CH IN5TITUTE OF MANAGEMENT

& COMMUNICATION

Pnst Graduatc DIp!nma In

Managcmcnt

CORPORATE INTERN5HIP REPORT
OF THE PROJECT
TITLED A5

5a!cs and DIstrIbutInn Channc! nf HUL

HINDU5TAN UNILEVER LTD.



5ubmIttcd Tn: 5ubmIttcd By:
Prcf. Girisn 8na|ia Pranaq Rajas


PREFACE

There is a famous saying "The theory without practical is lame and
practical without theory is blind. This modern era is era of
consumers. Consumers satisfy themselves according to their needs
and desires, so they choose that commodity from where they
extract maximum satisfaction. It has been identified in the
beginning of 21
st
century the market was observed a drastic
change. The successful brand presents itself in such a way that
buyers buy them in special values which match their needs.
Marketing is an important part of any marketing. Summer training
is an integral part of the PGDM and student of management have to
undergo training session in a business organization for 8 weeks to
gain some practical knowledge in their specialization and to gain
some working experience. Our institution has come forward with the
opportunity to bridge the gap by imparting modern scientific
management principle underlying the concept of the future
prospective managers. To the emphasis on practical aspect of
management education on practical aspect of management
education on the faculty of Cerebral Heights Institute of
Management and Communication, Indore has with a modern system
of practical training of repute and following management technique
to the student as integral part of PGDM in accordance with the
above obligation undergoing project in "Hindustan Unilever Ltd..
The title of my project is "Study of Sales and Distribution
Channel of HUL"

Certainly this analysis explores my abilities and strength to its
fullest extent for the achievement of organization as well as my
personal goals.














ACKNOWLEDGEMENT


It is my pleasure to be indebted to various people, who
directly or indirectly contributed in the development of this work
and who influenced my thinking, behavior, and acts during the
course of study.


I express my sincere gratitude to Dr. Mayank Saxena,
Director, CH Institute of Management and Communication,
for providing me an opportunity to undergo training at Hindustan
Unilever Ltd.

I take immense pleasure in thanking Mr. Sairam Subrahmanium,
Area Sales Manager, Hindustan Unilever Ltd. for having
permitted me to carry out this Internship.

I am thankful to Mr. Imran Khan, Territory Sales Officer,
Hindustan Unilever Ltd. for his support, cooperation, and
motivation provided to me during the training for constant
inspiration, presence and blessings.


I also extend my sincere appreciation to Prof. Girish Bhatia,
Training Mentor, who provided his valuable suggestions and
precious time in accomplishing my project report.


Lastly, I would like to thank the almighty and my parents for
their moral support and my friends with whom I shared my day-to-
day experience and received lots of suggestions that improved my
quality of work.




(Pranay Rajas)





DECLARATION


I, Pranay Rajas, student of Post Graduate Diploma in
Management, studying at CH Institute of Management and
Communication, Indore, hereby declare that the training report on
"Sales and Distribution Channel of Hindustan Unilever Ltd.
submitted to CH Institute of Management and Communication,
Indore, in partial fulfillment of Post Graduate Diploma in
Management, is the original work conducted by me.


The information and data given in the report is authentic to
the best of my knowledge.

This training report is not being submitted to any other
University/Institution for award of any other Degree, Diploma and
Fellowship.


(Pranay Rajas)















CERTIFICATE


This is to certify that the Industrial project entitled "Study of
Sales and Distribution Channel" carried out by Pranay Rajas,
student of Post Graduate Diploma in Management (PGDM) of
Cerebral Heights Institute of Management and Communication, is
hereby accepted and approved as a credible work. It is submitted in
the partial fulfillment for the requirement of Post Graduate Diploma
in Management (PGDM) from Cerebral Heights Institute of
Management and Communication; its a bona-fide record of the
work done by him under my supervision during his stay as a project
trainee at Hindustan Unilever Ltd. from 09
th
August 2011 to 08
th

October 2011.
















CONTENT

Chapter-1 Introduction to the Study
Scope of the Study
Significance of the Study
Objective of the Study
7
8
9
Chapter-2 Company Profile
Introduction
History
Financial Highlights
SWOT Analysis
Distribution Network of HUL
11
12
17
21
24
Chapter-3 Research Methodology 47
Chapter-4 Data Analysis 51
Chapter-5 Interpretations and Findings 69
Chapter-6 Recommendations and Suggestions 71
Questionnaire
Bibliography

004|k1

















SCOPE OF THE STUDY

The main scope of this study is to ascertain the effectiveness
of channel of distribution and various methods to increase the sales
volume of the concern. The methods include regular information to
the buyers creating a brand position in the market and taking
measures to make the brand remain in its position. One of the
important aspects of this study is also to increase the market
segment for the product.































SIGNIFICANCE OF THE STUDY

This study of Sales and Distribution Channel of Hindustan
Unilever Ltd. will help HUL in intervening the efficiency and
effectiveness of its distribution channel.

A marketing channel system is the particular set of marketing
channels employed by a firm. Decisions about the marketing
channel system are among the most critical facing management.
Marketing channels also represent a substantial opportunity cost.
One of the chief roles of marketing channels is to convert potential
buyers into profitable orders. Marketing channels must not just
serve markets, they must also make markets.

The study helps streamlining its operations and designing a
new Sales and Distribution Channel and thereby increasing the
overall value being provided to the consumer and thereby
increasing the revenues and the profits for the company.
















OBJECTIVE OF THE STUDY

Management is a course which teaches the student to get the work
done properly from different available sources viz. man, machine,
material, money etc. So there can be a satisfaction from the
organization side and the workers side who play a significant role in
achieving success. So far the fulfillment or the management course,
it gives emphasis to project work and students learn how to plan in
practical terms rather in terms of theory only. Student tends to
develop analytical and problem solving skill. We necessary become
motivated and competitive, in fact all the learning that goes on for
the two year term become a well around personality. The following
are the objective and purpose of the study for:

i) To study the Sales and Distribution network of Hindustan
Unilever Ltd. in Indore Region.

ii) To analyze the issues creating problems in Sales and
Distribution Channel.

iii) To recommend the solutions to issues concerning the Sales
and Distribution department.

004|kz























INTRODUCTION TO HUL

HUL was formed in 1933 as Lever Brothers India Limited and came
into being in 1956 as Hindustan Lever Limited through a merger of
Lever Brothers, Hindustan Vanaspati Mfg. Co. Ltd. and United
Traders Ltd.

It is headquartered in Mumbai, India and has employee strength of
over 15,000 employees and contributes to indirect employment of
over 52,000 people. The company was renamed in June 2007 as
"Hindustan Unilever Limited. The Anglo-Dutch company Unilever
owns a 52% majority stake in Hindustan Unilever Limited.

Hindustan Unilever's distribution covers over 1 million retail outlets
across India directly and its products are available in over 6.3
million outlets in the country, nearly 80% of all retail outlets in
India. It estimates that two out of three Indians use its many home
and personal care products, food and beverages.

Hindustan Unilever was recently rated among the top four
companies globally in the list of "Global Top Companies for Leaders
by a study sponsored by Hewitt Associates, in partnership with
Fortune magazine and the RBL Group. The company was ranked
number one in the Asia-Pacific region and in India.
("Present stature", official website)

The Brand Equity rankings in 2010 are ruled by FMCG products with
Hindustan Lever accounting for as many as 6 out of Top 10 most
trusted Indian Brands.
(Brand Equity Survey, 2010)

















HISTORY-CHRONOLOGY

In 1931, Unilever set up its first Indian subsidiary, Hindustan
Vanaspati Manufacturing Company, followed by Lever Brothers
India Limited (1933) and United Traders Limited (1935). These
three companies merged to form HUL in November 1956; HUL
offered 10% of its equity to the Indian public, being the first among
the foreign subsidiaries to do so. Unilever now holds 52.10% equity
in the company. The rest of the shareholding is distributed among
about 360,675 individual shareholders and financial institutions.

