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Report Certificate Submitted By: Afnaz Azeez Wasim Pathan Jafreed Jaleel

This is to certify that we are the student of UK MBA Batch3 has worked on a report title The Distribution Network of Hindustan Unilever LTD in rural area At P YOUSUF AND COMPANY Agency, Kannur during trisemester-I in partial fulfillment of the requirement for the programmed. This is his original work to the best of my knowledge.

22/07/13

CONTENTS

1. EXECUTIVE SUMMARY 2. INTRODUCTION 3. PRODUCTS 4. LIMITATIONS 5. HOW THE DISTRIBUTION CHANNEL WORKS 6. REVERSE LOGISTICS 7. SHCEMES AND ALLOWANCES 8. CHANNEL CONFLICT S IN HUL 9. HARNESSING IT 10. CRITERIAS FOR STARTING HUL DISTRIBUTIONSHIP 11. RECOMMENDATION 12. QUESTIONNAIRE

EXECUTIVE SUMMARY

This project is carried to find out the distribution network of HUL in rural area based on KANNUR district by using the different marketing research tools. It also studies the relation between HUL & P Yousuf and company group. This study focused on HUL product distribution in rural area.HUL distribution to retailers or P Yousuf group, ability to identify the distribution network under different condition defined by their company. With better understanding of retailers or P Yousuf group, companies can determine the action required to meet the retailers or P Yousuf group needs. The research results shows that the distribution network of HUL in rural area is different when considered by marketing strategies programmed regarding above & below the line activities. As part of this report a questionnaire was prepared for the distribution network survey was done at different places like distributor, retailers..The conclusion was derived from the findings.

INTRODUCTION

Hindustan Lever Ltd (HLL)is India's largest Fast Moving Consumer Goods (FMCG) Company.HLL products are manufactured over 40 factories across India and the associated operations involve over 2,000 suppliers and associates. Hindustan Lever Limited's distribution network comprises about 4,000 Redistribution stockiest, covering 6.3 million retail outlets reaching the entire urban population, and about 250 million rural consumers. HLL is also one of Indias largest exporters. It has been recognized as a Golden Super Star Trading House by the Government of India. Presently, HLL has over 15,00oemployeesincludingover 1,300 managers. Its mission is to "add vitality to life." The Anglo-Dutch company Unilever owns majority stake in Hindustan Lever Limited.

Hindustan Unilever Limited (abbreviated to HUL) Formerly Hindustan Lever Limited is Indias largest consumer products company and has an annual turnover of over Rs 13,000 crores (calendar year 2008). It was formed in 1933 as Lever Brothers India Limited and came into being in1956 as Hindustan Lever Limited through a merger of Lever Brothers, HindustanVanaspati Mfg. Co. Ltd. and United Traders Ltd. It is headquartered in Mumbai, India. The company was renamed in late June 2007 to Hindustan Unilever Limited

PRODUCTS

HUL is the market leader in Indian consumer products with presence in over 20 consumer categories such as soaps, tea, detergents and shampoos amongst others with over 700 million Indian consumers using its products.

Food brands:

Annapurna salt and atta Bru coffee Brooke Bond (3 Roses, Taj Mahal, Taaza, Red Label) tea Kissan squashes, ketchups, juices and jams Lipton tea Knorr soups & meal makers and soupy noodles Kwality Wall's frozen dessert Modern Bread, ready to eat chapattis and other bakery items

Homecare Brands:

Active Wheel detergent Cif Cream Cleaner Comfort fabric softeners Domex disinfectant/toilet cleaner Rin detergents and bleach Sunlight detergent and colour care Surf Excel detergent and gentle wash Vim dishwash Magic Water Saver

Personal Care Brands:


Aviance Beauty Solutions Axe deodorant and aftershaving lotion and soap LEVER Ayush Therapy ayurvedic health care and personal care products Breeze beauty soap Clear anti-dandruff hair products Clinic Plus shampoo and oil Close Up toothpaste Dove skin cleansing & hair care range: bar, lotions, creams and anti-perspirant deodorants

Denim shaving products Fair & Lovely skin-lightening products

Hamam Lakm beauty products and salons Lifebuoy soaps and handwash range Liril 2000 soap Lux soap, body wash and deodorant Pears soap Pepsodent toothpaste Pond's talcs and creams Rexona soap Sunsilk shampoo Sure anti-perspirant Vaseline petroleum jelly, skin care lotions TRESemm

Water Purifier Brand:

Pureit Water Purifier

LIMITATIONS: 1 The study was carried out in kannur district. And hence the reports and suggestions are mainly indented for that part only. 2 The sample for the comparison is hence low. 3 The survey was conducted at a short duration of time and hence the greatest limitation was lack in duration of time. 4 Due to the lack of time some information has been fetched through phone conversations. In spite of all limitations, care has been taken to provide the best possible data.

HOW THE DISTRIBUTION CHANNEL WORKS There are two types of trading called modern trade and general trade.. In traditional markets, the shop owners are actually no more than gate keepers though they get to keep profit involved in transactions. On the other hand, there is virtually no owner to be seen by customers in modern trade such as multi-brand stores in big malls and electronic stores. When the entire market is in front of a customer in the shape of a 2X2 mobile screen, it makes all the difference between the way people bought in traditional markets and the way they do today in the modern world. Modern trade can be conducted at any time anywhere in the world even when the consumer is flying over skies or inside a moving train. On the other hand, traditional trade requires the presence of the customer in the shop and the display of all items on sale. Self service is the main feature of buying in modern trade while, in traditional trade, the onus of display and selling was on salesman and shopkeeper.

