The Hindustan unilever limited

Hindustan Unilever Limited is India’s largest consumer products company and was formed in 1933 as Unilever Brothers India Limited. It is currently headquartered in Mumbai, India and its 41,000 employees are headed by Harish Manwani, the non-executive chairman of the board. HUL or HUL (Hindustan Unilever Limited), as it is now known, is the market leader in Indian products such as tea, soaps, detergents, as its products have become daily household name in India. The Anglo-Dutch company Unilever owns a majority stake in HUL. It was in the summer of 1888 that Unilever of England first marketed Sunlight soap in India. This was followed by brands like Pears and Vim. Unilever’s first Indian subsidiary was set up in 1931, Hindustan Vanaspati Manufacturing Company, followed by Unilever Brothers India Limited (1933) and United Traders Limited (1935). These three companies merged to form HUL in November 1956.

The company was renamed in late June 2007 to “Hindustan Unilever Limited” to provide the finest stability between maintaining the tradition of the Company and the future benefits and synergies of global alignment with the corporate name of Unilever”. Some of its brands include Kwality Walls ice cream, Lifebuoy, Lux, Breeze, Liril, Rexona, Lipton tea, Brooke Bond tea, Pepsodent and Close Up, Surf, Rin and Wheel laundry detergents, Pond’s talcs and creams, Vaseline lotions, Fair & Lovely creams, Lakmé beauty products, Clinic Plus, Clinic All Clear, Sunsilk and Lux shampoos, etc.

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HUL and Lakmé

A number of prominent companies came into the HUL fold as result of Unilever’s international acquisitions. These included Brooke Bond (1984), Lipton (1972) and Pond’s (1986). In 1993, Tata Oil Mills Company (TOMCO) merged with HUL.

On February 25th 1998, HUL and yet another Tata company, Lakmé Limited, formed a 50:50 joint venture, Lakmé Unilever Limited. Lakmé Limited sold its brands to HUL and divested its 50 per cent stake in the joint venture to the FMCG giant. It was decided that Lakmé would also sell its manufacturing facilities. It would become a shell company and its parent, Tata group, would exit the cosmetics industry. Hindustan Unilever, the largest company in India, would merge with Pond’s India Ltd.

About Lakmé

As stated above, Lakmé started in early 60’s as a 100% subsidiary of Tata Group (Tomco), it was named after the French opera, Lakmé. The story concerns a girl Lakmé who lives in India with her father. She falls in love with a British man in the military service and consequently displeases her father. The name Lakmé is in fact French for Lakshmi, the name of the girl.

At the time of its establishment, Indian cosmetic industry was rather nascent, and there was a very small market base. Simone Tata joined the company as a director, and went on to become its chairman. When Tata’s saw a bigger growth potential in the retail market, and greater competition from global companies in cosmetics, they entered into the above mentioned joint venture with HUL. Tata sold of there stakes in Lakmé Unilever to HUL, for Rs 200 Crore (45 million US$). In 1974, the India-inspired beauty line LAKMÉ´ became a major seller in Eastern Europe, and also achieved market leadership in the former Soviet Union.

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Lakmé has products in every range and variety suited for Indian skin. They have products for every season like recently they came up with summer collection 2007. The middle-class population in India, increased and it represents a growth in disposable incomes, due to which the number of customers increased for the cosmetics and toiletries market. In the finest segment Lakmé has commenced Aviance, which has been position as “customized beauty solutions”. Lakme has advantage of being attached to unilever and due to this lakme can use the distribution network of unilever in an ineffective and a productive way. In case of cosmetic industry the positioning is done mainly by advertisements. In this industry positioning is carried out mainly by advertisements. Lakmé has always advertised in the various mass media available.

SWOT Analysis

Strengths

• Access to Unilever’s global technological capability and sharing of best practices from other Unilever companies.
• HUL distribution network is recognized as one of Lakmé’s key strengths.
• Lakmé is the overall market leader in the color cosmetic segment with a wide range of products catering to consumer needs.
• Being one of the earliest entrants into the Indian market, it is perceived as one of the most trusted and reliable brand.
• Lakmé has the spread in the premium segment of Indian market in form of ‘Aviance’ which has been positioned as a customized beauty solution.
• Strong and well diversified range of products including cosmetics, skin and hair care products with leading share positions.
• The Lakme India Fashion week is an internationally acclaimed event.
• Lakme Salons are another innovative initiative of the company.