The erstwhile Brooke Bond's presence in India dates back to 1900.
By 1903, the company had launched Red Label tea in the country.
In 1912, Brooke Bond & Co. India Limited was formed. Brooke Bond
joined the Unilever fold in 1984 through an international acquisition.
The erstwhile Lipton's links with India were forged in 1898. Unilever
acquired Lipton in 1972 and in 1977 Lipton Tea (India) Limited was
incorporated.

Pond's (India) Limited had been present in India since 1947. It
joined the Unilever fold through an international acquisition of
Chesebrough Pond's USA in 1986.

Since the very early years, HUL has vigorously responded to the
stimulus of economic growth. The growth process has been
accompanied by judicious diversification, always in line with Indian
opinions and aspirations.

The liberalization of the Indian economy, started in 1991, clearly
marked an inflexion in HUL's and the Group's growth curve.
Removal of the regulatory framework allowed the company to
explore every single product and opportunity segment, without any
constraints on production capacity.

Simultaneously, deregulation permitted alliances, acquisitions and
mergers. In one of the most visible and talked about events of
India's corporate history, the erstwhile Tata Oil Mills Company
(TOMCO) merged with HUL, effective from April 1, 1993. In 1996,
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.

The 1990s also witnessed a string of crucial mergers, acquisitions
and alliances on the Foods and Beverages front. In 1992, the
erstwhile Brooke Bond acquired Kothari General Foods, with
significant interests in Instant Coffee. In 1993, it acquired the
Kissan business from the UB Group and the Dollops Ice-cream
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 1994, Brooke Bond India and Lipton India
merged to form Brooke Bond Lipton India Limited (BBLIL), enabling
greater focus and ensuring synergy in the traditional Beverages
business. 1994 witnessed BBLIL launching the Wall's range of
Frozen Desserts. By the end of the year, the company entered into
a strategic alliance with the Kwality Ice-cream Group families and in
1995 the Milk food 100% Ice-cream 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, Specialty Chemicals and
Exports businesses, besides a common distribution system since
1993 for Personal Products. The two also had a common
management pool and a technology base. The amalgamation was
done to ensure for the Group, benefits from scale economies both in
domestic and export markets and enable it to fund investments
required for aggressively building new categories.

In January 2000, in a historic step, the government decided to
award 74 per cent equity in Modern Foods to HUL, thereby
beginning the divestment of government equity in public sector
undertakings (PSU) to private sector partners. HUL's entry into
Bread is a strategic extension of the company's wheat business. In
2002, HUL acquired the government's remaining stake in Modern
Foods.

In 2003, HUL acquired the Cooked Shrimp and Pasteurized
Crabmeat business of the Amalgam Group of Companies, a leader in
value added Marine Products exports.
HUL launched a slew of new business initiatives in the early part of
2000s. Project Shakti was started in 2001. It is a rural initiative
that targets small villages populated by less than 5000 individuals.
It is a unique win-win initiative that catalyses rural affluence even
as it benefits business. Currently, there are over 45,000 Shakti
entrepreneurs covering over 100,000 villages across 15 states and
reaching to over 3 million homes.

In 2002, HUL made its foray into Ayurvedic health & beauty centre
category with the Ayush product range and Ayush Therapy Centers.
Hindustan Unilever Network, Direct to home business was launched
in 2003 and this was followed by the launch of `Pureit water purifier
in 2004.

In 2007, the Company name was formally changed to Hindustan
Unilever Limited after receiving the approval of share holders during
the 74th AGM on 18 May 2007. Brooke Bond and Surf Excel
breached the Rs 1,000 crore sales mark the same year followed by
Wheel which crossed the Rs.2, 000 crores sales milestone in 2008.
On 17th October 2008, HUL completed 75 years of corporate
existence in India.
(Official website of Hindustan Unilever Limited)

























MISSION

1. To add Vitality to life.
O We meet everyday needs for nutrition, hygiene, and
personal care with brands that help people feel good,
look good and get more out of life.
2. To help people feel good, look good and get more out of life
(Scribd 2010)

VISION

Unilever products touch the lives of over 2 billion people every day
- whether that's through feeling great because they've got shiny
hair and a brilliant smile, keeping their homes fresh and clean, or by
enjoying a great cup of tea, satisfying meal or healthy snack.

A clear direction

The four pillars of our vision set out the long term direction for the
company-where we want to go and how we are going to get there:

O We work to create a better future every day
O We help people feel good, look good and get more out of life
with brands and services that are good for them and good for
others.
O We will inspire people to take small everyday actions that can
add up to a big difference for the world.
O We will develop new ways of doing business with the aim of
doubling the size of our company while reducing our
environmental impact.

The company has always believed in the power of their brands to
improve the quality of peoples lives and in doing the right thing. As
the business grows, so do companies responsibilities. HUL recognize
that global challenges such as climate change concern us all.
Considering the wider impact of companys actions is embedded in
its values and is a fundamental part of who they are.
(Companies official website)

Instilling values

Our corporate purpose states that to succeed requires "the highest
standards of corporate behavior towards everyone we work with,
the communities we touch, and the environment on which we have
an impact."


O Standard of Conduct
We conduct our operations with honesty, integrity and openness,
and with respect for the human rights and interests of our
employees. We shall similarly respect the legitimate interests of
those with whom we have relationships.

O Obeying the Law
Unilever companies and our employees are required to comply with
the laws and regulations of the countries in which we operate.

O Employees
Unilever is committed to diversity in a working environment where
there is mutual trust and respect and where everyone feels
responsible. We will recruit, employ and promote employees on the
sole basis of the qualifications and abilities needed for the work to
be performed. We are committed to safe and healthy working
conditions for all employees. We will not use any form of forced,
compulsory or child labor.

O Consumers
Unilever is committed to providing branded products and services
which consistently offer value in terms of price and quality, and
which are safe for their intended use. Products and services will be
accurately and properly labeled, advertised and communicated.

O Shareholders
Unilever will conduct its operations in accordance with
internationally accepted principles of good corporate governance.
We will provide timely, regular and reliable information on our
activities, structure, financial situation and performance to all
shareholders.

O Business Partners
Unilever is committed to establishing mutually beneficial relations
with our suppliers, customers and business partners. In our
business dealings we expect our business partners to adhere to
business principles consistent with our own.
(Scribd 2010)









PRODUCTS

FOOD BRANDS
Brooke Bond 3 Roses
Annpurna
Brooke Bond Red Lebel
Brooke Bond Taaza
Brooke Bond TajMahal
Bru
Kissan
Knorr
Kwality Walls
Lipton
Modern
Brooke Bond Sehatmand

HOME CARE BRANDS
Active Wheel
Cif
Comfort
Domex
Rin
Sunlight
Surf Excel
Vim

PERSONAL CARE BRANDS
Aviance
Axe
LEVER Ayush Therapy
Breeze
Clear
Clinic Plus
Closeup
Dove
Fair & Lovely
Hamam
Lakme
Lifebuoy
Liril 2000
Lux
Ponds
Rexona
Sunsilk
Vaseline

WATER
Hindustan Unilever-Pure it




















FINANCIAL HIGHLIGHTS










ORGANIZATION STRUCTURE

Hindustan Unilever Limited is India's largest Fast Moving Consumer
Goods (FMCG) Company. It is present in Home & Personal Care and
Foods & Beverages categories.

The fundamental principle determining the organization structure is
to infuse speed and flexibility in decision-making and
implementation, with empowered managers across the companys
nationwide operations.


































(Companies official website)


Board of Directors
The Board of Directors as
repositories of the corporate
powers act as a guardian to the
Company as also the protectors
of shareholders interest
Management Committee
The day-to-day management
of affairs of the Company is
vested with the Management
Committee which is subjected
to the overall
superintendence and control
of the Board.
O Mr. Harish Manwani -
Chairman
O Mr. Nitin Paranjpe - CEO
and Managing Director
O Mr. Sridhar
Ramamuthy-Chief
Financial Officer
O Mr. Gopal Vittal -
Executive Director,
Home & Personal Care
O Mr. Pradeep Banerjee -
Executive Director,
Supply Chain
O Mr. D. S. Parekh -
Independent Director
O Mr. A. Narayan -
Independent Director
O Mr. S. Ramadorai -
Independent Director
O Dr. R. A. Mashelkar -
Independent Director

O Mr. Nitin Paranjpe -
CEO and Managing
Director
O Mr. Sridhar
Ramamuthy-Chief
Financial Officer
O Mr. Shreejit Mishra -
Executive Director,
Foods
O Mr. Gopal Vittal -
Executive Director,
Home & Personal
Care
O Mr. Hemant Bakshi -
Executive Director
O Mr. Pradeep Banerjee
- Executive Director,
Supply Chain
O Ms. Leena Nair -
Executive Director,
HR
O Mr. Dev Bajpai -
Executive Director,
CS

AWARDS & RECOGNISITIONS
Year Achievement

2010
O HUL won two prestigious awards at the World HRD
Congress 2010: 'The Most Admired & Best HR Team
Award' and our Executive Director-HR, Leena Nair
was awarded the 'HR Super Achiever of the Year'
award
O HUL won Customer and Brand Loyalty Award in the
consumer non durables sector.