Modern trade is generally used at big super markets. In p yousuf and company, general trade is practiced and the orders are placed through online and is called permanent dispatch plan and it is a weekly 3 plan. That is company places the order at a random of 3 times per week. The order is placed by collecting the information from the sales persons, looking the existing stock, forecasting the prices of the products, looking upon rebates discounts and the monthly schemes provided by HUL.

SUPPLIERS

MANUFACTURER

CARRIAGE AND FORWARD AGENCY

DEALER

WHOLESALERS

URBAN REATAILERS RURALRETAILERS

CUSTOMERS

MANUFACTURER:

HUL products are manufactured over 40 factories across India and the associated operations involve over 2,000 suppliers and associates. From the manufacturer goods are transported to the C & F agencies.

CARRIAGE AND FORWARD AGENCIES:

HUL manufacturing company had its C&F agents in all the states of India. These C&F agents then carry and forward the products to the various dealers in their states. We are going to study the in-depth distribution channel of the company in kerala. The C&F agent is located in thrissur one and only C&G agency in kerala. The C&F are run by the third parties and gets paid in the form of commission on the stock that he forwards to the dealers. The stock is forwarded to the dealer on the basis of the amount of stock demanded by the dealers.

DEALERS:

Dealer make the order through online to the C&G agencies , order is made at the evening time and is received by the C&G agencies at next day morning and the order made by the dealer is delivered at the very next day. That is total time taken to deliver the order is 1 day. Payments are made through cheques; these can be withdrawn within a period of 21 days. Company follows a policy of zero days credit period. Dealers make their order on the basis of the needs and demands of

the retailers. Distributors create sales territory for each of the salesman by calculating the size of the place or the number of population. Sales man are given a particular day that is a fixed day on each routes. Hence the average goods required for a root can be calculated. A palm top is given to each of the salesman in which the stocks are being updated. The advantage of using this palm top is that it becomes easy for updates, less corruption, easy forecasting. This system of using palmtops is called HIT (HARNESSING INFORMATION TECHNOLOGY).

WHOLESALERS:

Wholesalers get the cash discounts and other schemes promoted by HUL. Because they make the purchase in a bulk

Distribution at the Villages

The company has brought all markets with populations of below 50,000 under one rural sales organization. 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 about50, 000 villages, reaching 250 million consumers, through 6000 sub-stockiest.

Distribution at the Supermarkets

HUL has set up a full-scale sales organization for this channel to serve modern retailing outlets. Product tests and in-store sampling is provided to consumers.

REVERSE LOGISTICS:

Reverse logistics is the process in which the flow of surplus or unwanted material, goods, or equipment back to the firm, through its logistics chain, for reuse, recycling, or disposal. Expired items are returned to the company through the suppliers. Amount is adjusted in the next bill of the purchase.

SCHEMES AND ALLOWANCES:

Various schemes and allowances are introduced by the HUL for distributors, wholesalers, retailers and customers. Various schemes are provided for the distributors who are able to achieve targets at a particular given period of time. Targets are usually kept for a month. Trade discounts, allowances are the other benefits from HUL. Rebate sales , discounts, free products are some of the offers for the end customers.

CHANNEL CONFLICT IN HUL: Channel conflict in HUL is facing a conflict in their distribution system Conflict was for the product distribution by the distributers. The distributors were not happy with the distribution strategy of HUL. For resolving this conflict HUL decide -: Earlier, HUL had different distributors for its home and personal care division and food division in the same area. Now, all the products would be sold by the same distributor in any one area

Harnessing Information Technology (HIT)

An IT-powered system has been implemented to supply stocks to redistribution stockists. The objective is to make the product available at the right place and right time in the most cost-effective manner. For this, stockists have been connected through an Internet-based network, called RS Net, for online interaction. RS Net is part of Project Leap, HUL's end-to-end supply chain.

Marketing needs every where

Hindustan Lever's distribution network is recognized 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 stockists

covering about one million retail outlets. The distribution network directly covers the entire urban population.

The general trade comprises grocery stores, chemists, wholesale, kiosks and general stores. Hindustan Lever services each with a tailor-made mix of services. The emphasis is equally on using stores for direct contact with consumers, as much as is possible through in-store facilitators

CRITERIAS FOR STARTING A HINDUSTHAN DISTRIBUTION AGENCY

UNILEVER

1. Previous experience in FMCG business. That is they require minimum 10 years experience of FMCG business. P Yousuf and company was established 53 years ago. 2. They require fund and inspect the credibility of the proposed concern. 3. Involvement of concerned parties in a business. They require previous and ongoing business experience for the parties 4. Company requires security deposit. They decide the security deposit according to the area and population size. If the population size increases security deposit also increases.

RECOMMENDATIONS:

1.

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

2.

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

3.

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 in all the time.

4.

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

5.

Clear, prompt and courteous communication that convey consistent details.

6.

Good behavior and dealings by the company staff with the (dealers, retailers) so as to encourage them in the marketing activities.

7.

The advertisements should speak only about believable facts rather than glorifying the pretentious once.

8.

Although being the most competitive

QUESTIONNAIRE

1. How does the distribution channel works in HUL? 2. What are the criterias for the commencement of a distribution agency? 3. What are the procedures for placing an order? 4. What is the time taken for the receipt of the products after an order is placed? 5. How much credit period does the company provide? 6. Does the company provide any scheme allowances or discounts? 7. What is the procedures for the reverse logistics ? 8. How do you rate the service of the company ? 9. What suggestions would you make in order to improve the service of the company ?