CHAPTER II MARKETING STRATEGY OF HOME AND PERSONAL CARE PRODUCTS- A THEORETICAL OUTLOOK

Transcription

1 CHAPTER II MARKETING STRATEGY OF HOME AND PERSONAL CARE PRODUCTS- A THEORETICAL OUTLOOK 2.1 INTRODUCTION In the era of liberalization and globalization, markets all over the world are going through a metamorphosis. The present day consumers are regularly exposed to newer life-styles, products and services unprecedented due to the impact of media and communication explosion. Simultaneously, thanks to the continuously increasing disposable income, there has been a radical shift in the attitude and aspirations of the consumers. Marketing strategies of any corporate create a wave for promoting a product they produce. These strategies influence the corporate a lot on many occasions for adopting the right method in expanding market share. Personal care products are vital product of the consumers. These products need proper strategies to market them at an appropriate time because a reasonable number of corporate involves in this venture.in the modern marketing environment consumers are becoming more and more demanding since the market is glutted with endless products and countless brands offering them rich choices. In pursuit of achieving the best possible value for their money,

2 modern day consumers are gradually becoming quite choosy about products or services on the basis of their intrinsic value. Gone are the days of the marketers with the placed assumption that a market once won is theirs forever in view of the same, marketers of today frantically search strategies to maintain a set of consumers who are loyal to the products or services that they are offering for sale. This phenomenon is particularly significant for the low priced, daily use, nondurable products which are purchased repeatedly by the consumer at frequent intervals popularly termed as fast moving consumer goods (FMGCs) The purchase behaviour of the consumer for such products is of special interest to the marketer since these items are purchased repeatedly and it is this purchase that results in generating volumes and profits MARKETING: MEANING AND DEFINITION Marketing is a system of directing the flow of goods and services from producer to consumer. Normally these activities are carried out either by manufacturing units or retail outlets. In this it could be seen a set of human activities directed at facilitating and consummating exchanges. It involves planning, promoting and distributing want satisfying product and services and ideas in order to achieve organizational objectives. It is also referred to as the

3 process of discovering and translating consumer needs and wants into product and service and in turn expanding this demand. In simple words, marketing is defined as the process of providing the right product in the right place, at right time and at reasonable price to the customers. Mr. Paul Mazur in his book defines marketing as the creation and delivery of standard of living. Marketing is a matching process, based on goals and capacities by which a producer provides a marketing mix( product and services, promotion, pricing and distribution) that meets consumer needs within the limits of society. But American Marketing Association views marketing concerned with the people and the activities involved in the flow of goods and services from the producer to the consumer. Whereas Cundiff expresses in his book that Marketing is the business process by which products are matched with market and through which transfers ownership are effected. In summing up these, it could be expressed thus Marketing is the creation and delivery of standard of living, it is finding out what customers want, then planning and developing a product of service that will satisfy those wants and then determining the best way to price,promote and distribute that product or service.

4 2.3. STRATEGY Strategy is an action plan or a scheme of action or design of execution of a plan. It is a plan that integrates an organization s major goals, polices, decisions and sequences of action into a cohesive whole. It is applied at all levels in an organization and pertains to any of the functional areas of Management. Thus there are production, finance, marketing, personal and corporate strategies. Marketing includes pricing, product, promotion, distribution, marketing research, sales, advertising merchandising and so on. It is concerned with effectiveness rather than efficiency and is the process of analyzing the environment and designing the fit between the organization, its resources and objectives and the environment. Five Different concepts used for defining the word strategy by Mintzberg and Quinn are plan, ploy, pattern, position and perspective. Strategy as a plan is a consciously intended course of action to deal with a situation. As a ploy it is a specific manoeuvre intended to outwit an opponent or competitor. It is a pattern visible in the consistency of actions,intended or unintended, that a company undertakes from time to time to strengthen its position in the market place. It is a position which involves developing a match between the organization and its external environment by reacting or responding to changes in the market environment. Finally, it is a perspective which involves creating a shared view or

5 perspective of the environment by the marketing and other personnel at different levels in the organization. The success of a strategy depends on the convergence of many factors- clarity of objective or target, proper understanding of consumer perception, correct scanning of environment, proper marketing intelligence, correct analysis of competitor s strengths and weaknesses, right promotions and careful enterprise resource planning (ERP). A strategy is to be determined primarily by the demands of the market situation, and what the company should have necessarily are resources to implement the strategy financial as well as human or managerial. The resource base sometimes governs this strategy and at least, there should be a proper matching between the two. In fact, big offensive or challenger strategies assume a strong resource base. Lever s success over Nirma was also based on a strong resource base. Good example for marketing strategy of Indian FMGC is presented with the help of HUL. HUL was quietly working on a rejuvenation strategy. The last two years of the eighties saw Lever turning around. Decline in sales was arrested and slowly sales started increasing. This turnaround was brought about by a well designed orchestrated strategy based on buyer behaviour, expectations and perceptions. Lever s analysis revealed that the price sensitivity of customers varied across different demographic groups. Their research showed that upper middle income

6 and higher income group housewives perceived white and blue coloured detergent powders to be the strongest and the best in washing and they are low in price sensitive. The lower income and middle income housewives, on the other hand, perceived yellow and green coloured detergents as the most satisfying and they are in high price sensitivity. Based on this market research, Lever developed and positioned three brands of detergent powders, namely, Rin, (blue), Wheel (green) and Sunlight(yellow) and constinued to upgrade Surf- later to become Surf Ultra and maintained its position as an economic detergent powder. Through this strategy repositioning of surf and brand extensions (Rin, Wheel, Sun light), Lever emerged as the market leader in detergents in the market Marketing strategy Marketing strategy is a process that allows an organization to concentrate its resources on the optimal opportunities with the goals of increasing sales and achieving sustainable competitive advantages. This strategy includes all basic and long-term activities in the field of marketing that deal with the analysis of the strategic initial situation of a company and the formulation, evaluation and selection of market-oriented strategies and therefore contributes to the goals of the company and its marketing objectives. It serves as the fundamental