2009
O HUL ranked fourth in the `Top Companies for
Leaders, 2009 for the Asia Pacific region and
bagged the 10th place in the global rankings.
O HUL was awarded the CNBC AWAAZ Consumer
Awards 2009 in three categories: Most Preferred
Personal Care Company, Most Preferred Home Care
Company and Value for Money Brand of the Year.
O HULs Project Shakti won the Silver Trophy of the
EMPI-Indian Express Indian Innovation Awards.
O Ad club Emvies: Hindustan Unilever has bagged 7
Awards (2 Gold, 2 Silver and 3 Bronze) across
categories, the only company with maximum wins.
2008 O HUL won the Bombay Chamber Civic Award 2007 in
the category of Sustainable Environmental
Initiatives, for its water conservation and harvesting
project at Karchond village, Silvassa, Dadra and
Nagar Haveli.
O HUL won the UK Trade & Investment India Business
Award in the Innovation category for Pureit.
2007 O In 2007, Hindustan Unilever was rated as the most
respected company in India for the past 25 years by
Business world, one of Indias leading business
magazines.
2006 O Mr.D.S.Parekh -HUL in depend director received for
services to financial services and banking industry in
India and `Best Non-Executive Director 2006 by the
Asian Centre for Corporate Governance.
(Companies official website)










CORPORATE SOCIAL RESPONSIBILITY

O The water usage per tonne has been reduced by more than
32% in its own manufacturing operations against a baseline of
2004.

O More than 50% of our own manufacturing units have a rain
water harvesting facility. As on date, five Company units
return more water to ground than being consumed by them.

O The energy consumption and CO per unit of production since
2004 has also come down by 38% and 28% respectively.

O Company has initiated works in the area of sustainable
agriculture sourcing for Tea, Fruits & Vegetables and Palm oil.

O The Company has started developing Indian producers for
Tomato paste. We are working closely with key producers and
the initiatives include water conservation, use of authorized
pesticides, land conservation and improvement of farmer
income.

O The Brand partnered with the Government of Tamil Nadu and
organized a massive event on Global Hand Washing Day (15th
October, 2009) wherein out of 47,000 children that washed
their hands on that day, 15,000 washed their hands in perfect
harmony to stake claim to the Guinness record for the most
people washing their hands simultaneously.

O In the area of Health and Hygiene, during the Swine Flu
epidemic, 'Lifebuoy' undertook rallies in key effected cities,
where the message of the importance of hand washing was
emphasized, in preventing Swine Flu.

O The vast majority of HULs products reach the consumers
without being tested on animals.

O Your Company started the Sankalp initiative of employee
volunteering in the 75th year of its existence in India. In 2008
our employees undertook volunteering and community service
totaling more than 48,000 hours against a target of 27,375
hours. In 2009 we have achieved more than 1, 15,000 hours
of volunteering.
(Annual Report 2010, p.38 & Sustainability Report 2010, p.10)



SWOT ANALYSIS

Strengths

O Uniliver Group: Hul is a subsidiary of Unilever, which sells
Foods, home and Personal Care brands in about 100 countries
worldwide. Hul gain lots of advantages from the parent
company in terms of knowledge sharing, fully leveraging
benefits of scale and synergy through Unilever's global buying
network.
O Largest market share: HUL is Indias largest consumer
products company by sales.
O Strong Product Portfolio : HUL, unlike international and
local competitors such as Nestle India Ltd or Godrej Consumer
Products Ltd that are focused on one or two categories, HUL
straddles several sectors right from food to personal care
products.
O Strong Distribution Network: Hindustan Unilever's
distribution network is recognised as one of its key strengths.
Its focus is not only to enable easy access to our brands, but
also to touch consumers with a three-way convergence - of
product availability, brand communication, and higher levels
of brand experience. HUL's products, manufactured across the
country, are distributed through a network of about 7,000
redistribution stockiest covering about one million retail
outlets
HUL's distribution network in rural India already directly
covers about 50,000 villages, reaching about 250 million
consumers, through about 6000 sub-stockists.
O Strong R&D: HUL has build on its R&D by further
strengthening the R&D Units in Bangalore and Mumbai with
stronger integration with Unilever Global. R&D technology
centers in India have over 200 highly qualified scientists and
technologists. With the strong support from Unilever R&D as
well as the brand development capabilities, the company is
well placed to meet the challenges arising from the increased
competition intensity.
O Highly Skilled human resource: The ability to attract the
best talent in the market & to retain it has become one of the
key factors of HULs success. Currently HUL have an efficient
manpower of 15000 employees over 13000 mangers.
(Scribd 2010)
(Annual Report 2010, p.38)




Weakness

O High Competition: HUL is facing high competition from
companies like ITC,P&G,Dabur etc. P&G and HUL have
entered into a price-war, as P&G is giving tough competition
to HUL soaps and detergents brands. The 2010 price war,
though lower in quantum, has just started and is likely to
significantly impact HUL's Earnings
O Losing Market share: Hul is steady losing its market share
in segments including soaps, hair, oral & skincare.
(Economic times)
O High Advertising Costs: HUL is incurring high advertisement
costs in current fiscal year. There is 66% increase in the
advertising budget.
O Changing Consumption Patterns: Demand for high-end
products is dropping. Indian consumers are still buying; it's
just that they're avoiding the most expensive brands. That's
why HUL will need to become more sensitive to price by
offering price reductions on some of the existing products and
introducing more new innovative products at low price points.
(Businessweek.com)

Opportunities

O Large domestic market: There is huge market development
opportunity in countries like India with population of over a
billion, as consumption is still one-third that in Indonesia and
one-seventh that in China.
O Changing Lifestyles: Per capita income of Indian
customer is increasing and FMCG products are relatively
elastic in nature hence the expected sale should increase.
O Diversification: HUL can enter into the new brand segments
like confectionery, medicines etc.
O Opportunity in Food Sector: The advent of modern trade
has opened up greater opportunities for HUL to diversify its
brand and strength its food division. It could look at
introducing products from its parents stable like margarines
and could also look at expanding its Knorr range of products.
Moreover consumer expenditure in food sector rose by 13%.
O Untapped rural Market: With the presence of 12.2% of the
world population in the villages of India, the Indian rural
FMCG market is something of high importance for HUL.
(Authourstream.com)




Threats

O Increasing costs of raw material: input costs have been
on a rise. Prices of palm oil and copra--key components in
products like hair oils and toilet soaps--have surged. Copra
prices have gone up 4% in the last month and in this
financial; rates are expected to advance around 10% from a
year ago. Palm oil prices have seen a sharper rise of around
14%.
"Every 10% change in palm oil prices affects Hindustan
Unilever's operating profit margin by 60 basis points.
(NDTV.com)
O ITC Entry: ITC has reduced its dependence on the cigarettes
business. TC has extended its presence into areas like foods,
retailing, hotels, greetings, agri, paper, etc. With ITC gaining
momentum in each of these businesses, it is turning into a
consumer monolith, and hence, the greatest threat to HUL's
Business.
O Segment threat: Laundry is important business for HUL and
we have strong share position.HUL faces competition not only
from rival multinational company, Procter & Gamble, but also
from a slew of new price-warrior brands that have emerged in
the mass segment. There is an extraordinary situation in the
laundry market, over 500 new brands of laundry and over 200
washing powders are posing a new threat to Hul.
(Times of India 2010)
O Tax & Regulatory Structure: Some FMCG products such as
shampoos, processed food, soft drinks and toiletries
containing alcohol attract high rates of excise duty and sales
tax. Such high tax incidence hampers growth of these product
categories.
(www.slideshare.net)













DISTRIBUTION NETWORK OF HUL

Evolution over time:

The HULs distribution network has evolved with time. The first
phase of the HUL distribution network had wholesalers placing bulk
orders directly with the company. Large retailers also placed direct
orders, which comprised almost 30 per cent of the total orders
collected. The company salesman grouped all these orders and
placed intent with the Head Office. Goods were sent to these
markets, with the company salesman as the consignee. The
salesman then collected and distributed the products to the
respective wholesalers, against cash payment, and the money was
remitted to the company.

