. The substitution of soap with shampoos for hair wash has also impacted growth'', he said.

Better quality:The crowded market place has also brought a few benefits to the consumer as marketers of soap have tried to woo consumers through upgraded offerings and better quality soaps. Aided by low input prices, the marketers of toilet soaps have increased the TFM (total fatty matter) content in their brands, to offer better quality soaps at a lower price. Industry watchers say that the TFM content on some brands has moved up from the 50-60 per cent earlier to over 70 per cent of late. Therefore, per unit realisations on soaps have declined, the marketers of soaps have actually sacrificed a part of their margins on hiking the TFM content. Tough times ahead. With competitive pressures on the rise and a larger number of brands jostling for consumer attention in a sluggish market, the soap market is likely to remain a difficult one for most players. Smaller players such as Godrej Consumer and Henkel SPIC have been in a position to report robust sales growth in the category over the past year despite the bruising competition. However, this is partly due to a relatively small base of comparison. Unless the market expands, the frenetic promotional activity may soon tell on the growth rate of the players. And when it comes to sustaining a high decibel promotional campaign, HUL's size certainly gives it the wherewithal to do it.

Rural revival - A wild card:It appears that a genuine boost to the market size for toilet soaps will still have to come from a revival in rural demand. Evidence from the past does appear to suggest that a sharp rise in rural incomes would have a cascading effect on FMCG demand. The pick-up in volume growth in the soap market in 1999, after a year of sluggish growth in 1998, demonstrated that a recovery in agricultural output does have an indirect impact on sales volumes of FMCG products. This year, reports of a good monsoon in the northern and western parts of the country have sparked off speculation about a revival in FMCG growth rates. The fact these two regions account for 55 per cent of the demand for FMCG products strengthens this argument. However, it appears to be a bit early in the day to call it a revival. For one, while the northern and western regions have received satisfactory rains, southern India has been the victim of a very erratic monsoon. Second, given that the good monsoon in the current year succeeds two or three consecutive years of drought in some regions, there could be a substantial time lag before higher rural incomes translates into better FMCG demand. Third, the key crisis in agriculture over the past year has been that farm product prices have dropped sharply in response to a build up of surplus foodgrain stocks. Therefore, even if a good monsoon translates into a higher agricultural output, there is the question of whether this will actually expand or shrink farm incomes. These factors suggest that it may be premature to take investment exposures in companies focussed on toilet soaps in the hope of a revival. It may be better to wait for concrete signs of a pick-up in rural demand, which is certainly some way off.

THE FOUR COMPONENTS OF THE MARKETING MIX

In toilet soap market HUL has 63% market share. This is the product segment where HUL has seen growth over last year but the growth is not as high as there is expansion in the market for toilet soaps. The cash cows for HUL include Life boy, Lux, Liril, Rexona and Breeze. The company's premium soap includes Dove, Pears. The company has come up with a new product offering i.e. Fair & Lovely soap. The strategy for 2006-07 would be to increase the market share from existing 63% to 70%. The strategic changes taking 4 P's into consideration would be:

Product:- HUL would continue with the existing portfolio of the products and would concentrate on coming with new fragrances on different soaps than launching new soaps. It would position Dove and Lux International soap very urban rich women who are extra conscious for their complexion. Pears, Lux International would be positioned for the urban and rural rich. For the consuming urban class, Liril, Rexona, Pears and Lifebouy International would be positioned. It would also come up with 40gm packaging for different products. It will also be thinking of extending popular brands of cosmetics in the toilet soap segment by that decision would be based on the popularity and acceptance of that particular brand (Brand Extension).

Price:- HUL would be trying to customize the packaging of various products on the basis of price points. E.g. it will come up with the pricing of Rs 5, Rs 10 and Rs 15 for different products. It would try to experiment it with the products positioned for consuming class.

Promotion:- For promotion, apart from continuing the existing strategy of concentrating on T.V. channels, HUL would try to focus on the promotional campaign in rural sector. It would also concentrate on promoting through radio and sponsoring the programs e.g. Krishi Darshan' and Aap ka Swasthaya' programs that have greater number of audience. The advertising for them would have a pastoral and cultural looks. It would chalk out the rural promotion scheme for those areas where the cable T.V. has not reached. Under this scheme It would try to include Gram Panchayat', Swasthaya Parishad' and other local bodies by offering knowledge for using good and anti-germ products.