7 underpinning of marketing plans designed to fill market needs and reach marketing objectives. Plans and objectives are generally tested for measurable results. Commonly, marketing strategies are developed as multi-year plans, with a tactical plan detailing specific actions to be accomplished in the current year. Time horizons covered by the marketing plan vary from company to company, Industry to Industry and from nation to nation. However, time horizons are becoming shorter as the speed of change in the environment increases. Marketing strategies are dynamic and interactive. They are partially planned and partially unplanned. Marketing strategy involves careful scanning of the internal and external environments. Internal environmental factors include the marketing mix, plus performance analysis and strategic constraints. External environmental factors include customer analysis, competitor analysis, target analysis, as well as evaluation of any elements of the technological, economic, cultural or political/legal environment likely to impact success. These strategies are the result of a meticulous market analysis. A market analysis forces the entrepreneur to become familiar with all aspects of the market so that the target market can be defined and the company is positioned in order to garner its share of sales. A market analysis also enables the entrepreneur to establish pricing, distribution and promotional strategies that allow the company to become profitable within

8 a competitive environment. In addition, it provides an indication of the growth of potential within the industry,and this allows to develop own estimates for the future business Marketing strategy of home and personal care products The products in the home & personal care industry touch the lives of billions of people across the world, right from the time one wakes up to brush his/her teeth to the time one goes back to bed with a night cream for rejuvenating the skin. The household product segment offers cleaning, sanitation, pest elimination, and maintenance products. The personal care segment basically includes cosmetics and toiletries manufactures. The personal products market consists of fragrances, make-up, skincare, hair care and personal hygiene products. Some of the important names in this arena are- Unilever, Colgate Palmolive, Kimberley- Clark, Revlon, Alberto-Culver, Avon etc. The global household and personal products industry is relatively mature in most of the more developed economies. However, leading players can continue to obtain growing revenues by strategies such as development of strong brands,

9 enhancing products in order to charge premium prices, and micro selling in markets where personal incomes are low. In 2005, the household and personal product industry grew by 3.1% to reach a value of $227.2 billion, representing a compound annual growth rate (CAGR) of 2.9% for the period. Year-on-year growth rates were very steady. Consumption volumes increased with a CAGR of 2.5% to reach 70.9 billion units in The relatively modest growth rates reflect the maturity of the industry in most developed economies. Sales of personal products account for 74.3% of the industry revenues, equivalent to $168.7 billion in2005. The remainder of the industry value is generated by household product sales. The personal products market has also grown more strongly than the household product sector, so driving overall industry expansion. A possible reason is that manufacturers may be able to charge higher prices for personal products, for example through the use of marketing to build aspirational or luxury brands, whereas household product tends to be viewed by consumer as utility goods. Home and personal care products are considered to be a trusted and premium brand because of its unique association. Unilever is positioning their

10 product in the best of their customer satisfaction which also differentiates them from their competitors. They are creating an environment for people to have a life easy. Marketing strategies are to promote and market personal care product with the aid of marketing to properly leverage the assets owned. Dealing with personal care product is to actually display proper advertisement and a proper attitude towards promoting overall feeling of caring the customers. There is a secret behind the activity of marketing personal care product and it lies in learning how to grow business effectively. There are several strategies used to grow personal care product business, and most of them fall under 4 categories to attract more new customers, increase the average sales amount, make customers buy every time they are in need of a personal care product and hold on to customers for life. As personal care product business has the advantages, people have to know more about taking good care of themselves. A good idea would be actually to set up a mobile lab where you can measure different things about their health for free and provide free advice on how to take their lives and their way of life. Make sure that product covers all of their needs. Instead of advertising consider making a list of sites or magazines that are read by the people and that have a special focus on health. Offer help answer letters, telephone calls and even

11 provide articles in exchange for free publicity. This is called an education-based marketing strategy. It could be of a real help in promoting personal care business. While focusing on how to attract new customers, one should conduct proactive referral program. Second step in promoting personal care is to concentrate on increasing the total and the average sales amount. The first thing ought to do is to up-sell customer to a major quality service and high quality product. Every product, especially when we talk about personal care, would fulfill a personal desire but also has to complete that personal care desire together with another one. Try to suggest accessories and advertise them as well. Make combination of products that can be used together for better effects. Always try to offer complete service to customer. First of all start by being aware of their need and try to satisfy them as much as possible through combining different things. The genesis of the marketing mix or 4Ps is; if one manages to achieve the right product or right price with right promotion in the right place, the marketing programme would be effective and successful. Therefore assembling and managing the marketing mix Product Strategy

12 It is not prudent to predict the success of a product based on its success in developed market. Most of the consumers in their emerging economics have not been introduced to the newer products that might have been developed in the developed world many years ago. Hence, it is important the company should first try to create an awareness of the product benefits. Failing this, there is a big chance of failures. For example, When hair products were first introduced to rural India, the companies started with a transplanted product from developed markets, the 2-in-1 shampoo-conditioner. Companies thought that women would be attracted to this products because it was cost-effective, However initial sales were dismal.what companies failed to recognize is that most rural consumers had previously never used shampoo and did not value or understand the full benefits of conditioner, But when HUL focused on product development strategies for Indian rural consumers who still did not use shampoo, their research indicated that a prevailing consumer habit in rural India was to use Soap for hair and body care. Rather than trying to change instilled consumer behavior, they focused on creating an opportunity. Consumers wanted a product that was convenient and at low cost. The result was a new 2-in-1, a product that cleaned the hair and body, was targeted towards companies in rural areas. Once a consumer is aware of the products benefits, he might consider buying it.

13 2.3.4 Pricing strategy It is an integral part of any marketing strategy. But pricing itself is used as an effective strategy many times. Pricing as a strategy can be powerful because it has the ability to create or destroy value. It can act both ways; increasing market share and cutting into profitability and so on. Every increase or decrease in price generally has multiple effects. Some have even attempted to calculate the average multiplier effects of a price change on pre-tax profit margin. Major objectives of pricing strategy are customer affordability and not necessarily to undercut competitors, prices are restructured and repositioned, and, not lowered arbitrarily, the changes in price are permanent and not driven by temporary discounts, the price develops the value of the brand and does not erode it. But most of the companies using pricing as strategy must enjoy certain cost advantages. In fact, many feel that to become a price leader, a company should also be a cost leader. It must have very efficient methods of cost control. HUL is an excellent example. HUL pricing strategy is backed by a very strong cost strategy. If the pricing strategy is not backed by an equally effective cost strategy, low pricing becomes a long term losing strategy Promotion strategy