The focus of the second phase, which spanned the decades of the
40s, was to provide desired products and quality service to the
company's customers. In order to achieve this, one wholesaler in
each market was appointed as a "Registered Wholesaler," a stock
point for the company's products in that market. The company
salesman still covered the market, canvassing for orders from the
rest of the trade. He then distributed stocks from the Registered
Wholesaler through distribution units maintained by the company.
The Registered Wholesaler system, therefore, increased the
distribution reach of the company to a larger number of customers.

The highlight of the third phase was the concept of "Redistribution
Stockist" (RS) who replaced the RWs. The RS was required to
provide the distribution units to the company salesman. The second
characteristic of this period was the establishment of the "Company
Depots" system. This system helped in transshipment, bulk
breaking, and as a stock point to minimize stockouts at the RS
level. In the recent past, a significant change has been the
replacement of the Company Depot by a system of third party
Carrying and Forwarding Agents (C&FAs). The C&FAs act as buffer
stockpoints to ensure that stockouts did not take place. The C&FA
system has also resulted in cost savings in terms of direct
transportation and reduced time lag in delivery. The most important
benefit has been improved customer service to the RS.

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


Detail Overview:

The distribution network of HUL is one of the key strengths that
help it to supply most products to almost any place in the country
from Srinagar to Kanyakumari. This includes, maintaining favorable
trade relations, providing innovative incentives to retailers and
organizing demand generation activities among a host of other
things. Each business of HUL portfolio has customized the network
to meet its objectives. The most obvious function of providing the
logistics support is to get the companys product to the end
customer.

Distribution System of HUL:

HUL's products are distributed through a network of 4,000
redistribution stockists, covering 6.3 million retail outlets reaching
the entire urban population, and about 250 million rural consumers.
There are 35 C&FAs in the country who feed these redistribution
stockists regularly. The general trade comprises grocery stores,
chemists, wholesale, kiosks and general stores. Hindustan Unilever
provides tailor made services to each of its channel partners. It has
developed customer management and supply chain capabilities for
partnering emerging selfservice stores and supermarkets. Around
2,000 suppliers and associates serve HULs 40 manufacturing plants
which are decentralized across 2 million square miles of territory.






















HUL
C & F Agents
Redistribution
Wholesalers
Rural Retailers Urban Retailers
Consumers
Distribution at the villages:

The company has brought all markets with populations of below
50,000 under one rural sales organisation. The team comprises an
exclusive sales force and exclusive redistribution stockists. The
team focuses on building superior availability of products. In rural
India, the network directly covers about 50,000 villages, reaching
250 million consumers, through 6000 substockists.




















HUL approached the rural market with two criteria the accessibility
and viability. To service this segment, HUL appointed a
Redistribution stockist who was responsible for all outlets and all
business within his particular town. In the 25% of the accessible
markets with low business potential, HUL assigned a sub
stockist who was responsible to access all the villages at least once
in a fortnight and send stocks to those markets. This substockist
distributes the company's products to outlets in adjacent smaller
villages using transportation suitable to interconnecting roads, like
cycles, scooters or the ageold bullock cart. Thus, Hindustan
Unilever is trying to circumvent the barrier of motor able roads. The
company simultaneously uses the wholesale channel, suitably
incentivising them to distribute company products. The most
common form of trading remains the grassroots buyandsell mode.
This enables HUL to influence the retailers stocks and quantities
sold through credit extension and trade discounts. HUL launched
this Indirect Coverage (IDC) in 1960s.Under the Indirect Coverage
(IDC) method, company vans were replaced by vans belonging to
Redistribution Stockists, which serviced a select group of
neighboring markets.

Distribution at the Urban Centres:

Distribution of goods from the manufacturing site to C & F agents
take place through either the trucks or rail roads depending on the
time factor for delivery and cost of transportation. Generally the
manufacturing site is located such that it covers a bigger
geographical segment of India. From the C & F agents, the goods
are transported to RSs by means of trucks and the products finally
make the last mile based on the local popular and cheap mode of
transport.

NEW DISTRIBUTION CHANNEL

Project Shakti:

This model creates a symbiotic partnership between HUL and its
consumers. Started in the late 2000, Project Shakti had enabled
Hindustan Lever to access 80,000 of India's 638,000 villages. HUL's
partnership with Self Help Groups (SHGs) of rural women is
becoming an extended arm of the company's operation in rural
hinterlands. Project Shakti has already been extended to about 12
states Andhra Pradesh, Karnataka, Gujarat, Madhya Pradesh, Tamil
Nadu, Chhattisgarh, Uttar Pradesh, Orissa, Punjab, Rajasthan,
Maharashtra and 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 HUL and support from government agencies
concerned and NGOs. Armed with microcredit, women from SHGs
become directtohome distributors in rural markets.

The model consists of groups of (1520) villagers below the poverty
line (Rs.750 per month) taking microcredit from banks, and using
that to buy our products, which they will then directly sell to
consumers. In general, a member from a SHG selected as a Shakti
entrepreneur, commonly referred as 'Shakti Amma' receives stocks
from the HUL rural distributor. After being trained by the company,
the Shakti entrepreneur then sells those goods directly to
consumers and retailers in the village. Each Shakti entrepreneur
usually service 610 villages in the population strata of 1,0002,000.
The Shakti entrepreneurs are given HUL products on a `cash and
carry basis.'



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
of C&FAs, Redistribution Stockists, wholesalers and retailers (as
shown earlier). Hindustan Unilever's distribution network is
recognized as one of its key strengths. Its focuses on Product
availability, Brand communication, and higher levels of brand
experience.

Channel Structure (Special Focus is on Indore Rural Area)

Typically, the goods produced in each of the HUL's 40 factories are
sent to a depot with the help of a carrying and forwarding agent
(C&FA). The company has its depot in every state of the country.
The C&FA is a third party and gets servicing fee for stock and
delivery of the products. In each town, there is at least a
redistribution stockist (RS) who takes the goods from the C&FA and
sells them to retail outlets. In Madhya Pradesh the C&FA is in
Indore and Jabalpur. Indore C&F is serviced by 2 Redistribution
Stockists at M/s Riddhi-Siddhi Sales and M/s Agrawal Sales.

Redistribution Stockists:

Total number of RS in Indore=2

Sales Margin: .31% which includes cash discount,
unloading expenses from depot, distribution expenses to
retailers, incentive schemes & other incidental expenses.
Modes of transport used: Rickshaw, tempo.
Incentive schemes: Before 2000 holiday packages and
tours but after 2000 no nonmonetary incentive for RS.
Areas of Operations: Marked for each of the RS.
Selling Operations: RSs sells the goods to
4 Wholesaler (gets 1.5 % max. discount from RS)
4 Retailers (gets 1.0% max. discount from RS)






olesaler:

Gets cash discounts and other schemes promoted by HUL (gets
points under Vijeta Scheme).

Retailers:

Total retailer base in Indore: Approximately 113.
Sales Margin: Depends on the product
o Soap, detergents-8% on MRP
o Cosmetics-10% on MRP
o Food items-8% on MRP

Incentive schemes:

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

Field Sales Force:

To meet the everchanging needs of the consumer, HUL has set up a
distribution network that ensures availability of all their products, in
all outlets, at all times. This includes, maintaining favourable trade
relations, providing innovative incentives to retailers and organizing
demand generation activities among a host of other things.

