A Study on Sale and Distribution

Management of
Hindustan Unilever Limited

Presented by
 Introduction…..
• Hindustan  Unilever  Limited  (‘HUL’),  formerly  Hindustan  Lever  Limited
 (it  was  renamed  in  late  June  2007  as  HUL).
• India's  largest  Fast  Moving  Consumer  Goods  company
• HUL  is  also  one  of  the  country's  largest  exporters
• The  mission  that  inspires  HUL's  over  15,000  employees,  including
 over  1,300  managers,  is  to  "add  vitality  to  life.“
• HUL  meets  everyday  needs  for  nutrition,  hygiene,  and  personal  care
 with  brands  that  help  people  feel  good,  look  good  and  get  more
 out  of  life.
• Products endow the company with a scale of
combined volumes of about 4 million tones
and sales of nearly Rs. 13718 corers

• HUL is also one of the country's largest

exporters; it has been recognized as a Golden
Super Star Trading House by the Government
of India.
 Food Brands

Playful banter, a little Lipton has a range India’s favorite cup Brooke Bond Taaza lifts Brooke Bond Taj Mahal
mischief, serious of vitality teas that of tea, the great me people unshackles is an exclusive selection
conversation… there’s truly encompass taste of Red Label the mind, allowing them of teas for the
no time for young the goodness of brings people closer to see and realize discerning consumer.
couples like the time tea. together and possibilities.
spent sharing a cup of strengthens
3 Roses. relationships.

Ek cup Bru aur A good honest With Kissan, good Kissan Amaze Knorr helps families Partnering with the
mood ban jae… scoop of daily food is loved not Brainfood is speci - make meal times mom in nurturing her
pleasure. shoved! fically designed special, nutritious, dreams, Annapurna
for the mental tasty and healthy. Atta is aimed at
development of helping her provide
kids. wholesome tasty
nutrition to her
 Home Care Brands

Sunlight is a color Cif- the best cleaner The world’s largest The sheer power of
care brand to let you shine. fabric conditioner Domex bleach gives
brand. you the confidence you
need, eradicating all
known germs.

Created in 1885, the Vim Active Wheel de Rin provides ‘best in Giving your kids the
brand is still innovating "Mehnat se Aazadi" class whiteness’ which freedom to get dirty and
and using the magic of Freedom from painful is demonstrable. experience life, safe in
natural ingredients to & tiring laundry the knowledge that Surf
create unbeatable Excel will remove those
results over a hundred stains
years later.
 Personal Care Brands

Lux believes in passion
for beauty. It continues to
be a favorite with
generations of users for a
sensuous experience of
luxury.
Holistic skin care experiences Breeze, with the goodness Awaken, and enliven your
perfected over the ages to of glycerine gives soft, senses with a Liril bath.
deliver healthy, beautiful fragrant and smooth skin.
skin

Rexona gives you 24 Pears – the purest and most Lifebuoy is available in
Dove stands for real beauty.
hour protection from gentle way to skincare! multiple variants in
All around the world, Dove
sweat and body odour soaps and specialist
is making complete therapy
and therefore the formats such as liquid
for your hair.
confidence to handle hand wash, catering to
whatever the day has the entire family.
in store.
 Personal Care Brands

New Clear with Essential Oils, Clinic Plus is India’s largest selling Sunsilk encourages young women in
guarantees Zero dandruff and shampoo and has won the trust the India to live for today. Sunsilk helps you
leaves your hair feeling fabulous. millions of families across India. transform the beauty of your hair
instantly because LIFE CAN'T WAIT!!