14 There are many ways to promote a product and most of the companies use a mix of the promotional tools. Major elements of a promotional tool are, advertising, sales promotion, personal selling, and public relations. Today, advertising plays a pivotal role in any promotional mix. Sales promotion has always played a vital role in marketing. Public relations are generally important in business marketing and services. Marketers should also take into account the major factors that determine the choice of a particular promotion mix. These are, nature of market, i.e. market size, number of products\brands in the market, intensity of competition, etc. Brand awareness and buyer s readiness, that is buyer s awareness of various brands and their readiness to buy particular brands. Product life cycle, that is introduction stage and advertising publicity are more important while in the maturity stage, sales promotion and personal selling are more effective. Overall marketing strategy such as whether the company likes to push the product (through marketing or distribution network) or create a pull (strong consumer demand). In the push strategy, focus is on personal selling and trade promotion; in the pull strategy, the emphasis is on advertising and consumer promotion. For many companies the overall marketing strategy can be a combination of push and pull. Given these factors and the promotional tools, the marketer has to decide the right mix for different products, market and

15 buyer situations. As a general rule, advertising is found to be more effective in consumer non durable (FMCGs). HUL used a promotion mix in the motors to build an awareness and create excitement around the new relaunched Le Sancy soaps. The new promotion is aimed at children with attractive offers. As HUL puts it; This thematic cross- promotion is closely tied up with the product s advertising which stresses value and reinforces the fact that Le Sancy also stands for quality. Tooth-paste manufacturers commonly use promotion, often quite effectively, to identify competitors, and, offer a discount on the purchase of their brands.another tactical use of promotions is to block new entrants into the market. Many companies, including HUL, believe that preponing purchases of loyal customers is the best way to block. One of the most essential things that would be a factor towards the long-term sustainable success of business venture is setting out and implementing a successful marketing strategy. Most business as do not set out their marketing strategy or, even if they do, it is not followed and implemented comprehensively. Business as that have the vision to create a vibrant, customer -focused marketing strategy, and the resolve to implement it, would have a real opportunity to do something wonderful with their business. A marketing strategy involves choosing realistic, measurable and ambitious goals that business can achieve on a sustainable basis. Each marketing tactic should be

16 100% focused on reaching and surpassing that overall goal. A marketing plan includes all of the tactics and actions that are designed to achieve the overall strategic goal, and a time table for their implementation. The vast majority of businesses in all sectors market themselves the same way as their competitors, with supply-driven marketing messages based on product features, unappealing websites and blend strapinnes and statements about what their business does Place Strategy Two major factors that influence the emerging economic or the labour cost and the retailer power if labour cost is high and the frequency of purchase too is high, it makes economic sense to automate the systems. This is exactly what soft drink make as to when they install vending machines. However its cost of labour is high, but if frequency of purchase is low, then having a distribution point consisting of only this sole product will be unprofitable. If both retailers cost and frequency of buy or low, then it is the retailers who will be the main influencer of product choice. Hence a retailer s push strategy should be adopted for emerging markets, low labour cost and frequency of buy or high, and thereby, it is much more economical to substitute capital investment by labour. 2.4 PROFILE OF HUL

17 HUL was a 51 per cent subsidiary of the Anglo-Dutch conglomerate, Unilever, one of the largest FMCG companies in the world. Over the years, HUL had acquired a tremendous reputation as one of India s best-managed companies. Despite being the subsidiary of an MNC, HUL was perceived to be more Indian than foreign, in the way it managed its operations. HUL was believed to operate with considerably more autonomy than other subsidiaries in the Unilever system. HUL Logo is presented below: CHART 1 HUL Logo Origin

18 HUL s origin went back to 1885 when the Lever Brothers set up William Hesketh Lever in England. In 1888, the company entered India by exporting Sunlight, its laundry soap. In 1930, the company merged with Margarine Unie (a Netherlands based company which exported vanaspati to India), to form Unilever. In 1931, Unilever set up its first Indian subsidiary, the Hindustan Vanaspati Manufacturing Company for the production of vanaspati. This was followed by the establishment of Lever Brothers India Ltd. In 1933 and United Traders Ltd. In 1935, for the distribution of personal products. In November 1956, the three Indian subsidiaries merged to form HUL. In the 1990s, HUL expanded its operations through mergers and acquisitions. In April 1993, the company acquired its largest competitor, Tata Oil Mills Company (TOMCO), the biggest such deal in Indian industry till that time. HUL formed a 50:50 joint venture with another Tata company, Lakme Ltd in the venture named Lakme Lever Ltd. Marketed lakme s leading cosmetics and other associated products. Subsequently in 1998, Lakme sold its products to HUL and divested its 50 per cent stake in the venture. In January 1996, group company Brooke Bond Lipton India Ltd. (BBLIL) merged with HUL. Unilever had acquired Lipton in 1972, and Lipton Tea, (India)

19 Ltd. was incorporated in Brooke Bond had joined the Unilever fold in 1984 through an international acquisition. Brooke Bond and Lipton India merged in July 1993 to form BBLIL. Another group company, Pond s India Ltd, merged with HLL in January Pond s India Ltd. had been present in India since It became an HUL group company when Unilever acquired Chesebrough Pond s USA in By the mid-1990s, the integration of the different Unilever entities operating in India, had been completed by and large. The details of HUL from inception Till date presented in Table 2.1. TABLE 2.1 Mile stone of HUL in its History Year 1888: 1918: 1930: Historical events Lever Soap, Sunlight, introduced in India through imports. Vanaspati(hydrogenated edible oil) launched through imports. Unilever created through the merger of Lever Brothers, UK and Margarine Unie, Netherlands. Unilever registers company in India Hindustan Vanaspati Manufacturing Company 1931: 1933: 1935: 1956: 1958: (HVM) for local manufacture of vanaspati. Lever Brother s India Limited (LBIL) incorporated in India to market personal soap. United Traders Limited (UTL) incorporated in India to market personal products. The three subsidiaries, HVM,LBIL and UTL merge to form Hindustan Lever Limited (HUL). Hindustan Lever Research Centre starts functioning.