The important activities that HUL field sales force does are (i) target
chasing and (ii) reporting on a daily basis. Account information is
maintained on palmtops given by HUL.

















Initiatives taken to improve the Distribution Channel:

HUL has taken the following initiatives to improve its distribution
network:

O Setting up of a fullscale sale organisation comprising key
account management and activation to impact, fully engage
and service modern retailers as they emerge.
O Servicing Channel partners and customers with continuous
daily replenishment.
O Leveraging scale and building expertise to service Modern
Trade and Rural Markets.
O Delay ring of sales force to improve response times and
service levels.
O Revamping of its sales organisation in the rural markets to
fully meet the emerging needs and increased purchasing
power of the rural population. HULs distribution network in
rural India already directly covers about 50,000 villages,
reaching about 250 million consumers through about 6,000
sub stockists.
O Implementation of supply chain system that connects
stockists across the country, and also includes a backend
system connecting suppliers, all company sites and stretching
right up to stockists. IT tools have been deployed for
connectivity across the extended supply chains. Backend
processes have been combined into a common Shared Service
infrastructure.
O Launching of Project Shakti through which the company is
able to extend its operations in villages. HUL has also included
several NGOs and state governments as the initiative helps
rural women to improve their financial position.
O Launching of HUL Network to leverage the channel of direct
selling by presenting customized offerings in 11 home and
personal care and food categories. Started in 2003, it already
has a base of 300,000 consultants across the country.
O Starting of franchised Lakme Beauty Salons and Ayush
Therapy centres to offer standardized services, in line with the
strategy to leverage the equity of its brands through
relevant services.
O Finding out Innovative ways to reach out to its consumers,
particularly in rural areas by leveraging nonconventional
media like wall paintings, cinema vans, weekly markets
(haats), fairs and festivals.
O Launching the Unicare scheme with up market pharmacies
and retailers to sale its premium brands.

O Undertaking several initiatives for traditional channels in order
to improve its capabilities at the frontend by developing skills
for stockists' sales force. Under 'Project Dronacharya', the
FMCG major continuously imparted training to over 10,000
stockist salesmen.
O Launching of several promotional schemes for existing
wholesalers and distributors. For instance, it has started the
`Vijeta Rishta Jeet Ka scheme to provide a platform for the
wholesaler and HUL to grow the business by earning points
and redeeming them.





































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Field Force Management

The working cycle of a typical HUL field force member is from 21st
of every month to the 20th of the next month. During this period he
is given various targets that helps to achieve company objectives
and gives him a chance to prove his performance relative to other.

To start with the field force member is given a particular area and
his responsibility is to cater to all the retailers in that area. While
deciding the area for each member of the field force, the company
makes sure that the operating area of each field member doesn't
overlap with his other colleagues. There are various methods used
by the company to incentivize the field force Monetary and Non
Monetary.

In HUL, the field force is evaluated using " ("uality of
ontribution). It consists of 4 components:

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


Secondary Sale-Based on the operating area, each member is
given a specific target in terms of value (e.g., Rs. 15 lacs) for the
operating month (21
st
- 20
th
of next month). If he achieves 100% of
the target he gets 2.5 points, if he achieves 95% target he gets 1.5
points. These points are used to add to the total QOC score as well
as linked to monetary incentive.

Eidt pack Target - This is used for the penetration/reach
of certain products in the existing market. The following is a typical
ECO target assigned to a field force agent:

Lux International - 105 outlets x 1 SKU
Pears Soap-135 outlets x 1 SKU
Rin-104 outlets x 1SKU
Breeze Soap-100 outlets x 1 SKU

The outlets mentioned are within the operating area of the person
and 1 SKU=Rs. 27/-. Based on this the Field person calculates
number of packs he should sell to the retailers. The concerned
agent receives this target around 25
th
of each month and has to
complete this target within the 5
th
day of next month. Upon
completion he gets additional 0.5 points added to his QOC score
along with monetary incentive associated with it. However if this is
not met within 5
th
, he looses the opportunity.

Focus Dept Pack target - This is mainly used to increase the
sales volume of certain products. A typical `Focus target is given
below:

Lux International-Rs 20,640/- @ Rs 6/- per unit
Life Buoy-Rs 70,220/- @ Rs 10/- per unit
Wheel-Rs 99,000/- @ Rs 10/- per unit
Breeze Soap-Rs 27,000/- @ Rs 10/- per unit

This target needs to be achieved within 20
th
of next month. Upon
achieving the target the field person is awarded 0.5 points which is
then added to his overall QOC score.

Field apability Score (FS) In this component, the field force
persons are required to ensure that the scheduled visit/outlet billing
is such that at least 15 items are demanded per order. If this is
achieved the retailer gets a discount of 1% on the billed amount
and on the other hand the field person gets an additional score of
0.5 which is added to his QOC score. Each scheduled visit per outlet
is one per week. For example if there are 100 outlets within the
operating area of a field person then the number of visit per week is
100 and total number of visit per month = 100x4 = 400.

The sales person is required to achieve 90% success rate to get 0.5
points for his QOC score and at least 65% for a satisfactory
performance.

Non Monetary Methods

The other purpose of the QOC scores is to highlight the performance
of the field person among his peers. Based on the QOC various
awards are distributed to the field persons at the end of every
month. These awards are also known as `MOC Star awards. MOC
stands for Monthly operating Cycle.

If QOC score > 4.5 - The person is eligible for 7 star award
If QOC score > 4 - The person is eligible for 5 star award
If QOC score > 3.5 - The person is eligible for 3 star award

In the event of exceptional performance, management
representatives from the regional office come to the zonal office to
distribute the awards. The photograph of the award winners is
displayed in the office as a source of inspiration for other sales
person.

Target Setting Mechanism and Monitoring

The regional office monitors the performance of various zones. A
thorough analysis is done at the end of each month and based on
that the weak products are identified or those for which the demand
has weakened. This is the basis of setting ECO and FOCUS targets
for the field persons. Each field person is given a palmtop wherein
he can feed the entries on the spot where the transaction is done.
This solves basically the two purposes.

a) The field person is freed from the tedious task of maintaining
cumbersome records and can then concentrate on the job (thus IT
is replacing some of the field force or other channel members)
b) The sold item is immediately updated in the company information
system.







ANALYTICAL FRAMEWORK

I tried to analyze HULs distribution network in the light of some
most significant variables that affect the distribution part of channel
management for any organization in the business of marketing &
selling of goods. The variables, their explanations and their impact
on the HULs distribution network are given below -

1. Number of Consumers

In retail business dominated by traditional stores like Kirana Stores
etc (Indian retail business falls in this category), higher the no. of
consumers, higher will be the no. of channel intermediaries. The
implication of this is that there will be many layers in the channel in
such a situation and managing such a complex distribution network
by keeping tabs on every player will be a huge task. Moreover,
Transport & Logistics ("T&L) support provided by the organization
needs 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
redistribution stockists, covering about 6.3million retail outlets
reaching the entire urban population, and about 250million rural
consumers in India. Its said that HUL is able to touch the lives of
about 2 out of every 3 Indian consumers. This achievement is due
to the sheer strength of its distribution network (products should be
good as always, otherwise they will find no buyers in the long
run).For a comparison, 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 in managing modern retail (biggest example,
WalMart), but not traditional retail.

. Geographic Dispersion of Consumers

Again, this is closely related with the previous variable, more so in a
large, geographically diverse country like in India. With the increase
in this dispersion level, more intermediaries and more layers are
required in the distribution network so as to effectively reach the
length & breadth of the country. Obviously the T&L management for
such an organization would be critical to accomplish this.



Implication for HUL

For a country as geographically diverse as India, panIndian
presence & market leadership can only be possible when products
reach even the remotest parts of the country. HUL is very
successful in achieving and maintaining this reach due to its
distribution network.

3. Frequency of Purchase

If the frequency of purchase is high, then transport intensity in "the
last mile (i.e., from distributor to retailers) increases manifold. For
FMCG products, as a thumb rule we can take that the mean time
between two purchases is ~ 90 days. With the introduction of
smaller form factor packaging for FMCG 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 40
plants around the country, rationalizing the logistics and planning is
a 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 mother
depots. Each of them has a minimum number of JIT depots
attached for stock requirements. All brands and packs required for
the set of markets which the MD and JITs service in a given area
are sent to the mother depot by all manufacturing units. The JITs
draw their requirements from the MD on a weekly or biweekly basis
and supply to stockists in that area, who, in turn, supply to
retailers.