Weaknesses

• The premium products of Lakme lack popularity and have a loew market share. 80% of this segment is captured by Revlon alone whereas Lakme still stands low at 9%
• It has entered the Hair Care segment lately, hence still doesn’t have a substancial market share.
• Promotion for the Hair Care segment lacks.
• Lakme, still faces stiff competition from the International brands, as it has not been able to break their image because of its Indian origin.

Opportunities

• The Indian cosmetics and toiletries market grew by 8.4% in current value terms in 2006, with value sales amounting to Rs172 billion. Hence overall a healthy picture for sales in the cosmetics industry
• The increasing size of the middle-class population in India, representing a growth in disposable incomes, has led to more consumers for the cosmetics and toiletries market.
• With its present technological capability and distribution network it can even diversify towards the male segment espically dure to men becoming more and more conscious of their looks.
• Can Unileverage the latest IT technology and position itself across countries as a sourcing hub for skin care products under Unilever brand, also using Unilever’s excellent distribution systems.
• The hair care products industry is huge and is growing, there’s opportunity to increase its share of the market through Hair Next.range.

Threats

• Due to market liberalization there are many competitors within the same market
• Earlier it was the case that the products were not priced competitively but alond with the competition within the market now the market have become more price sensitive.
• A counterfeit/spurious product in rural areas and small towns eats away into Lakmé’s business.

Brief Analysis

The current market of fashion products is increasing in its size and has grown at a brisk rate of around 10% in the past couple of years. Hence with its current infrastructure and distribution network Lakmé can do wonders in this market. With the help of Lakmé fashion week it has tried to make an international impact so it has huge amount of scope to expand its reach to international arena. Also in this international positioning Unilever the mother company will help in the distribution network.

Macro Environment

• Demographic factors:
• India has a large population out of which a major segment is the youth, which in turn is a advantage for the cosmetic industry.
• Out of the large population present, another aspect important for the cosmetics and hair care industry is the age mix. Our country has a good percentage of the youth which is the major consumer base for the products.
• Education and increased awareness levels are also additional reasons. The need to look good and present oneself well is on the rise due to this, thereby giving a boost to the cosmetic industry.
• Economic factors:
• The higher income levels of the consumers and the amount of disposable incomes affect their purchasing powers. The need for personal hygiene and grooming has a high impact on the industry.
• Social-Cultural factors:
• With the changing times, there is a change in the people’s habits, attitudes and behavior. More and more prefer to use the latest cosmetics and are generally aware of what they want and what suits them. This gives a major boost to the sales and scope to the company and the industry.
• Fashion also plays a major role in influencing the consumer’s mind and in his decision making abilities and preference of products he chooses to use.

Micro Environmental Factors

These are internal factors close to the company that have a direct impact on the company’s strategy. These factors include:

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• Customers: Organizations survive on the basis of meeting the needs,wants and providing benefits for their customers. Failure to do so will result in a failed business strategy.
• Employees: Employing the correct staff and keeping these staff motivated is an essential part of the strategic planning process of an organization. Training and development plays an essential role particular in service sector marketing in-order to gain acompetitive edge..
• Suppliers: Increase in raw material prices will have a knock on affect on the marketing mix strategy of an organization. Prices may be forced up as a result. Closer supplier relationships are one way of ensuring competitive and quality products for an organization.
• Media: Positive or adverse media attentions to a company’s product or service can in some cases make or break it. Consumer programmes with a wider and more direct audience can also have a very powerful and positive impact, forcing the company to change their tactics.
• Competitors: The name of the game in marketing is differentiation. What benefit can the company offer which is better then their competitors? Can they sustain this differentiation over a period of time from their competitors? Competitor analysis and monitoring is crucial if the company is to maintain its position within the market. Competitors include Revlon, Oriflame, Mac, Avon, Maybelline,etc.

PRODUCT

face

A complete line of foundations, powders and blushers for all skin types and complexions. Come in a range of flattering finishes and beautiful shades.

PRICE

As the product umbrella of Lakme is vast, which caters for cosmetic and skin care need for almost all kind of women, hence the pricing structure reflects variation in market-segment requirements, purchase timings and order levels. Lakme product’s price is uniformly administered across the country with slight variation for the products delivered abroad.

PLACE AND PROMOTION

Lakme – Advertising

By not following the traditional mode of advertising, Lakme Unilever, adopted different strategy for the product launches The company do not use mass media marketing for the launch or advertising Lakme Products; They have adopted the education’ strategy that means they educate their customer about the use of the products.