Place:- As the marketing channels of the company are already established HUL would try to increase the penetration in the rural sector to the extreme remote areas which are not touched till now. It would try to reduce the delivery time of the products by choosing and increasing the strategic locations of warehouses. It would also track the distribution path of the wholesalers in small cities through marketing team and would establish a platform or team at a zonal level for all the wholesalers and would try to take their feedback on the market developments. These kinds of congregations could also increase the brand loyalty in the wholesalers and they would be motivated to push HUL products.

The Real Challenge: Bridging the gap between Philip Kotler and Countryside India:Marketing in developing countries like India have often been borrowed from the western world. Concepts like Brand identity, Customer relationship management, 4 Ps of the marketing mix, Consumer behavior process; Segmentation, targeting and positioning etc. have often been lifted straight from the marketing intelligentsia abroad and adopted in Indian conditions, often with minimal success. Reason lies not in the fault of such concepts, but their integration with the Indian ethos and culture. The rural India offers a tremendous market potential. Nearly two-thirds of all middle income households in the country are in rural India and represents half of Indias buying potential. Despite, the strong potential the rural markets are by and large less exploited.

HUL Bridging the Gap by Extending 4Ps Of the Marketing Mix to the 5 Ps And 2 Es HUL has modified 4 Ps of the marketing mix by including an additional P i.e. Packaging. Further to ensure the sustainability of the marketing mix two Es i.e. Education and Empowerment have to be at the core as they help in generating widespread participation from the rural client by enhancing their standard of living.

PACKAGING: The reason for putting packaging out of the product as a special focus area is that due to low literacy levels the importance of symbols and packaging become more important in having a high brand recall.Thus, after the 4 p of marketing, it is 5th P which is packaging going to play a key role in rural markets. Also since the rural customers are usually daily wage earners and they dont have monthly incomes like the ones in the urban areas have. So the packaging is in smaller units and lesser-priced packs that they can afford given their kind of income streams.

THE CORE 2ES The two biggest problems that the rural India faces are Illiteracy and Unemployment. To integrate them in ones Marketing mix ensures that the product or service offered ensures wider participation and better chances of success. Hence, it gives the rise to the concept of two Es: Education and Empowerment at the core of our improved Marketing Mix. This concept presents an opportunity to improve the life of rural Indians and thus, ensure that they actively patronize the companys products. 1. Education: Since vast majority of rural India lacks even basic education levels and modern outlook, it is important that the company introducing a new product should look at building category and not just selling products. It is important to consistently drive home the point that the customers life is going to be enhanced because of products consumption. 2. Empowerment: Because of huge disguised unemployment levels in agriculture and lack of employment opportunities in other sectors, any concept which uses any scope for income generation would be favored more than the traditional marketing mix concepts. HUL runs the program of Self-Help Groups (SHG), which operate like direct-to-home distributors. 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 HUL products, which they will then directly sell to consumers.

RETAILER: Data on rural consumer buying behavior indicates that the rural retailer influences 35% of purchase occasions. Therefore, sheer product availability can determine brand choice, volumes and market share. So, role of retailer is also very important in rural markets, because he would be one who provides information regarding quantity of pack, promotional schemes, influences of advertisement, consumer feedback etc to company. So the retailer plays a very big role here. The rural customer goes to the same shop always to buy his things. And there is a very strong bonding in terms of trust between the two. The buying behavior is also such that the customer doesn't ask for the things by brand but like -- "paanch rupey waala sabun Dena". Now it is on the retailer to push whatever brand he wants to push as they can influence the buyer very easily and very strongly on the preferences. Hence, there is the need to get his support through proper trade promotion activities to get more retail shelf and convincing on his side to make the customer buy the brand.