. Tendency to Postpone Purchase

If the tendency to postpone purchase is lesser, then the product will
be easier to distribute. For example, products/services like Fire
Extinguishers, Life Insurance etc. are such that though these are
needed, the overall tendency for the consumers is to postpone the
purchases - these products/services can be termed as "necessary
evil. For this kind of products, regular reinforcement in the minds
of consumers becomes necessary, sales field force becomes critical
and use of "expert field force is commonplace.



Implication for HUL

Since FMCG products are used regularly and these products are not
"necessary evils, distribution network of HUL does not require any
expert field force to sell its products. Only the recent diversification
of HUL into Home Water Purification business ("Pure It brand)
needs dedicated field sales force.

. Level of Familiarity/Knowledge (of consumer) about the
Product

If the level of familiarity of consumer with the product is higher,
lower will be the importance of field sales force and higher will be
the importance of channel.

Implication for HUL

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

6. Degree of Brand Loyalty

If the consumers are more brand loyal, then less "push will be
required from the channel members to sell the products as there
will be sufficient "pull or demand from the consumers. This implies
that for products with loyal customer base, efforts from the channel
members can be much lesser for final offtake to happen which in
turn leads to lesser margins to the channel members for those
products. For faster moving products (mostly due to brand pull),
retailers may not be averse to slightly lesser margins as rotation of
the products is high and thus his/her ROI is protected.

Retailers ROI = Margins x Rotation
Investment

For a FMCG player with a nonestablished brand, margins to channel
members and point of sale (POS) advertising are both important.

Implication for HUL

As HUL enjoys leadership position in many FMCG segments like
Soaps, Detergents, Personal Care products etc. with strong brands
with continuous "pull, HUL has less to worry about margins to
channel members or POS advertising. But this situation can change
considerably in the face of rise of a significant competitor having
almost the same reach as HUL has (e.g., ITC as its eating into
HULs market share continuously since it entered FMCG segment).

. Purchased on Impulse

The impulse purchase products like chocolates, toffees, colas, ice
creams etc. follow Says Law which states that "Supply Creates
Demand, implying availability of these products are the most
critical aspect for these to be sold and consumed. This stresses on
the fact that T&L for these products becomes very important.

Implication for HUL

HUL has only one product in this impulse purchase category Kwality
Walls (ice cream). HUL is#2 after Amul in this FMCG segment. To
increase this brands sale & market share, availability, visibility and
consumer mind share has to be increased and improved as well.

. Level of Involvement (LOI)

Level of involvement (i.e., time & effort spent by the consumer)
generally depends on the product cost. If LOI is higher, lower is the
importance of availability and more critical is the supply of
information as consumer decision process depends more on
elaborate information search.

Implication for HUL

As FMCG products are generally Low Involvement Products, HUL
has to bother more on ensuring availability of the products, rather
than supply of information.

9. Purchased as a Basket of Goods

The products which are generally bought together by consumers as
a basket of goods (e.g., Rice, Flour powder, Cooking oil etc at the
beginning of the month) are to be made available together for final
offtake.

Implication for HUL

This aspect partly applies to HULs products as some products like
shampoos, soaps; detergents may fall in a basket. Efficient
distribution network of HUL ensures availability of all such products
at each selling point (individual retailer).


10. Speed & Complexity of Decision Making Process

If the speed is low, then the complexity of the decision making
process is higher and greater is the importance of field sales force
and the salespersons skill, knowledge and quality.

Implication for HUL

For FMCG products, complexity of decision making process is not
there and so, speed of decision making is high. This means that for
HUL, field sales force is of limited functional usage.

11. Present of Expert Influencer in the Decision Making
Process

Roles of sales field force vary depending upon whether expert
influencer (e.g., doctors) is present in the process or not. If present,
then consumer buying behavior may become subcontracted and the
expert influencer becomes another customer of the network, apart
from the enduser. In that situation two groups of sales force are
needed to cater to both the segments.

Implication for HUL

For FMCG goods, role of expert influencer is limited. But companies
try to associate brands with regulatory bodies/authorities and show
advertising with experts commenting upon superior virtues of a
product in an attempt to make the buying behaviour shift from
picking/varietyseeking to subcontracted and make consumers more
loyal to the brand. These are true for HUL also (e.g., Ponds
Institute).

1. Element of Crisis Purchase Exists

If element of crisis purchase exists in the buying decision of a
product (for example, bulbs & tubes), then its availability becomes
critical.

Implication for HUL

None of the products of HUL fall under this category. Nevertheless,
availability of products of HUL is necessary for other reasons.

13. Element of Risk Aversion Exists

If the level of involvement of the consumer in buying decision
process is higher, risk taking tendency of the consumer will be
lower or consumer will be more risk averse. In such a situation,
channel members can "unsell a brand by giving explicit or implicit
suggestions. This implies that in such a case, selling depends on
many cases how the company is taking care of channel members
("keeping them happy) such that they are not lured by other
competitors or directed by grievances so as to unsell the brand. This
situation is prevalent mostly in Consumer Durables (like TV,
Refrigerators etc.). In FMCG goods, the situation does not exist per
se.

Implication for HUL

HUL is not affected for its FMCG products by this variable. For water
purifier "Pure It, this can have considerable impact if its sale starts
to happen through channel members rather than by field sales force
as is happening now.

1. Perishability of the Product

If the product is perishable (having small shelf life; examples-
newspaper, milk, fruits etc), then the dimension of "speed in
reaching the end consumers becomes critical & T&L assumes great
significance for the company.

Implication for HUL

The FMCG products that HUL sells are not perishable by nature, but
have limited life. So this aspect is not critical for HUL.

1. Time Band Associated with the Purchase of the Product

If there is 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 grocery items are
most on demand in the 1st week of the month), then high T&L and
infrastructural requirements are needed for the "last mile for the
time band when demand is maximum. It is possible to have idle
capacity in the areas mentioned 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 & Hair
Oil etc. This element of demand time band exists to a certain
extent. This underscores the importance of T&L for HUL as the
transport intensity between distributors and retailers increases in
the 1
st
& 4
th
week of a month for the products mentioned above.
This is over and above the regular replenishment of stocks at
retailers done by distributors. Festivals like Holi etc. may also
increase the demand for personal care items like soaps, shampoos
etc for a short period and distribution network should be geared up
not to miss any such opportunity.

16. Degree of Customization Possible

Degree of customization directly affects economies of scale; higher
the customization, lesser the economies of scale. Also, criticality of
sales field force increases with customization levels of the offering.

Implication for HUL

For FMCG products of HUL, which are mass produced, such
customizations are not possible and thus with higher economies of
scale, lower criticality of field forces from the standpoint of
customization of product offerings, costs are lower in these respects
with HUL.

1. Negative or Positive Reinforcing Product

Negative reinforcing products are those which are bought to
avoid/reduce the problem (ex. -insurance, washing machine, car
battery etc). Positive reinforcing products are those which gratify
the senses (ex. - Perfumes, Chocolates, and Vacation etc).
Shopping experience becomes a critical aspect for positive
reinforcing products to reaffirm the positive feelings.

Implication for HUL

"Axe & "Rexona deodorants are distinctly positive reinforcing
products from HUL, including others like Lux, Lakme etc. So these
are seen in most shopping malls etc. with high visibility displays to
reaffirm the feelings. Consumers are willing to pay higher for these
brands.