Dove stands for real beauty. All around Freshness that brings you Closer Pepsodent India is committed to improve
the world, Dove is making complete the overall Oral health of Indians.
therapy for your hair.
 Distribution System
• Distribution system’s focus to enable easy access
to their brands, touch consumers with a three-
way convergence - of product availability, brand
communication, and higher levels of brand
experience.
• The most obvious function of distribution system
is to provide the logistics support to get the
company’s product to the end customer.
• The another important role of this system is to
maintain the information flow between company
to consumer.
 Distribution System
• HUL's products, are distributed through a network
of about 7,000 redistribution stockists covering
about one million retail outlets.
• The general trade comprises grocery stores,
chemists, wholesale, kiosks and general stores.
• Company provides tailor made services to each of
its channel partners.
• HUL is using the point of purchase method for
much higher level of direct contact, through in-
store facilitators, sampling, education and
experience.
 Distribution System

• The distribution network of HUL is one of the

key strengths that help it to supply most
products to almost any place in the country
from Srinagar to Kanyakumari
• This includes, maintaining favorable trade
relations, providing innovative incentives to
retailers and organizing demand generation
activities among a host of other things
• Each business of HUL portfolio has customized
the network to meet its objectives
 Distribution System of HUL

• There are 35 C&FAs in the country who feed these

redistribution stockists regularly. The general trade
comprises grocery stores, chemists, wholesale,
kiosks and general stores.
• Developed customer management and supply
chain capabilities for partnering emerging self‐
service stores and supermarkets. Around 2,000
suppliers and associates serve HUL’s 40
manufacturing plants which are decentralized
across 2 million square miles of territory
 Marketing Strategies for Urban Areas

• Focuses on short supply chain for distribution.

• Meet every need of people everywhere.
• Build segments & market for the future
• Emphasis on Direct selling, Franchisee to reach
everyone .
Marketing Strategies for Rural Areas

• For long term benefit HUL started PROJECT

STREAMLINE in 1997.
• Appointed 6000 sub–stockists that directly
covers about 50000 villages & 250million
customers.
• Integrate, economic, environment, & social
objective with Business Agenda.
 Distribution at the Villages:

• The company has brought all markets with

populations of below 50,000 under one rural
sales organisation

• The team comprises an exclusive sales force and

exclusive redistribution stockiest and focuses on
building superior availability of products

• In rural India, the network directly covers about

50,000 villages, reaching 250 million consumers,
through 6000 sub‐stockists
Rural Distribution Model of HUL
• HUL approached the rural market with two
criteria‐ the accessibility and viability

• HUL appointed a Redistribution stockist who

was responsible for all outlets and all business
within his particular town
 Distribution at the Urban centres
• Distribution of goods from the manufacturing site to C &
F agents take place through either the trucks or rail roads
depending on the time factor for delivery and cost of
transportation

• Generally the manufacturing site is located such that it

covers a bigger geographical segment of India

• From the C & F agents, the goods are transported to RS’s

by means of trucks and the products finally make the
‘last mile’ based on the local popular and cheap mode of
transport
Schematic of HUL’s Distribution Network

HUL
 New distribution channels

• Project Shakti
Started in the late 2000, Project Shakti had enabled
Hindustan Lever to access 80,000 of India's 638,000
villages .HUL's partnership with Self Help Groups(SHGs)
of rural women, is becoming an extended arm of the
company's operation in rural hinterlands
• Project Streamline
Project Streamline is an innovative and effective
distribution network for rural areas that focuses on
extending distribution to villages with less than 2000
people with the help of rural sub‐stockists/Star Sellers
who are based in these very villages. As a result, the
distribution network directly covers as of now about 40
per cent of the rural population
 Hindustan Lever Network (HLN)

• It is the company's arm in the Direct Selling

channel, one of the fastest growing in India
today
• It has about several lakh consultants‐ all
independent entrepreneurs, trained and
guided by HLN's expert managers
• HLN has already spread to over 1500 towns and
cities, covering 80% of the urban population,
backed by 42 offices and 240 service centres
across the country
• It presents a range of customised offerings in
Home & Personal Care and Foods
 Channel Design
• Hindustan  Lever  Limited  (HUL)  has  two   types
 of  channel  selling  ‐ 
 
i. Regular  (traditional)  retail  channel,   
ii.Direct  Selling  Channel  in  the  name  of  Hindustan
 Lever  Network  (HLN).  
 Channel structure
Redistribution stockists:-

• Sales  Margin:  4.76%  which  includes  cash  discount,  unloading  expenses  from  depot,
 distribution  expenses  to  retailers,  incentive  schemes  &  other  incidental  expenses.  

