The last year had not been easy for Hindustan Unilever (HUL). But India’s largest FMCG behemoth fought the blues and posted a net profit of Rs.24.96 billion for the 15-month ending March 2009.
HARISH MANWANI, CHAIRMAN, HUL
How did HUL do it? Well, in Chairman Harish Manwani’s words it was via a paradoxical strategy of “business as usual on growth and business unusual on costs.” At first, struggling with increasing prices of critical raw materials, HUL tried every known trick in the trade to balance its cost, price and profit equation. They raised prices of their shampoos, detergents and tea brands and even reduced grammage of some products. While these measures helped HUL in achieving decent sales growth, increased prices led to a simultaneous decline in volumes. But when inflation reared its ugly head, HUL was again forced to cut prices of its key brands to stay competitive.
It was then that Manwani took the decision to convert the impending crisis into an opportunity. Realising that those conventional strategies would be unable to bail HUL out of its predicament, Manwani implemented three crucial strategies to balance the company’s toplines and bottomlines. He first declared a ‘war on waste,’ wherein the company reduced its fixed cost component. Primarily, HUL began buying its raw materials (commodities) on a monthly basis instead of the previous annual cycle to take advantage of the fluctuations in the commodity market. Says Dibyajyoti Bora, FMCG Analyst, CII, “In the long term, the move will help HUL take advantage of futures contracts and save costs.” The company followed this up by ‘straddling the pyramid’ to capture uptrading opportunities. Actually with an increase in prices, HUL had started losing market share to cheaper rivals.
To counter this, they rationalised their stock keeping units (SKUs) and spread out their vast product portfolio at new price points. Tweaking their go-to-market strategy to cut flab at the front end added more push. For FY10, HUL has decided to revamp its entire product portfolio and relaunch several brands like Rexona, Breeze, Kissan Fruit Jam, et al. The bid is to enhance ad budgets for brands like Hamam and Liril. Business unusual? Naah!
Savreen Gadhoke
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Source : IIPM Editorial, 2009
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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HARISH MANWANI, CHAIRMAN, HUL
How did HUL do it? Well, in Chairman Harish Manwani’s words it was via a paradoxical strategy of “business as usual on growth and business unusual on costs.” At first, struggling with increasing prices of critical raw materials, HUL tried every known trick in the trade to balance its cost, price and profit equation. They raised prices of their shampoos, detergents and tea brands and even reduced grammage of some products. While these measures helped HUL in achieving decent sales growth, increased prices led to a simultaneous decline in volumes. But when inflation reared its ugly head, HUL was again forced to cut prices of its key brands to stay competitive.
It was then that Manwani took the decision to convert the impending crisis into an opportunity. Realising that those conventional strategies would be unable to bail HUL out of its predicament, Manwani implemented three crucial strategies to balance the company’s toplines and bottomlines. He first declared a ‘war on waste,’ wherein the company reduced its fixed cost component. Primarily, HUL began buying its raw materials (commodities) on a monthly basis instead of the previous annual cycle to take advantage of the fluctuations in the commodity market. Says Dibyajyoti Bora, FMCG Analyst, CII, “In the long term, the move will help HUL take advantage of futures contracts and save costs.” The company followed this up by ‘straddling the pyramid’ to capture uptrading opportunities. Actually with an increase in prices, HUL had started losing market share to cheaper rivals.
To counter this, they rationalised their stock keeping units (SKUs) and spread out their vast product portfolio at new price points. Tweaking their go-to-market strategy to cut flab at the front end added more push. For FY10, HUL has decided to revamp its entire product portfolio and relaunch several brands like Rexona, Breeze, Kissan Fruit Jam, et al. The bid is to enhance ad budgets for brands like Hamam and Liril. Business unusual? Naah!
Savreen Gadhoke
For more articles, Click on IIPM Article.
Source : IIPM Editorial, 2009
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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Event at IIPM
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