1. Value/Volume Ratio (Value Density) of the Product

This ratio is very important for both the company and the retailer
for its two critical aspects -T&L cost and retailer ROI/sq. cm
(retailers are actually in real estate business in true sense). Higher
the ratio, better it is for both company and the retailer as higher
ratio signifies lesser T&L cost per unit volume transported for the
company and greater ROI per unit of shelf space for the retailer.
Implication for HUL

In general for FMCG goods and for HUL as well, value density is
relatively lower. In addition to this fact, increasing trend towards
using smaller pack sizes increases the packaging density (increased
packaging density increase cost to some extent, but favours
mechanized handling greatly, reducing handling costs). Since value
density is less, transportation costs will be higher and thus it is of
economic sense to have manufacturing plants located closure to
major markets. This is the reason HUL has various manufacturing
plants (40 plants) located across India. This is a pointer to the fact
most of the major FMCG players (including HUL) use contracted
manufacturing dispersed across the geographic spread so as to
lower transportation cost component.





























ORGANIZATIONAL STRUCTURE (Rural)














































General Manager
Regional Sales and Customer Manager
Area Sales and Customer Manager
Field Sales and Customer Executive
Territory Sales Manager

004|k;


























INTRODUCTION

"Marketing Research is the systematic designing, collection, analysis, and
reporting of data and finding relevant to a specific marketing situation
facing the company. The present st udy of di st r i buti on channel
based on sur vey methods. In thi s sample survey methods I
have taken only a small part of the whole and data collected from the
small part are made applicable to the whole. Within the time limit, I
tried my best to select the sample representative of the whole
group.































RESEARCH DESIGN

Our research is based on the Exploratory Study.

Research is exploratory when you use no earlier model as a basis of
your study. The most usual reason for using this approach is that
you have no other choice. Normally you would like to take an earlier
theory as a support, but there perhaps is none, or all available
models come from wrong contexts.

Exploratory research means that hardly anything is known about
the matter at the outset of the project. You then have to begin with
a rather vague impression of what you should study, and it is also
impossible to make a detailed work plan in advance.

The gradual process of accumulating intelligence about the object of
study means also that it will be impossible to start by defining the
concepts of study. You have to start with a preliminary notion of
your object of study, and of its context. During the exploratory
research project, these provisional concepts then gradually gain
precision.

We have collected our data by drafting a questionnaire and thereby
interpreted or analyzed or result by using the Microsoft excel.




















DATA COLLECTION

After understanding the aforesaid mentioned distribution network
and, I decided to visit six markets and collect a sample data of 60.
Data (both qualitative as well as quantitative) was collected with the
help of questionnaire and observations in the market. Some of the
quantitative data have been collected with the help of questionnaire
/interview with the retailers.
I spoke to the retailers and wholesalers to know their views
regarding HULs supply chain.
In each of the visits, I have collected information related to:

1. Order Delivery Time
2. Order fulfilling
3. Sales Promotion Schemes, Discounts, Account Settlement and
product variety.
4. Behavior, knowledge, etiquettes of Salesman.
5. Company Officers Visits

004|k;


















Q.1- Are the orders delivered to you on time:







45% retailers are Strongly Agree that there orders are delivered to
them on time.
11% retailers are Agree that there orders are delivered to them on
time.
15% retailers are Disagree that there orders are delivered to them
on time.
29% retailers are Strongly Disagree that there orders are delivered
to them on time.













Q.2- Are your orders fulfilled properly:

SLrongly Agree
Agree
ulsagree
SLrongly ulsagree
CanL Say




22% retailers are Strongly Agree that there orders are fulfilled
properly.
15% retailers are Agree that there orders are fulfilled properly.
13% retailers are Disagree that there orders are fulfilled properly.
50% retailers are Strongly Disagree that there orders are fulfilled
properly.














Q.3- Do you get all the sales promotion schemes:

SLrongly Agree
Agree
ulsagree
SLrongly ulsagree
CanL Say




68% retailers are Strongly Agree that they get all the sales
promotion schemes.
10% retailers are Agree that they get all the sales promotion
schemes.
9% retailers are Disagree that they get all the sales promotion
schemes.
13% retailers are Strongly Disagree that they get all the sales
promotion schemes.











Q.4- Are discounts properly passed on to you:

SLrongly Agree
Agree
ulsagree
SLrongly ulsagree
CanL Say




72% retailers are Strongly Agree that discounts are properly passed
on to them.
17% retailers are Agree that discounts are properly passed on to
them.
8% retailers are Disagree that discounts are properly passed on to
them.
3% retailers are Strongly Disagree that discounts are properly
passed on to them.











Q.5- Are accounts settled timely:

SLrongly Agree
Agree
ulsagree
SLrongly ulsagree
CanL Say




68% retailers are Strongly Agree that there accounts are settled
timely.
10% retailers are Agree that there accounts are settled timely.
5% retailers are Disagree that there accounts are settled timely.
10% retailers are Strongly Disagree that there accounts are settled
timely.
7% retailers are not is the position to say that there accounts are
settled timely.











Q.6- Do you get the product variety:

SLrongly Agree
Agree
ulsagree
SLrongly ulsagree
CanL Say




77% retailers are Strongly Agree that they get the product variety.
5% retailers are Agree that they get the product variety.
15% retailers are Disagree that they get the product variety.
3% retailers are Strongly Disagree that they get the product
variety.















Q.7-Ever missed your order. If yes then what may be the reason:

SLrongly Agree
Agree
ulsagree
SLrongly ulsagree
CanL Say




2% retailers say that their orders are missed due to wrong order
given by them
3% retailers say that their orders are missed due to sudden change
in whether.
95% retailers say that their orders are missed due to less
availability of stock.














Q.8- How frequently executives come to take orders:

Jrong Crder
Sudden change ln
wheLher
Change ln schemes
Less avallablllLy of sLocks




100% retailers are agree that executives visit them weekly.




















Q.9- Do the quality complaints solved properly:

ually
AfLer days
Cnce ln a week




40% retailers are Strongly Agree that there complaints are solved
properly.
18% retailers are Agree that there complaints are solved properly.
10% retailers are Disagree that there complaints are solved
properly.
20% retailers are Strongly Disagree there complaints are solved
properly.
12% retailers are not in the position to say that their complaints are
solved properly or not.








Q.10-Do the salesman have empathetic attitude towards your
problems:

SLrongly Agree
Agree
ulsagree
SLrongly ulsagree
CanL Say






80% retailers are Strongly Agree that salesman have empathetic
attitude towards their problems.
10% retailers are Agree that salesman have empathetic attitude
towards their problems.
5% retailers are Disagree that salesman have empathetic attitude
towards their problems.
5% retailers are Strongly Disagree that salesman have empathetic
attitude towards their problems.








Q.11-Do the salesman try to solve your problems:

SLrongly Agree
Agree
ulsagree
SLrongly ulsagree
CanL Say





80% retailers are Strongly Agree that salesman try to solve their
problems.
3% retailers are Agree that salesman try to solve their problems.
7% retailers are Disagree that salesman try to solve their problems.
8% retailers are Strongly Disagree that salesman try to solve their
problems.
2% retailers are not in the position to say that salesman try to solve
their problems or not.









Q.12-Do the salesman have courtesy and etiquette in their
behaviour:

SLrongly Agree
Agree
ulsagree
SLrongly ulsagree
CanL Say







93% retailers are Strongly Agree that salesman have courtesy and
etiquette in their behavior.
4% retailers are Agree that salesman have courtesy and etiquette in
their behavior.
3% retailers are Strongly Disagree that salesman have courtesy and
etiquette in their behavior.










Q.13-Do the salesman have proper knowledge regarding products:

SLrongly Agree
Agree
ulsagree
SLrongly ulsagree
CanL Say






98% retailers are Strongly Agree that salesman have proper
knowledge regarding products.
2% retailers are Strongly Disagree that salesman have proper
knowledge regarding products.

SLrongly Agree
Agree
ulsagree
SLrongly ulsagree
CanL Say
Q.14-Do the salesman have proper knowledge regarding sales
promotional schemes:







90% retailers are Strongly Agree that salesman have proper
knowledge regarding sales promotional schemes.
2% retailers are Agree that salesman have proper knowledge
regarding sales promotional schemes.
3% retailers are Disagree that salesman have proper knowledge
regarding sales promotional schemes.
5% retailers are Strongly Disagree that salesman have proper
knowledge regarding sales promotional schemes

SLrongly Agree
Agree
ulsagree
SLrongly ulsagree
CanL Say
Q.15-Do the company officers regularly visit you:







3% retailers are Strongly Agree that company officers regularly visit
them.
17% retailers are Agree that company officers regularly visit them.
7% retailers are Disagree that company officers regularly visit
them.
73% retailers are Strongly Disagree that s company officers
regularly visit them.