Getting the focus right

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The ‘aspirational’ qualification would mean Lakmé would compete at what the company terms the ‘upper-mass’ (premium) end of the colour cosmetics spectrum (products priced between Rs 85 and Rs 250) where a slew of competitors are already slugging it out.

And fashion consultants like Meher Castelino believe the brand commands an edge at the high-end: ”By appropriating the fashion platform for itself, Lakmé has entrenched itself at the glamour-end.”

Getting the spread right

The premium segment, however, is just a slice of the Indian market for colour cosmetics (estimated size: Rs 275 crore). Today, the company has three brands: Lakmé itself, which will be positioned as a fashion-brand.

Advertising Strategies by Lakme

In-store sampling

Lakme has in-store trail products. Since it in the cosmetics market it is very essential to provide samples, many stores in Mumbai from time to time have Lakme sampling offers. Where they allow you to try the product and then buy it.

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Brand placement & Event sponsorship

Brand placement often referred to, as product placement is the sales promotions technique of getting a marketer’s brand featured in movies and television shows. When a firm sponsors or co-sponsors an event, the brand featured in an event immediately gains credibility with the event audience. The audience attending an event already has a positive attitude and affinity for the contest that they choose to attend. When this audience encounters a brand in this very favourable reception environment, the brand benefits from the already favourable audience attitude. Lakme India Fashion Week, thus creates a positive image and has a huge impact on the sales of a brand.

Lakme’s association with the annual Lakme India Fashion Week (LIFW) has helped significantly in the brand’s growth chart. A beauty brand, like Lakme, must always remain contemporary and define trends. The LIFW has certainly helped Lakme acquire that position. Product ranges have been launched every year to coincide with the event and have met with considerable success.

Internet promotions

They are the most recent form of sales promotions. They are promotions that are done via the Internet. It is becoming increasingly popular because of the large use of Internet. Lakme offers its wide range of skin and hair products as well as salons thru its website www.lakmeindia.com

Line Branding

Lakme is a brand launched with a distinct concept – “source of radiant beauty”. The brand appeals to a distinct market segment who appreciate and like the brand concept. The core idea is that the brand connects with the consumer group. Now the customers do not tend to be content with the one product, which the brand offers. Rather they want additional product which go hand in hand with the brand concept or application; for example a Lakme user wants all the products which enhance beauty-beauty lotion, deep pore cleansing cream, lipsticks, nail enamel, eye make up etc.

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Line branding strategy illustrates how well cultivated brand can be extended on to a host of related products under a common concept. This strategy seeks to penetrate the customer rather than penetrating the market. It seeks to fulfil all complementary needs that surround a basic need. Line brands start with a product but later extend too a whole range of complementary products. The products in the line draw their identity from the main brand. Marketing products as a line enhances the brand’s marketing power rather than selling them as an individual brand.

Lakme – Retail & Distribution

channels of distribution are categorized as follows –

Broad – Cosmetic discounters, Supermarkets, and mass merchandisers. Examples are D-Mart, Big Bazaar etc.

Alternative – is identified by five different marketing methods:

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• Direct Sales
• Direct Mail/TV/Print
• Free Standing Stores
• Health Food Stores
• Salons

Lakme’s Retail marketing has evolved, the consumer has become more knowledgeable and demanding, and cosmetics themselves have become more sophisticated and innovative. About the only thing that has remained constant in the cosmetics industry over the years is women’s love of cosmetics.

Technological advances have allowed for the creation of multifunctional products of Lakme – products that perform more than their basic role. For example, Lakme cosmetics that contain ceramides and vitamins, as well as UV protection are popular. Today, foundations protect from ultraviolet rays, lipsticks moisturize and mascaras thicken and condition. These Lakme Multifunctional products have enjoyed much success, thanks to more discerning consumers who are demanding value for money in their colour cosmetics purchases.

• The biggest performance development in Lakme colour cosmetics has been the creation of “stay-on” products.
• Lakme has also attracted consumers by products that are easier to apply and convenient to use, such as pen lipsticks and fast-drying nail polishes
• Women buy the majority of their cosmetics from mass, drug or food stores where selecting products yourself is the norm. Lakme has introduced its wide product range at all these facilities.
• Research shows that sales doubles when self-service is offered. Giving people the choice attracted new customers to Lakme.
• Innovative technologies have allowed manufacturers to create dramatically improved cosmetic samples and to distribute samples beyond the point-of-sale, even into the home. Lakme believes that the most effective sampling vehicles are those designed to reach consumers at home.
• Greater product penetration in suburban and rural areas, frequent product launches and greater interest in personal grooming, especially among the younger population, drives growth of Lakme. Higher levels of disposable income and lower product prices through smaller packaging sizes made these cosmetics affordable to more consumers.
• SKUs – Selling Kit Unit sizes and packaging can be effectively used to generate trial and initiate demand for a product, without compromising on price. Lakme has various SKUs in colour cosmetics.