DISTRIBUTION STRATEGIES OF HUL

The need for innovative and effective distribution network for rural areas is evident from the fact that HUL has come up with new distribution channels to cater to rural markets. For eg, Project Streamline was conceptualized to significantly enhance the control on the rural supply chain, through a network of rural sub-stockist, who are based in these very villages. As part of the project, higher quality servicing, in terms of frequency, credit and fullline availability, was be provided to rural trade. The pivot of Streamline is the Rural Distributor (RD), who has 15-20 rural sub-stockists attached to him. Each of these substockists is located in a rural market. The sub-stockists then performs the role of driving distribution in neighboring villages using unconventional means of transport such as tractor, bullock cart, et al. The Streamline system has extended direct HUL reach in these markets to about 37% of India's rural population from 25% in 1995 and the number of HUL brands and SKUs stocked by village retailers has gone up significantly.

HUL MODEL: HUL have adopted the 4 Ps in addition to 1 more P, 1 R (RETAILER) AND 2 Es. So the new MARKETING MIX model adopted by HUL look like:

CONSUMER SALES PROMOTION

The importance of consumer sales promotion in the marketing mix of the fast moving consumer goods (FMCG) category throughout the world has increased. Companies spend considerable time in planning such activities. However, in order to enhance the effectiveness of these activities, manufacturers should understand consumer and retailer interpretations of their promotional activities. A study of these perceptions will reveal their preferences, their knowledge, and motivations. In India fast moving consumer goods (FMCG) category has witnessed an outburst of sales promotion activities in the post-liberalization era. This project study though exploratory has considered perceptions for price as well as non-price promotions in toilet soap category. The reasons for the study were: (i) The widespread use of sales promotions in toilet soap category (ii) Historically, whenever there was a downward trend in growth, sales promotion activities took the front seat of promotional mix. (iii) Companies planned these activities with inward looking view hence it was felt that it would be useful to understand the perceptions of consumers and retailers regarding sales promotion activities to improve the effectiveness of these activities.

LATEST ADVERTISING TRENDS

Last three-four years have seen a tremendous increase in the number of regional channels as well as the amount of advertising on it. The entire advertising scenario is dominated by FMCG categories and more recently, in the last one or two years, by cellular phones/ cellular phone service categories. FMCG categories, which dominate the market scenario, include toilet soaps, tooth pastes, shampoos, ready to eat food and fairness creams. But out of all these categories, the most heavily advertised category across the entire channel whether regional or national is the toilet soaps category.

RESEARCH METHODOLOGY
Research Type: Exploratory Research: Data Collection Tool: Questionnaire. In-depth interview. Research Area: Noida

Sampling Plan:Sample type: Users of the Toilet Soap.

Sample Size: 100 people between the ages of 20-40 years. Primary Data: The primary data is collected through questionnaires and in-depth interview. Secondary Data: The sources of secondary data are various researches conducted by HUL, business magazines and internet.

RESEARCH AND SURVEY METHODOLOGY

The research study entailed two major phases: (I) Pre- field Study:(a) Unstructured in-depth interviews were conducted to create the initial questionnaire (the instrument). (b) Expert opinions on the questionnaire were collected and further improvements were made to the questionnaire. (II) Field Study:(a) A structured questionnaire was prepared and the survey was conducted by explaining the purpose of the research to the respondents and administering the questionnaire. (b) A split panel test was also conducted to test certain questions that were felt to be inadequate in their design, to evoke responses from the respondents and to test the effect of changing the structure of these questions. Most of the questions in the survey are not disguised; but to assess certain non-factual variables disguised questions are used. For example, there are some questions pertaining to the effectiveness of email, internet etc. which measure the attitudes of the respondent and we take these data as the proxy for that of the organization as a whole. The rational behind this is that the respondents are typically top management personnel in the Information Technology department of the organization and they are in a position to assess the impact of these technologies on their organization. In some cases, to test the relevance of hypotheses and to assess the impact of the questionnaire on the respondent, personal interviews were combined with the completion of the questionnaire.

Both the panels received identical treatment. The questionnaire version was changed but the mode of administration etc. remained the same to preserve the integrity of the comparisons. Evaluation of the split panel tests was done along with the analysis of the original questionnaire. The techniques included comparison of response distributions and examination of item non-response data. Modifications in some questions/ items used in the questions were made to increase the response rate and effectiveness of the questionnaire. Some of the respondents had reservations about some questions in the initial questionnaire, due to the sensitive nature of the topics addressed. This necessitated some changes in the later versions of the questionnaire.