• Modes  of  transport  used:  Rickshaw,  tempo.  

• Incentive  schemes:  Before  2000  holiday  packages  and  tours  but  after  2000  no  non‐
monetary  incentive  for  RS.  
• . 

• Areas  of  Operations:  Marked  for  each  of  the  RS.  

• Selling  Operations:  RSs  sells  the  goods  to  ‐  

o Wholesaler  (gets   1.5  %  max.  discount  from  RS)  
o Retailers  (gets   1.0%  max.  discount  from  RS)  
Wholesaler:  
• Gets  cash  discounts  and  other  schemes  promoted  by  HUL  (gets  points  under
 Vijeta  Scheme).    
Retailers:  
• Total  retailer  base  in  chennai :   Approximately  1070.  

• Sales  Margin:  Depends  on  the  product  

– o Soap,  detergents  ‐  8%  on  MRP  

– o Cosmetics              ‐ 10%  on  MRP  
– o Food  items            ‐  8%  on  MRP
Incentive  schemes:   
• Company  programs  (Scheme  Discounts  +  Cash  Discounts)  
• TPR  schemes  based  on  Sales  (1  %  to  4  %)  
• Vijeta  scheme  is  not  for  retailers.  
Initiatives Taken to Improve The Distribution Network

• Setting  up  of  a  full‐scale  sales  organization  comprising  key  account

 management  and  activation  to  impact,  fully  engage   and  service  modern
 retailers  as  they  emerge.  
• Servicing  Channel  partners  and  customers  with  continuous  daily
 replenishment.   
• Leveraging  scale  and  building  expertise  to  service  Modern  Trade  and  Rural
 Markets.  
• Delaying  of  sales  force  to  improve  response  times  and service  levels
• Launching  the  Unicare  scheme  with  upmarket  pharmacies  and  retailers  to  sale
 its  premium  brands.  
• Launching  of  several  promotional  schemes  for  existing wholesalers  and
 distributors.
 Field Force Management
• In  HUL,  the  field  force  is  evaluated  using  QOC  (Quality
 of  Contribution).  It  consists  of  4  components  ‐ 
 
• 1.  Secondary  Sale  (Max  points  =  2.5)  
• 2.  Eco  (Max  points  =  0.5)  
• 3.  Focus  (Max  points  =  0.5)  
• 4.  FCS  (Max  Points  =  0.5)  
 Non Monetary Methods
• Based  on  the  QOC  various  awards  are  distributed  to  the  field   persons  at  the
 end  of  every  month.  These  awards  are  also  known  as  ‘MOC  Star’  awards.

• If  QOC  score  >  4.5 - The  person  is  eligible  for  7  star  award  

• If  QOC  score  >  4    - The  person  is  eligible  for  5  star  award  

• If  QOC  score  >  3.5  -The  person  is  eligible  for  3  star  award  
 Financial Analysis
Marketing  Expenses  
As  stated  earlier  also,  marketing  expenses  here   include  the
 following  –   
- Commissions  
- Rebates  29
- Discounts  
- Sales  promotional  
- Expenses  on  direct  selling  agents    
- Entertainment  expenses  etc.
 Distribution  Expenses  
• Distribution  expenses  include  the  outward  freight  cost  to  the
 company.   
 Evolution of HUL’s distribution Network
• The  first  phase  of  the  HUL  distribution  network  had
 wholesalers  placing  bulk  orders  directly  with  the  company
• The  highlight  of  the  third  phase  was  the   concept  of
 "Redistribution  Stockist"  (RS)  who  replaced  the  RWs