20 1979: 1993: Chemicals complex commissioned at Haldia, West Bengal. HUL s largest competitor, Tata Oil Mills Company (TOMCO), merges with the company. Erstwhile Brooke Bond India acquires Kissan, Business from the UB Group and Dollops ice-cream from Cabury. Doom Dooma and Tea Estates Plantation divisions merged with brookebond, Broke Bond, Brooke Bond and erstwhile Lipton India merge to form Brooke Bond Lipton India Limited. 1994: 1995: HUL and US-based Kimberley-Clark Corporation from 50:50 joint venture, Kimberley-Clark Lever Limited. HUL and Indian cosmetics major, Lakme limited form 50:50 joint venture, Lakme Lever Limited HUL acquires Kwality and Milkfood with 100% brand names and distribution assets. HUL and US-based SC Johnson and Son incorporated to from 50:50 joint venture, Lever Johnson (Consumer Products) Private Limited. HUL soaps and detergent sales cross one million tones. HUL associate company, Brooke Bond Lipton India Limited, India s biggest firm in food and beverages, merge. 1996: 1997: 1998: HUL and Gist Broacades BV form 50:50 joint venture. Lever Gist Brocades, to market Gold Seal Fermipan Instant Yeast baking industry. Group Company Pond s India Limited merges with HUL. HUL acquires Lakme brand, factories and Lakme Ltd s 50% equity in Lakme Lever Limited, HUL acquiring manufacturing rights of Kwality Ice-cream.Appellate Authority of Government of India absolves HUL of insider trading charges, made by SEBI in1997, in the BBLIL merger. HUL acquires Modern Foods, the first public sector company to be devised by the Government of India. Hindustan Lever Ltd (HLL) has launched Clinic Plus Protein Shampoo with a new formulation that contains a Protein Health Complex. Hindustan Lever has launched after-shave locations from its Calvin. HLL has launched the new Fair & Lovely Fairness Soap Which will help make the skin fairer, safely and gently. 2000: 2001 Company s branded salt Annapurna launched in Africa. Enters into ayurvedic healthcare market by releasing their Lever Ayush ayurvedic health and beauty care products. Relaunches Surf Excel as a low-foam detergent to target markets facing severe water crisis. Unites Knorr, Annapurna brands under one roof in the name Knorr Annapurna Umberla. The company has introduced a new mango drink Mr Fruit.

21 Relaunches Rin Shakti Powder and Rin Shakti Bar. Hindustan Lever Ltd has introduced its new active Gel Close Up in the market. Launches Dove Ultra Moisturizing Body Wash HLL introduce iced tea in glass bottles. Brookefields food operations moved to Mumbai. Company name has been changed from Hindustan Lever Ltd to Hindustan Unilever Ltd HUL completes 75 years on 17 th October Hindustan Unilever decided to license Lakme and Lever Ayush, brands to it s subsidiary, Lakme Lever Private Limited, for the Beauty and Wellness services business. Hindustan Unilever said it exited from BPO firm Capgemini Business Services India by selling its remaining 49% stake to IT consultancy firm Cap Gemini SA Brand Portfolio Restructuring HUL Like its parent brand Unilever, it planned to prune its brands and focused on the top 30 out of a total 110 brands. These top 30 brands contribute more than 75% of the turnover. The rest is either dropped, sold, migrated or continued as regional brands. HUL is not planning to vacate any category it is present in, and is only eliminating brands. With the rationalizing of these brands an enormous

22 simplification is expected to take place. According to Chairman, Banga Because you cut down on the number of SKU s, the supply 30 chain gets simplified and that saves costs. The company plans to support the power brands with strong advertising. Brands which contribute to about 25% of HUL s turnover, have been classified into three groups. First, they are the regional jewels, that is, brands which are exceptionally strong in certain geographic areas. Hamam, for instance, gets about 60% of its volumes from Tamil Nadu, where it has more than 30% market share. HUL, though tightlipped about its power brands gameplan, has started to announce its list of casualities, or brands which are both small and unprofitable, and are to be discontinued or sold off. HUL has delisted two toothpaste variants, Close-Up Renew and Close-Up Oxyfresh, which are off the shelves, the washing powder Revel and the rural toothpaste Aim which will also go off the shelves soon. Breeze, a mass market brand in the toiletries market is growing at 50% plus per annum. Hence, the company plans to phase out the other mass market Jai soap, which is now being supported lesser and lesser. Another brand that might be phased out is Moti soap which sells only in one or two states and just about 5,000 tonnes a year, mostly during the Diwali season. Among the emerging categories Rexona and Axe deodorants are the power brands. Rexona has been used to build the deodorant

23 market by HUL. Axe, though launched only last year, has been doing well. However Denim and Impulse are likely to go since they have not fared well in the market. Banga explains, Whenever you have the same benefit and same price point there s no advantage to me to carry two brands. So what we would do is to merge those brands with some of the 30. The company through intelligent communication and use of pack graphics intends to migrate the consumers of the phased out brands to existing brands. After almost a month of research, The Economic Times short listed what it considered the probable power brands of HUL. The criteria for selecting the 30 brands was brand s current sale, its differentiation vis-à-vis the rest of the market and its future growth potential. The 30 power brands are presented in Table 2.2. TABLE 2.2 HUL s Brand Portfolio S.NO Type Product Brand 1. HPC Personal Wash 2. Foods & Beverages Fabric Wash Care Skin Care Hair Care Oral Care Lux, Lifebuoy, Liril, Hamam, Breeze, Dove, Pears, Rexona. Surf Excel, Rin, Wheel, Vim, Domex, Sunlight, Comfort, Ala. Fair and Lovely, Ponds, Vaseline, Lakme, Pears, Dove, Axe, Denim. Sunsilk shampoo, Clinic Plus shampoo, Clear shampoo, Dove shampoo. Pepsodent, Close-up. Beverages, Brooke Bond 3 Roses, Brooke Bond Red Label, Brooke Bond Al, Brooke Bond Taj Mahal, Lipton Tazza, Lipton

24 Yellow Label, Brooke Bond Bru, Lipton Green Label, Annapurna, Kissan. 3. Ice Cream Kwality Wall s Cornetto, Kwality Wall s Feast, Kwality Wall s Max, Kwality Wall s Softy. 4. Water Pureit water filter Sources: Pureit Chart 2 Shows the personal wash care products of HUL CHART 2 Personal Wash Care Products

25

26 Chart 3 Shows the Fabric wash care products of HUL CHART 3 Fabric Wash Care Products

27 Chart 4 Shows the Hair care products of HUL CHART 4 Hair Care Products

28 Chart 5 Shows the HUL Brand portfolio CHART 5 HUL Brand Portfolio

29 2.4.3 Business Segments HUL had five main divisions, Soaps & detergents, Personal Products, Beverages, Foods and Ice creams. HUL also had a separate exports division. The company s exports included soaps and detergents, personal products, home care products, tea and coffee and other items such as marine products, basmati rice, castor oil and its derivatives, HUL was one of India s largest exporters. The Government of India had recognized HUL as a Golden Super Star Trading House 1. The soaps business had famous brands such as Lifebuoy, Lux, Liril, Hamam, Pears, Breeze and Dove. The detergents business had brands like Surf Excel, Surf, Rin, Wheel (the number one detergent brand in India, and HUL s largest), 501, OK, Ala and Sunlight. HUL also offered the Vim and Domex range of Home Care Products. The Personal Care Products business was divided into Hair Care, Oral Care, Skin Care, Color Cosmetics, Deodorants and Fragrances. The Hair Care brands were Clinic, Sunsilk and Lux Shampoos and Nihar oil. Oral Care brands included Close-up and Pepsodent tooth pastes and toothbrushes. In Skin Care, HUL marketed Fair & Lovely Skin Cream and Lotion. The Lotion, which was a brand developed in India and exported to over 30 countries, had been extended as an