RESPONDENTS AND DATA COLLECTION

The population addressed by the survey comprises of those, who use various toiletry items. The main respondents were the general public as toiletry soaps are used by all the people. Its main objective is to know about the buying behavior and the likes and dislikes of the consumers. Basically the research was done to know what the consumer thinks before buying the product, what they think about the product and what they want from the product i.e. their need.

EXPLORATIVE RESEARCH SYSTEM

The marketing research process adopted by us is as follows: Define the problem and research objectives: The objective of this research is to study the past and current marketing and demand trends. The research highlights various marketing and demand concerns faced by HUL in the soap category. Develop the research plan: This includes: Primary data Focus-group research Questionnaires Sampling plan: Urban people of the middle class. Both male and female between the ages of 20 to 40. Sampling Size: 35

INFERENCES ON IMPLICATIVE RESEARCH

Following are the inferences made from the research which closely matches with the SWOT Analysis of HUL.

SOME FACTS OBSERVED FROM THE RESULTS SO OBTAINED:

LUX still rules the soap market with substantial market share. Others which include DOVE also have some share in higher class thus it serves as the STARS for HUL. Most of the customers are satisfied with the product they are using and they are likely to retain the same product again. Most of the customers think that the HUL soaps are good with respect to other brands in the market.

However there is a close tie between the people who will recommend HULs product to others to the people who will probably not recommend it. This may be a concern for HUL but due to there recent attacking marketing (SRK IN LUX AD) strategy they are trying to regain there market share.

DATA ANALYSIS

Volume Growth of Soaps* on TV during January - May 2010.

During January -May 2010, advertising of Soaps* category on TV has seen a rise of 19 per cent compared to same period in year 2009.

Note: Soaps* Category only includes Bathing/Toilets Soaps and not the Laundry/Washing Soaps.

Share of Variants of Soaps* on TV during Jan - May 2010.

During January - May 2010, 'Protection-Ayurvedic/Medicated' segment had the largest share (i.e. 49 per cent) of overall advertising share of Soaps* on TV, followed by 'Nourishing-Beauty' and 'Hydration-Moisturising' Soaps with 26 per cent and 13 per cent share respectively.

Note: Soaps* Category only includes Bathing/Toilets Soaps and not the Laundry/Washing Soaps.

Top Advertisers of Soaps* on TV during Jan - May 2010.

'Hindustan Unilever Ltd', 'ITC Ltd' and 'Reckitt Benckiser (India) Ltd' were the Top three advertisers, contributing 76 per cent share of overall Soaps* category ad pie on TV during January - May 2010.

Note: Soaps* Category only includes Bathing/Toilets Soaps and not the Laundry/Washing Soaps.

New brands of Soaps*advertised on TV during Jan-May2010

'Vivel Satin Soft', 'Lux Strawberry & Cream' and 'Vivel Di Wills Toilet Soap' were top three new Soap* brands advertised on TV during January - May 2010.

Note: Soaps* Category only includes Bathing/Toilets Soaps and not the Laundry/Washing Soaps.

Top States in Soaps* advertising on TV during Jan - May 2010

During January -May 2010, Soaps* category advertising on Regional and National channels in the ratio of 61:39. 'Maharashtra', 'Andhra Pradesh' and 'Karnataka' were the top three states accounting for more than 50 per cent advertising share of Soaps* category on Regional channels during January - May 2010.

Note: Soaps* Category only includes Bathing/Toilets Soaps and not the Laundry/Washing Soaps.

Average advertising frequency of Soaps* on TV during Jan-May2010

Compared to January - May 2009, average advertising frequency of Soaps* saw a rise of 14 per cent on TV during January - May 2010.

Note: Soaps* Category only includes Bathing/Toilets Soaps and not the Laundry/Washing Soaps.

Celebrity Endorsements for Soaps* on TV during Jan-May 2010.

'Priyanka Chopra' with 24 per cent share leads in Celebrity endorsement of Soaps* on TV closely followed by 'Kareena Kapoor' with 23 per cent share during January - May 2010

The third spot of the Celebrity Endorsement chart for Soaps* was occupied by 'Yuvraj Singh' during January - May 2010.