Lakme is also emphasising on making the brand prominently visible in the crowded stores. Their outlet visibility programmes cover over 25,000 outlets in key cities, deploying a large number of third party merchandisers and agencies to ensure superior display of their products. Greater interaction is key to touching consumers and they are using the point-of-purchase for a much higher level of direct contact. For example, Lakme Beauty Advisors in key outlets promote sales and provide specific information and product testing, facilitating an informed choice to women seeking 4 beauty solutions. Encouraged by this, they are undertaking a similar initiative across many of their other brands where in-store facilitators offer promotions and provide product information.

For many developing categories, such in-store sampling, education and experience will play a major role in building the brand. Lakme started using CRM. It set updozens of beauty salons across the country, where it has Lakme beauty advisors who interact directly with customers and advise them. This helps the company get firsthand knowledge of customer preferences. As a result, sales at the outlets are growing by 42%. This is way above the 10% to 25% enjoyed by the 60,000 outlets that sell Lakme products sans advisors.

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Standing amidst the jamboree of what is, arguably, India’s first fashion summit, the Lakmé India Fashion Week (LIFW for short), Anil Chopra, 51, the affable Director who heads Lakmé Unilever Ltd is bullish about the brand’s new positioning: ”By taking on the fashion and glamour platform, we have, in a way, not just taken a lead (over others), but also got a virtual ownership of this plank. It will be very difficult for any other brand to adopt a similar approach.” And reactions to the born-again Lakmé at the LIFW did suggest that Chopra and the brand were on to a good thing. ”Lakmé is at the forefront of product-innovation. Almost everyone has a Lakmé-something in their (cosmetics) collection,” gushes Mumbai-based fashion choreographer Lubna Adams. So, is Lakmé back?

Current Market Strategy

• Loyalty programmes and reward systems: As part of its marketing strategy, Lakme Unilever Ltd removed loyalty programmes and encouraged beauty salons. Lakme Unilever has also launched ‘New Lakme Beauty Salon Rewards Programme’ with a tagline ‘Get benefits worth Rs 3,225 for Rs 350 only’ to attract customers. There are also different magazines and booklets designed with acme promotion and stuffs.
• New look of Website: he company also re launched a new looking Website Lakmeindia.com to have a change in marketing of the company.
• Direct Marketing for ‘Lakme Pure Defense’: Deviating from the traditional mode of advertising, Lakme Unilever opted for direct marketing concept to create awareness for their new launch ‘Lakme Pure Defense’. The company deployed a bevy of beauty advisors at 1200 Lakme retail outlets across the country to promote its new launch-dumping mass media ad campaigns. Their strategy is not to use mass media advertising to promote Lakme Pure Defense-the first of its kind across the globe. Instead, they opted for the ‘education’ route to create awareness for their product.
• Tie-up with Schwarzkopf: Lakme had a recent tie up with FMCG Player Henkel group’s high end hair product brands Schwarzkopf Professional. Currently, Lakme has over 100 salons across the country. Under this exclusive pact, Lakme will use Schwarzkopf hair care products in all its salons. In return, Schwarzkopf will provide training for hairdressers in the salons.
• Lunched in Sri Lanka: Hemas Marketing has expanded the range of Lakme skin care products it markets in Sri Lanka, and unveiled a new international logo and image for the brand. Launched in Colombo, the additions to the Lakme skin care range are Nourishing Cold Cream, Nourishing Body Lotion, pH-Balanced Face Wash, Calamine Lotion, Sun Screen Lotion and Hair Remover.

Future Market Strategy

• Online e-group: Lakme can form some e-group like Sunsilk Gang Of Girls GOG) to understand consumer requirement. It requires no formal surveys, easy to administer, reduces paper work. In all it used technology to effectively to promote the brand and advertises the brand through e-generation.
• Online ordering of Lakme products
• Online appointments for Lakme Beauty Salon

Strategies Under Product Mix

• New product lines can be added to the existing one which may be related or unrelated to the company.
• Within the product line, they can have different brands at different price points to cater to different segments of customer.
• Growth of Lakme Beauty Salons can provide better display of products and a beauty adviser can make it much more attractive in the eyes of the customer.
• Packaging can be improved or changed of Lakme products to make it more attractive to the customer