30 Ayurvedic cream, an under-eye cream, soap and talc. The other major Skin Care franchises were Pond s, Vaseline, Lakme and Pears. In Colour Cosmetics, HUL marketed the Lakme and Elle-18 ranges. In Deodorants, the dry brands were Rexona, Axe, Denim and Pond s. The major Talc brands were Pond s, Liril, Fair & Lovely, Vaseline and Lifebuoy. HUL s men s toiletries included Axe and Denim. Health Care was among the new businesses HUL had chosen to enter. The Ayush range of Ayurvedic Health & Personal Care Products, launched in 2002, included Cough Naashak Syrup, Headache Naashak Roll-on, Dandruff Naashak Shampoo, Hair Rakshak Oil and Body Rakshak Soap. The brand seal was Truth of Ayurveda Proof of Science. HUL was one of the world s largest packet tea marketers, owning leading tea brands like Taj Mahal, Red Label, Taaza, A1 and Three Roses. The coffee business consisted of Bru Instant Coffee and Deluxe Green Label Roast & Ground Coffee. The Kissan and Knorr Goods range comprised Spreads & Jams, Biscuit Sticks, Soups, Spuashes, Tomato Ketchup, Sauces, Puree, and Cooking Aids. HUL also marketed popular food items like wheat flour and iodized edible salt, under

31 the Knorr Annapurna brand name. The range had been expanded recently with ready-to-eat 10-second chapattis (Indian bread). HLL had invested heavily in the foods business, believing innovative offerings could prompt consumers to shift towards processed, hygienic, healthy and convenient products. But the business had not performed as well as the company had expected. Between 1998 and 2002, the revenues from the foods business had shrunk, from Rs932 crore to Rs715crore, when oils and fats, processed fruits and vegetables and branded staples were included. If beverages (mainly packed tea and coffee) were included, between 1998 and 2002, the foods and beverages turnover would have dropped by a dramatic 29 per cent, from Rs.2,731 crore to Rs.1,947 crore. The contribution of the foods business to HUL s total revenues decreased from 10 per cent in 1998 to 7 per cent in 2002 while that of beverages reduced from 19 per cent in 1998 to 12 per cent by The Kwality-Wall s Ice Cream range comprised exotic Sundaes, Viennetta Desserts, popular Impulse segment products like Max, Cornetto and Feast, and Cornetto Ripple Softies. Max was extended in 2001 as sugar confectionery, one of the new businesses HLL had chosen to enter.

32 In 2002, HUL s growth was driven by a strong performance in Personal wash (11.3 per cent), Fabric wash (8 per cent), Dish wash (19.4 per cent) and Skin care (21.8 per cent). In Foods (including Ice Cream) where HLL had laid heavy bets, sales declined by 11.6 per cent HUL and direct marketing HUL made its foray into direct marketing in 1999 with the launch of a range of personal care products under the brand name Aviance. Though Aviance was not a roaring success in absolute sales numbers, it laid the foundation for HLN, which was launched on January 27, In terms of market share, HUL is India s largest consumer goods company and the leader in beauty, personal hygiene and home care products in the country. The innovative distribution channels created by HUL to access the Indian market have spelled success for the company for over five decades. HUL s formula has been successfully replicated by many competing brands and small players in the FMCG segment. The wide range of products offered by HUL to tap every conceivable price point, tapped the unexplored Indian market optimally, and HUL became the jewel in Unilever s crown, contributing to revenue growth even when the parent company was struggling. But in the late 1990s and early 2000s, an

33 influx of foreign players and myriad low-price rivals started eroding HUL s dominant position. The company zeroed in on the idea of meeting the growing needs of the time-starved Indian middle class population through direct marketing via HLN. The direct marketing industry was estimated to be worth more than Rs. 15 bn as of early 2003, and was growing at the rate of approximately 25% year-on-year. Through value-added services like expert advice and home delivery, and a range of world-class products which mirrored the aspirations of its target consumer, HLN aimed to be the most preferred network marketing company in the country. It envisioned partnering with its consultants (salespersons) and providing them with a business and self-development opportunity that was truly rewarding. In the words of Dalip Sehal, executive Director New Ventures and Marketing Services, HUL, We need to be present in all channels. And we see network marketing as a bigger opportunity than a threat Hindustan Lever Network (HLN) A dominant player and market leader in the fast moving consumer goods segment HUL forayed into direct marketing in 1999 with a premium brand of personal care products for woman, with woman acting as consultants. Aviance,

34 the brand name under which the products were sold, was limited in its domain and scope of operation. It offered customized beauty solution and a range of cosmetic and skin care products to its consumers. The Aviance range of products catered to the SEC B&C strata and this led to visible mismatch between the brand positioning and the consultant profile. The brand Aviance, therefore, never really managed to attract and retain its target consumer segment. At the same time, aithough Aviance had failed to attain its desired level of success, the direct selling industry in India was undergoing great change with the emergence of a number of new product categories. Network marketing expanded, engulfing a wide spectrum of products from kitchenware and home care to food and jewellery. In such a scenario, HUL stood conspicuously limited in its positioning as a premium women s brand with women-oriented beauty products. By the end of 2002, the company therefore decided to rethink its strategy and not broadbase its products but also open the distribution network to men, who wanted to act as consultants. Past experiences with Aviance (the brand name failed to communicate the origin of the product from the House of Levers and therefore failed to instill trust and confidence in its target segment) made HUL skeptical about using a neutral,