Note: Soaps* Category only includes Bathing/Toilets Soaps and not the Laundry/Washing Soaps.

During 2010, TV advertising of Personal Care sector saw a rise of 22 per cent compared to 2009.

Share of Personal Care Categories on TV during 2010

During 2010, 'Personal Hygiene' category had maximum share i.e. 44 per cent of overall Personal Care sector advertising on TV followed by 'Hair Care' and 'Personal Healthcare' with 26 per cent and 16 per cent share respectively.

Top Sub Categories of Personal Care Brands advertised on TV.

'Toilet Soaps' , 'Shampoos', 'Tooth Pastes' were the top 3 sub categories contributing 39 per cent share of overall Personal Care sector advertising on TV during 2010.

Top Advertisers of Personal Care brands on TV during 2010.

'Hindustan Unilever Ltd', 'Procter and Gamble', 'Reckitt Benckiser (India) Ltd' were the top 3 advertisers, they contributed 36 per cent of overall Personal Care sector advertising on TV during 2010.

New Brands of Personal Care sector launched on TV during2010.

'Lux Strawberry and Cream', 'Axe Dark Temptation' and 'Sunsilk Hair Fall Solution' were the top 3 new Personal Care brands advertised on TV during 2010. During 2010, 4 of the Top 10 new Personal Care brands advertised on TV were 'ITC Ltd' and 3 belonged to Hindustan Unilever Ltd which had occupied the Top 3 places.

Top Celebrities endorsing Personal Care Brands on TV.

'Priyanka Chopra' was the top celebrity endorsing Personal Care brands on TV followed by 'Kareena Kapoor' and 'Sushmita Sen' during 2010.

Top 10 Brands in the Indian market

STUDY ON CONSUMER PERCEPTIONS:

1. Current usage of toilet soap Brands:

Table below gives current usage of toilet soaps across different income categories (research was conducted with 30 people):

2. REASONS FOR SWITCHING BRANDS:

This could be seen from Table below:

As obvious from the above table, sales promotion was not the main reason for switching brand in this category. Need for variety was the predominant reason. It was found through deeper probing that even though consumers would have switched brands due to sales promotion, there was reluctance about admitting the same and variety was given as a reason for switching. It was further found that consumers had positive disposition towards promoted brand. As a result when toilet soap brand was changed for variety, the brand which was promoted had higher probability of purchase than non-promoted brands.

3. RECALL OF BRANDS BEING PROMOTED:

It could be seen from Table below:

As seen from above, Lux (Gold Star offer most promoted and advertised brand) had the maximum recall. This brand used TV advertisement heavily to announce sales promotion offers. Six out of 30 did not recall any sales promotion scheme on any brand. It could be inferred that. i) Hard core loyals to a particular brand (eg. Hamam) would never (pay attention to any announcements of any other toilet soap brand. ii) Unless sales promotion offers were properly communicated to the target audience, required impact might not be created and iii) Unless promotional offers were of significant value to a consumer, it was likely to get unnoticed and/or ignored.

4. WILLINGNESS TO BUY ON SALES PROMOTION OFFER

N sure ot 10%

Due to prom otions 27%

N due to ot prom otions 63%

Sixty-three per cent of the sample did not show willingness to buy a brand due to promotion while 27% showed willingness and 10% were not sure. This indicates that when 27% showed willingness and 10% consumers who were not sure, these groups might be lured through innovative and lucrative sales promotion offer.

5. ABILITY TO INDUCE TRIAL

Forty per cent of the respondents had said that sales promotion had the ability to induce trial which reinforces the above inference.

LIMITATIONS OF THE STUDY

1. The study was confined to Noida city only and differences in perception and profile may exist for other parts of the country. 2. The sampling was based on convenience that could have given rise to errors. 3. This result may not be appropriate for the whole population (i.e universe).