SLrongly Agree
Agree
ulsagree
SLrongly ulsagree
CanL Say
Q.16-What is your perception towards HULs distribution channel:







5% retailers say that HULs distribution channel is Excellent.
77% retailers say that HULs distribution channel is Good.
13% retailers say that HULs distribution channel is Bad.
5% retailers say that HULs distribution channel is Worse.

LxcellenL
Cood
8ad
Jorse
Q.17 Are you happy with the services provided by distributor/HUL:





79% retailers say that they are happy with the services.

21% retailers say that they are not happy with the services.

?es
no


004|ks


















INTERPRETATIONS AND FINDINGS

Orders which are given by retailers are almost delivered to
them on time.

Orders are not fulfilled properly; means retailers always find
something missing in their orders, they never get the full
order on.

Stock is not available in the depot to serve the retailers. It is
found that the problem for shortage of order delivery is less
availability of stocks.

Seasonal products are also not available at outlets; i.e. winter
season has started and the winter products are still out of
shelf.

New products are also unavailable at outlets, the products for
that the T.V. ads are running regularly are also found out of
stock.

Company officials are also not visiting the outlets regularly. It
is found that if the Company officers are visiting any area
then they are only visiting the main and big outlets and avoid
visiting small outlets. Company is also not conducting retailers
and wholesalers meet.

Banners, posters, boards etc. materials are also not delivered
to outlets.

Product display windows are also not created at retail stores.

Necessary and high sale volume products are also not
available at outlets.

Distributor is also not visiting the market. Only salesman visit
the markets collect the bills and take orders.

Variety of products is not available in rural areas. Sometime it
happen that salesman say that these products are not for
rural area.

It is found that retailers gets the products at cheaper rates
from market compare to offer by the distributor.

004|k(























RECOMMENDATIONS AND SUGGESTION


The following suggestions are given for improvement in the sales
and distribution channel of Hindustan Unilever Ltd.:

1. Frequent visit of company staff should be ensured so as
encourage the retailers in their marketing activity.

2. Every retailer must be aware of the schemes which are
introduced by the HUL from time to time.

3. Prices of costly product should be reviewed in comparison to
other company products and reduced the price if found necessary.

4. Company should ensure timely delivery of consumer goods to
different rural areas by its own arrangement and see that all the
goods are available with the retailers.

5. The commitments of the company to be honest with customers
about problems and shortcomings.

6. Clear, prompt and courteous communication that convey
consistent details.

7. Good behavior and dealings by the company staff with the
Wholesalers and Retailers so as to encourage them in the marketing
activity.

8. Company should ensure timely delivery of products to reduce
replacement of HUL products by products of other companies. For
example unavailability of Wheel creates market for Ghari Detergent;
Unavailability of LUX creates market for Vivel etc.

9. Company should ensure proper production to satisfy market
needs. It is found that there is a huge problem of product shortage
in the market.










name
Address
ConLacL no

1. : Are the orders delivered to you on time:
(a) Strongly Agree
(b)Agree
(c) Disagree
(d)Strongly Disagree
(e) Can`t Say
2. : Are your orders IulIilled properly:
(a) Strongly Agree
(b)Agree
(c) Disagree
(d)Strongly Disagree
(e) Can`t Say
3. : Do you get all the sales promotion schemes:
(a) Strongly Agree
(b)Agree
(c) Disagree
(d)Strongly Disagree
(e) Can`t Say
4. : Are discounts properly passed on to you:
(a) Strongly Agree
(b)Agree
(c) Disagree
(d)Strongly Disagree
(e) Can`t Say
5. : Are accounts settled timely:
(a) Strongly Agree
(b)Agree
(c) Disagree
(d)Strongly Disagree
(e) Can`t Say
6. : Do you get the product variety:
(a) Strongly Agree
(b)Agree
(c) Disagree
(d)Strongly Disagree
(e) Can`t Say
7. : Ever missed your order. II yes then what may be the reason:
(a) Wrong Order
(b)Sudden change on whether
(c) Change in Schemes
(d)Less availability oI stocks

8. : How Irequently executives come to take order
(a) Daily
(b)AIter 1-2 days
(c) Once in a week
9. : Do the quality complaints solved properly:
(a) Strongly Agree
(b)Agree
(c) Disagree
(d)Strongly Disagree
(e) Can`t Say
10. : Do the salesman have empathetic attitude towards your problems:
(a) Strongly Agree
(b)Agree
(c) Disagree
(d)Strongly Disagree
(e) Can`t Say
11. : Do the salesman try to solve your problems:
(a) Strongly Agree
(b)Agree
(c) Disagree
(d)Strongly Disagree
(e) Can`t Say
12. : Do the salesman have courtesy and etiquette in their behavior:
(a) Strongly Agree
(b)Agree
(c) Disagree
(d)Strongly Disagree
(e) Can`t Say
13. : Do the salesman have proper knowledge regarding products:
(a) Strongly Agree
(b)Agree
(c) Disagree
(d)Strongly Disagree
(e) Can`t Say
14. : Do the salesman have proper knowledge regarding promotional schemes:
(a) Strongly Agree
(b)Agree
(c) Disagree
(d)Strongly Disagree
(e) Can`t Say
15. : Do the company oIIicers regularly visit you:
(a) Strongly Agree
(b)Agree
(c) Disagree
(d)Strongly Disagree
(e) Can`t Say
16. : What is your perception towards HUL`s distribution channel:
(a) Excellent
(b)Good
(c) Bad
(d)Worse
17. : Are you happy with the services provided by distributor/HUL:
(a) Yes
(b)No
































REFERENCES

Content Reference List

Company Profile
O Hindustan Unilever Limited. Archived from the original on 2008-08-
02, Retrieved on 08-15-2010 from
http://web.archive.org/web/20080802090951/http://hul.co.in/knowu
s/present_stature.asp
O Retrieved on 26 September from
http://trak.in/tags/business/2010/09/01/top-50-most-trusted-
brands-india/
History
O Retrieved on 26 September 2010 from
http://www.hul.co.in/aboutus/ourhistory/

Mission
O Archived on Scribd 2010. Retrieved on 12 September 2010 from
http://www.scribd.com/doc/37102748/hul

Vision
(Companies official website)
O Retrieved on 24-sep-2010 from
http://www.hul.co.in/aboutus/ourvision/

Values
O Archived on Scribd.com n.d, Retrieved on Aug 31, 2010 from -
http://www.scribd.com/doc36686641//hul


Management
O Organizational Structure : Retrieved on 26-sep-2010 from
http://www.hul.co.in/aboutus/companystructure/
O Awards & Recognitions : Retrieved on 27-Sep-2010 from
http://www.hul.co.in/aboutus/sustanbilityreports/awards
O Corporate Social Responsibility : Retrieved on 27-sep-2010 from
Annual Report 2010, `CSR p.38 & Sustainability Report 2010, p.10




SWOT Analysis
O Strengths : Archived on scribd.com. Retreived on 27-sep-2010
fromhttp://www.hul.co.in/Images/AnnualReport0910_tcm114-
225889.pdf
O Weakness: Archived on Businessweek.com. Retrieved on 27-sep-
2010 from
http://www.businessweek.com/globalbiz/content/jun2009/gb200906
12_706157.htmmainstream consumers
O Opportunities: Archived on authorstream.com. Retrieved on 27-sep-
2010 from
http://www.authorstream.com/Presentation/vickyvishalshah-486442-
hul/
O Threats :
i. http://profit.ndtv.com/news/show/hindustan-unilever-hikes-price-
of-lifebuoy-soap-cuts-lux-pack-size-91476?cp
ii. http://timesofindia.indiatimes.com/business/india-business/Price-
war-HUL-reduces-tags-of-select-laundry-
packs/articleshow/5529324.cms#ixzz10k2r6Mie
iii. http://www.slideshare.net/hardikldrp/swot-analysis-of-fmcg-
industry

O Google.com
O Slideshare.com
O Scribd.com
O HUL.com