35 new or foreign name for its revamped efforts in the direct marketing segment. The company wanted to leverage its goodwill and brand equity that it had built over a period of 100 years in the Indian market, and decided to stamp its own name on the rejuvenated venture. HLN was formally launched on January 27, Speaking of the importance of leverage the corporate name, Dalip Sehgal, Executive Director, New Ventures and Marketing Services, HUL commented, HUL has built a reputation built on trust and quality over the last 100 years. With its existing position of strength as the leading consumer goods company in India, HUL will leverage its capabilities across manufacturing, supply chain, R&D and consumer understanding to provide a strongly differentiated proposition in Hindustan Lever Network that redefines the business of network marketing. A comprehensive range of more than 175 to 200 products was sold under the umbrella brand HLN. Aviance was incorporated as a sub-brand within HLN. Several other products that were added onto the expanding portfolio included Lever home-range of kitchen care, home care and laundry care products. HUL also launched a food supplement Nutrium Plus, exotic tea, special coffee and valueadded foods such as sauces in its direct marketing network. Consumer offerings were expanded to oral care (Mento dent), confectionary gifting items and the Denim brand of men s grooming and personal care products. The company

36 aimed to expand its reach over time, by adding a new product every alternate month to cover all product categories. Internal sources stated HLN s intentions to introduce a complete range of products similar to its existing retail range in the future. Apart from this, the company also decided to increase the product line of its existing retail brands, Denim and Ayush. Denim Xclusive and HLL Ayush Spa were the two new brands that were in the offing. Most of the HLN products were manufactured in-house in the world class centre set up by HUL at Mumbai. When Unilever first became engaged in India in the 1930s, the opportunity to conquer unexplored markets was enormous. The company broke ground by establishing the first edible oil, soap and personal products companies in India: Hindustan Vanaspati Manufacturing Company (edible oil), Lever Brothers India Limited (soaps) and United Traders (personal products), all created between 1931 and1935. The three Unilever companies merged in 1956 to form Hindustan Lever Limited (HUL). By the 1990s, Unilever s business in India was entirely represented by HUL. Given its longstanding presence in India, it had become a uniquely Indian company and was perceived by the Indian people as a local company and not a multinational. The company made painstaking efforts to become implanted in the

37 hearts and minds of people by showing that it cared about local communities. Its corporate purpose statement noted to succeed requires the highest standards of corporate behaviour towards our employees, consumers and the societies in which we live. HUL had several ongoing projects that focussed on rural development. Education, health, community welfare, resource conservation, sustainable development and national heritage in art and culture. By 2000, HUL was India s largest fast-moving consumer goods company with market leadership in home and personal care products and one of India s seven biggest exporters. HUL operated over 100 manufacturing facilities across the country, with several third-party manufacturing arrangements Mergers The personal care segments of the FMCG market provides both high volumes and high margins. The merger of HUL and Pond s (India) will result in increased revenues for HUL. As compared to HUL s margins of 11.6% in 1997, Pond s achieved 18% margin while Lakme had 45% margins in March HUL has also acquired a 50% stake in Lakme Lever Limited gaining total control of the

38 company. This led to the restructuring of the manufacturing and distribution systems of Lakme with HUL. It also fuelled the growth of Lakme s business through a focused portfolio approach and increased the reach of Lakme through more outlets as compared to before. HUL also intends to acquire Lakme s cosmetics brands. With this, it will own the largest colour cosmetic franchise in the country, once again making it the market leader Human Resources HUL s top management realized that its ability to attract and nurture good talent would be crucial to the success of Project Millennium. Over the years, HUL s leadership development model, considered one of the best in the country, had groomed managers by providing a well-rounded view of the business through job rotation and various new assignments. The system was designed to identify fast-trackers, who were called the Lever listers and groom them for handling greater responsibilities. For every position, typically; three people competed. One would eventually make it, the second person would be offered an alternative slot, while the third would simply fall out of the system. This leadership development model served HUL well for many years. The company effectively became a school for practising managers. But in the late

39 1990s, as the business environment underwent a seachange, cracks began to appear in the model. First, there was a reduction in the number of positions due to the withdrawal of many brands under HUL s power branding strategy. The closure of non-core businesses, like seeds and the downsizing of the large commercial department, due to outsourcing of a large number of backroom activities, also eliminated many promotional opportunities. Meanwhile, Unilever itself began to divest brands and businesses, reducing the need for expensive expatriate talent. As a matter of fact, the supply of HUL s pipeline of talent grew because of returning expatriates from the Unilever system. With fewer slots available and supply increasing, internal competition also increased. During good times, most managers got good performance ratings. But the system changed as growth slowed down and competition increased. In the early 2000s, HUL instituted a forced rank system of evaluating people for all its businesses, further accentuating the in securities inside the minds of employees. Managers began to rely on short-term recourses to deliver quarterly profit and sales numbers. If one brand team did well to grow through a short-term scheme, there was immediate pressure on the others to follow the same.

40 The process of identifying fast trackers began to cause disgruntlement among employees. Initially, when HUL instituted the system of listers, it had focused more on performance. However, over the years, apart from performance, the potential of the person had played a bigger role in identifying the fast trackers. This seemed to have introduced an element of subjectivity in the process of identifying talent. When Dadiseth rolled out Project Millennium, many young managers were identified to lead a set of new growth initiatives. But these initiatives had moved Lever into entirely new areas, which took a long time to be conceptualized and implemented. Under the Lever system, there were clear work levels, which defined the nature of work and responsibilities. So, unless there was a change in the nature of work, a manager could not be promoted to the next level. Career progression was also slowing down at senior levels. Many of the management committee members, like the head of the foods division, Gunender Kapur had been expected to move to larger regional roles in Asia. But the continued non-performance of the foods business had thrown a spanner in the works. That meant that category heads were unlikely to find a berth soon, until someone at the top moved on. Many HUL managers had CEO aspirations. They

41 were attracted by the opportunities opening up in the country in newly liberalized businesses like telecom, healthcare and insurance. They moved when they felt they did not get any clear signals from the top management about what the future held for them. In 2002, responding to these concerns, HUL switched to an open job posting (OJP) system. All new jobs were advertised on the intranet. Any employee who met the criteria could apply. HUL also stated a new personal development plan (PDP), where each manager was to evaluate on a set of 12 competences. The superior was expected to discuss the assessment with each person The Major Competitors HUL is not one of monopoly company for HPC product. There are certain other companies prevail in the market. They are Cavinkare Limited, Procter & Gamble, Marico Group, Godrej Consumer Products Ltd, Dabur, ITC s initiative. The details are competitors are presented in forth coming paragraphs Cavinkare Limited

42 Chennai - based Cavinkare Limited has launched the Fairever skincare cream, taking on the dominant HUL s Fair & Lovely which had a 97% market share but Fairever has already garnered a good 14% share of the roughly Rs.650 crore fairness cream market. The company has also entered the toilet soap market with the launch of Meera herbel soap. It is planning to introduce a range of other soap brands as well as detergents, thus directly competing with Nirma, Procter and Gamble (P & G) and HUL. In the hair care segment too, it launched its Chik brand through the small packaging sachet route, and picked up a sizeable marketshare-roughly 15% of the Rs.840 crore shampoo market- in just two years. This has clearly ruffled the feathers of both HUL and P & G. Cavinkare has, as a part of its marketing strategy, sought to be different. It has decided that apart from an organic growth, it would even take to the brand acquisition route. It plans to introduce a number of new products in existing categories like skin, hair and personal care. Cavinkare is also trying innovations in pricing and packaging areas. For example, in May 2001 it launched a single-use perfume Spinz Singlez priced at Rs per sachet. This is expected to drive usage and volumes by expanding the Rs. 66 crore category.