CONCLUSION
After conducting the survey, observed can be made that HUL still rules the FMCG market. There premium class like LUX and LIFEBUOY acts as the CASH COW for them and others like DOVE is growing fast in the market. HUL is in a sticky ground and finds itself between devil and deep sea, on one end is local and international competitors while on other are humongous population in villages. FAST Moving Consumer Goods (FMCG) sector will witness more than 50 per cent growth in rural and semi-urban India by 2012, according to an analysis carried out by the Associated Chambers of Commerce and Industry of India. HUL has learned its lesson the hard way that INDIA is full of vagaries in spite of the fact that HUL has so many products in the market , to cater to the whims of customer is almost impossible. There is very peculiar market dynamics prevalent in the rural parts so multi national like HUL find it difficult to follow the trends here in comparison of local manufacturers. The rural market may be alluring but it is not without problems such as low per capita disposable incomes and large number of daily wage earners. Some of the other problems associated with rural markets are acute dependence on the vagaries of the monsoon, seasonal consumption linked to harvests, festivals and special occasions, poor roads and power problems. The other difficulty that FMCG companies are likely to face is that of logistics. India's 627,000 villages are spread over 3.2 million sq km. Delivering products to the 750 million Indians living in rural areas will be a tough task.

Moreover our findings indicate that with respect to the nature of the schemes, premiums (free gifts) were found to be the most frequently used in both premium and popular toilet soap category, followed by price offs. Retailers perceived price offs to have relatively greater impact compared to any other forms of sales promotion. In line with the retailers perceptions, the findings of consumer perceptions indicated that price offs were the most preferred type of sales promotion. Retailers stated that role of word of mouth and television advertising was very important in providing information inputs to the consumers regarding sales promotion activities. This perception of retailers was supported by the consumer unaided recall of sales promotion schemes which were widely advertised. As the retailer interacts and observes consumers more frequently and closely than the manufacturer, it would be useful for the companies to incorporate perceptions . We believe that younger age-groups are more experimental in nature, amenable to trying new brands, and sought/looked for or asked whether there were any) sales promotion schemes running on any toilet soap at the time of purchase. Also the person going to the shop for the purchase of soap is the final decision maker of the brand. Hence it is essential that companies need to design attractive, striking, visible POPs for scheme announcements. Also following inference can be made that UNILIVER is using new innovative media campaigns which are not only alluring customers but also increasing brand awareness. The theme for media campaign is almost common for Uniliver but it changes the application for e.g. DIRT IS GOOD is transformed into DAAG ACHHEY HAIN in INDIA.

CHAPTER 3
RECOMMENDATIONS

RECOMMENDATIONS

The two point remedies for HUL through which it can recover its lost grounds are: 1. Retailing is the new mantra in marketing these days; HUL should come up with its exclusive stores in metros and sub-urban areas. In this way it can not only decrease number of intermediaries but also direct contact with the customers can be established. 2. HUL should identify that there are two segments in Indian market that have vast potential which are youth and rural market. So, HUL should introduce product specifically to this segment, there is specific soap in the market which leverages on the youth and rural aspect of India. 4. The organizational pressure, tight financial control and overall dull ness make the marketers to sulk and squeeze. But, marketers have to be more focused just apply themselves. Then they can rejoice that the spring will not be too far. Apart from the usual 4Ps, its all in the recessionary 3Ps, perception, planning and plundering of the market to find growth out of degrowth. One who finds the opportunity reaps the benefit. 5. Some time, slow down may be a blessing in disguise for some companies. Upon compulsions, some companies may be forced to enter some new categories and either knowingly or unknowingly they may end up having hit the jackpot with some niche brand winners.

6. Customers become a rare commodity in a slow down. Increase promotions and incentives to lure them. The Indian market has become so intense that every player, including the local brand player has become intelligent enough to come out with some scheme or the other. 7. As a great brand builder and with principles of strategic marketing, companies may have a tendency to give a stoic smile on the lesser mortals. Its a trap and do not ever dare to miss the race. Its time to be an Indian in India.

Bibliography
Philip kotler, V.A., Marketing management, First edition (2007), Himalaya Publishing House, Mumbai.

McDonald, W.J., Direct Marketing-an Integrated Approach, First Edition (2008), Irwin/McGraw Hill.

Roberts, M.L., Berger, P.D., Direct Marketing Management, sixth Edition (2008), Prentice Hall International Inc., USA.

Shankar, Ravi, Services marketing, Second edition (2002), South Asia Publications, Delhi.

Sheth, J.N., Mittal, B., Newman, B.I., Consumer Behavior, First Edition (1999), the Dryden Press, USA.