43 Currently, it is estimated that only one percent of the population uses perfumes. Chik s shampoo sachets priced at 50 paise have already created waves in the market. Within a year of its launch, the shampoo penetration in the country grew from 17.90% to 19.4%. Today, the company spends around 4% of its turnover on R&D and close to 25% on advertising and marketing, while constantly upgrading its offerings, based on consumer feedback. It has employee forums like cross functional teams which discuss and plan new product developments while sharing learning and insights from its successes and failures. The company also records its brand histories on which company is moving. It is poised to offer competition to HUL Procter & Gamble P&G has recently announced price cuts in two of its premium brands. It announced price cuts in Tide its largest selling global detergent brand-launched in India last year. Its price has been slashed by a massive 29% from Rs. 120 per kg to Rs. 85 per kg. Tide was initially positioned midway between concentrates like Ariel and Surf Excel (Rs. 160 per kg) and the premium segment occupied by Surf (Rs. 85 per kg). now the company has lowered prices, after creating a premium image. Analysts see this price cut on Tide as a threat to HUL s Surf.

44 The technology - focussed P&G is now concentrating on the value-formoney consumer, and this is perhaps the company s most successful strategy and strongest effort to capture volumes in the market Marico Group Marico s parallel rural sales and distribution network ranks among the top three in the industry today. Marico has leadership in the coconut oil category and in fact, Parachute has gained market share in the last one year and currently has a market share of about 53%. It has expanded range in the value-added segment by recently launching the Parachute Dandruff Solution Hair Oil and has positioned it on a herbal platform. Marico s Saffola is positioned in the premium category and has a well-entertained brand equity. It is also test marketing Saffola Kardi- Cornblend in Bangalore, which is receiving a good response. Besides this, Saffola Salt which is positioned in the premium category, has also been doing well Godrej Consumer Products Ltd. Godrej is well entrenched in the fairness cream category. It launched Fairglow last year which has picked up 2.1% share of the market. The market share in the hair care category has also improved from 39.4% to 41.7%. The

45 company however, does not intend to get into shampoos and detergent bars as it does not have the required technology to manufacture such products Dabur Strong brand equity in the Ayurvedic segment has helped Dabur sustain growth despite a sluggish demand situation. Apart from its large Ayurvedic products like Chyawanprash, over a period of time, the company has forayed into personal products like Dabur Amla Hair Oil and Lal Dant Majan by capitalizing on its distribution strengths. Dabur has a strong transnational distribution network of more than 5,500 distributors servicing 1,300,000 retail outlets, through 21 sales offices. The company has shown healthy double digit growth rates during this period of FMCG slowdown. Its haircare segment, contributes 61% to its family products division ITC s initiative ITC is not a pure-play FMCG company, since cigarettes is its primary business. It is diversifying into non-tobacco FMCG segment like foods, personal care, paper products, hotels and agri-buisness to reduce its exposure to

46 cigarettes. Its is focusing on delivering value at competitive prices. Its tremendous reach through extensive distribution chain has been a competitive advantage. Additionally, the company s e-choupal model for direct procurement is wellknown under which ITC partners with over 1,00,000 farmers for spices and wheat procurement and an even larger number for oilseeds, This kind of rural pedigree is hard to beat. Increased regulatory clamps on tobacco, along with rising tax burden, pose a business risk for ITC. So, it has started an ambitious diversification plan, which has its own set of risks. With its foray into the conventional FMCG space, ITC has entered the high-clutter branded products market. This will burden its resources in terms of ad spend and brand building. Creating brand recall and building market share to new products are ITC s key challenges Business level Strategy Most companies that hold a market leadership position do so by achieving the right balance between differentiation and low cost. In the consumer products industry, consumers have many choices regarding which brand to select. With twelve brands that each exceeds 1 billion in annual sales, Unilever s market leadership cannot be sustained if costs are significantly higher than a competitor s

47 products. Similarly, without adequate differentiation, brand loyalty could be difficult to maintain. For Unilever, the current business-level strategy would be characterized as a differentiation strategy, where the emphasis is on branding, advertising quality and new product development. Unilever holds the world number one position in five of six food segments, and two of six segments in Home & Personal Care (skin and deodorants). Unilever holds the (world) number two position in two of the six Home and Personal Care segments (Laundry and Daily Hair Care) and is number three or less in Household Care and Oral Care. Company resources have been divided into two primary functions, one responsible for brand development, innovation, and brand strategy ( Categories ), and the other for managing the business, effective deployment of brands and innovations, and winning with customers ( Regions ). Their commitment to Research and Development and innovation is clearly; stated through their mission statement ( Add vitality to life ) and their corporate purpose ( Vitality; Innovation ). The alignment of company resources with its strategy is an important component for sustaining a competitive advantage. With its resources aligned and a commitment to funding its significant R & D spending, Unilever should be well positioned to sustain and improve their current standings. Perhaps the greatest risk to sustaining their

48 competitive advantage is the high SG & A costs of Unilever s current organizational structure Growth Strategy Hindustan Lever Ltd (HLL), India s largest Fast Consumer Goods (FMCG) company announced disappointing results. The company seemed to be struggling to grow its business. Just a few months back, HUL had announced a major top management reshuffle. According to many press reports, this restructuring which had taken place at the instance of parent company, Unilever, seemed to be a public admission of the challenges being faced by the company Global Strategy Unilever s global presence has deep roots, beginning with the founding companies At various stages throughout the course of Unilever s history, there is evidence that the firm was driven by nearly all five global expansion imperatives the growth imperative, the efficiency imperative, the knowledge imperative, the globalization of customers, and the globalization of competitors -- in its efforts to globalize. However, Unilever s progress in exploiting global presence may in fact be hampered by the lack of an overarching global strategy.

49 With 223,000 employees in over 150 countries, 2 Unilever is proud of its deep roots in local cultures and markets worldwide, which enables it to bring its wealth of knowledge and international expertise to local consumers. In doing so, Unilever labels itself as a multi-local multinational 3 and truly; believes that it is creating value through global expansion by adapting to local market differences and tapping the most optimal locations for activities, resources and product launches. In an effort to win Latin America, Unilever embarked on a number of transformational initiatives, with the goal of One ULA (Unilever Latin America) and a regional approach based on four cornerstones strategic leadership; innovation, market share and brand health; excellence in reaching consumers and customers; and implementing common processes, systems and shared services. In three countries in this region, Unilever is the market leader for four out of six primary HPC categories. 4 With 44 operating companies in the Asia/Africa region, and brands sold in 98 countries, Unilever is the market leader in most priority categories in countries where it has a presence (key markets include India, South Africa, Indonesia, Thailand, Vietnam and the Philippines). In this region, Unilever places emphasis

50 on: serving and delighting consumers; deepening partnership with customers; and building relationships with local communities. 5 Unilever s current expansion plans call for a focus on the developing and emerging markets, where the company enjoys a long-established presence, has established consumer intimacy, and prides itself on affordability. Thirty-five percent of Unilever s turnover is in developing and emerging markets, products are tailored to different income levels, and Unilever s distributions systems reach deep into these areas. Unilever is aiming for seamless global development 6, with system-wide automation and data synchronization, among other things, to make this possible. Further, in at least one of its brands, it has opted to consolidate its advertising accounts into one global agency network an example of centralizing key business junctions which, though cost effective, runs counter to being sensitive to local markets, and global box-ticking can t match intuitive knowledge of local markets. However, despite all the references that Unilever has made to global strategy and its acknowledged global presence, the company has not articulated an overarching global strategy that clearly outlines the alignment of all functions in the value chain to that strategy. While it has taken steps to adapt to local

51 markets, and capture economies of global scale and global scope, as Trevor Gorin, press officer for Unilever has stated, Unilever needs to counter threats in specific markets and transplant learning s from one place to another. Unilever needs to take the next steps in ensuring global competitive advantage, by evaluating the optimality of its global network for each activity in its value chain, along each of three dimensions: activity architecture, locational competencies and global coordination E-Business Strategy Unilever s e-business strategy continues to evolve, from its early membership in a B2B marketplace, to participation in the GDSN, the implementation of RFID technologies, 7 and the creation of an online buying system for making certain types of purchases from suppliers. 8 The firm s e- business strategy focuses primarily on the use of the internet and information technologies (IT) to achieve operational efficiencies in dealing with suppliers and in utilizing its distribution network. The firm s e-business strategy is progressing,

52 but its IT initiatives are not unique or rare within this industry, nor are they inimitable. Unilever has made significant advances- most notably its alliance with Safeway, however, according to the Dynamic Resource-based Model of Competitive Advantage (DRMCA) Unilever will need to continue to add new and industry-leading IT resources to build and sustain a resource-based advantage. Many of the products in the personal products industry fall under the category of experience goods that is, the qualities and characteristics of those products are only recognized after consumption. As such, those products by and large do not lend themselves well to e-commerce purchases by consumers via the internet. However, as early as February 2000, Unilever was making plans to invest heavily in electronic commerce, in an effort to slash costs, radically change its supply chain, and reach out to consumers. The company recognized that it could achieve significant savings by using the internet to buy everything from raw materials to cardboard 9. Unilever also began using the internet to target consumers of its products by advertising selected products on websites catering to specific consumer markets. Unilever and P & G are members of Transora, 10 a B2B marketplace consisting of 49 companies. 11 Transora merged with UCCnet to form ISYNC, which offers a cost-effective data pool with solutions and services that support user needs, and helps the industry maximize the value of data

53 synchronization. 12 Unilever, as a member of Transora, was part of an enterprisewide effort in 2004 to test the GDSN an internet-based supply chain initiative launched to streamline communication of product information Furthermore, in June 2004, Safeway and Unilever heralded the success of their joint Global Data Synchronization initiative; the first time that product information had been synchronized between the leading supply side and demand side data pools 13 Other examples of Unilever s forays into e-commerce and information technologies include: the implementation of radio frequency identification (RFID) tags, 14 the Unilever Private Exchange (which enables purchases of nonproduction items to be made at volume-negotiated prices from selected suppliers ) and ISIS, Unilever s supply management information system (which helps local, regional and global supply managers to gather and analyze information quickly, and make appropriate sourcing decisions) Corporate Strategy Corporate strategy addresses the scope of the firm s activities, including the portfolio of businesses that a firm chooses to engage in, the locations or geography it will cover, and the amount of vertical integration it employs. Unilever s strategy is to have strong customer relationships at the local level,

54 everywhere they do business, and to be seen as a truly multi-local multinational. Unilever s activities are spread across six primary business categories, including home care, spreads, savory & dressings, beverages, ice cream & frozen foods, and personal care, and are sold in 150 different countries. As previously mentioned, Unilever is number one or two in all but three segments in which they compete. In the segments where they are not number one or two, they face intense competition and weak consumer spending, particularly on Europe. Further, the business is in an area that is relatively mature and segmented. It is in cases like this where companies might benefit from a divestiture of low-growth, under-performing business units in order to free up resources to focus on higher growth, higher profit opportunities. A decision to divest the brands that are under-performing would not be foreign to Unilever; over the last several years the brand count has been reduced from over 1,200 to around 400 as part of an overall restructuring campaign. With a stated focus on developing and emerging markets, particularly in the area of personal care, divesting the European frozen foods units would free up resources, provide cash for additional debt reduction, and help reduce their high SG&A cost. Such a move would better position Unilever for sustained profitability, however, should Unilever wait too long before executing this divestiture, they risk a

55 reduction in the value of the business due to further brand depreciation. Another option for the cash that would be generated through the divestiture of lowgrowth businesses would be to seek out potential acquisitions that offer growth or complimentary products, and would help consolidate a market. Consolidating markets can help provide sustained competitive advantage by reducing the overall level of competition. 2.5 PROFILE OF THE STDUY AREA The description of the study area deals with, its origin, location, administration, setup, area classification on the basis of industrial backwardness,

56 human resources, agriculture resources, forest resources, mineral resources, industries, trade and commerce and other infrastructure facilities. The map of virudhunagar is shown in figure 2.1

57 FIGURE 1 Map of the virudhunagar district