Posts Tagged ‘Unilever’
According to Proctor & Gamble shoppers make up their mind about a product in three to seven seconds, just the time it takes to note a product on a store shelf. This time lapse is called (by P&G) “first moment of truth” and it’s considered the most important marketing opportunity for a brand. The term “First Moment of Truth” (commonly called FMOT) was coined by Procter & Gamble in 2005 to define the first interaction between a shopper and a product on a store’s shelf.
While this first moment of truth is still important, the rise of full internet adoption and increased search engine use often lead to many brand interactions taking place between a consumer and a brand before that consumer ever sees a product on a shelf. This phenomena is what Google calls as “Zero Moment of Truth”, or ZMOT.
So, essentially the Three moments of Truth changed to Four moments of Truth as below:
1. Zero Moment of Truth: When the user is searching online for a product with an intention to understand the product that he intends to consume or buy.
2. First Moment of Truth: When the consumer goes to the store and interacts with the brands in the store
3. Second Moment of Truth: When the consumer brings home the product and experiences the product. The consumer checks if they delivered on the promises made or not.
4. Third Moment of Truth: When the consumer gives feedback or how the consumer advocates the brand?
Please refer to google-zmot to get a comprehensive understanding of ZMOT. Thank you.
The typical chain for a grocer store FMCG product will be:
Manufacturing plant -> Company Ware House -> Regional Ware House -> Regional Stockist -> Super Stockist -> Stockist -> Distributor -> Retailer
Main Godown -> C&F Agents/Super Stockists -> Distributors as per the territories -> Wholesalers/Retailers
So, the retailers either buy from the distributor or they buy from the local wholesaler. Each has its own advantages and disadvantages. Distributor provides you with better servicing, replacement of spoilt products, credit facility of 2 weeks, etc. On the other hand, the wholesaler will give you more margins, but no credit facilities, and you don’t have compulsion of storing a set of SKUs, etc.
The inventory is under the ownership of the company only until it reaches the distributors by the C&F agents. The stockists are responsible to distribute to the retailers. Each stockist may serve around 500-1000 retailers in a proximity. Also, all the stockists are not the same in their storage. Every stockist may have his own set of categories which he can store the best, like a stockist can store rice, sugar, teapowder, biscuits, and snacks. Some may be specialists in handling premium products, and some in frozen foods. The company generally categorizes the stockists based on their specialty and allocates different super-stockists. For example, HUL categorizes them as U1 and U2 stockists, where U1 is general products and U2 stockists handle only premium products. The distribution network for premium products is different from that of discount and popular as they require much deeper distribution penetration unlike the premium products. Company categorizes based on their storage capacities where company has some standards that every stockist and distributor should have 2 months and 3 weeks of stock.
The stockists appoint salesman who take the orders from the retailers, and the delivery is made on a van. Each stockist may have 6-10 vans, and 10-12 people for the delivery process. The link between the manufacturer and the stockist is maintained by the manufacturer’s employees Area Sales Manager, Territory Sales Manager, Activation Manager, and the Re-Stockist Salesman (RSSM) manages all the distribution, purchases, labor management, and supervises the delivery process.Every month the sales targets are set by the company to all its salesforce – TSM, ASM, Sales InCharge, etc. and they handle all the relations with the distributor and sometimes push the stock onto the distributor to meet their sales targets.
Companies try to motivate the channel partners with workshops about business & marketing, good warehouse practices, and a lot of other incentives. They follow a strict rating mechanism with all its channel partners and evaluate them continuously on a set of parameters.
Though each company has its own distribution strategy and flow, most of the companies follow the above distribution framework.
Brand Management is a classic example of markets have changed into consumer-driven markets. Today, brand managers face a lot of market fragmentation, market realities, and competition. The Brand Managers are under pressure to leverage upon the brand assets because of higher costs of creating new brands, although this is dependent upon your brand strategy which we will see later in the blog.
Originally, branding has started with names, and symbols. It then moved on to providing unique experiences to consumers in every way they can. Today, branding is no more about a logo or a name, it is about the complete unique experience in many ways. So it gave rise to a completely new subject called Brand Management and all the complexities of handling the dynamics of branding.
Brand Managers adopt different marketing and branding strategies and unknowingly started creating a lot of line extensions, flanker brands, brand extensions, endorsed brands and subbrands. This led to a new area of Brand Management called Brand Architecture, which studies the relationships and structures among all these flamboyant extensions. For example, companies like P&G and Unilever operate in so many categories and they have many brands under each category where the whole spectrum becomes very difficult to comprehend and manage.
Brand Architecture gives you a clarity of the relationships, structures, and positioning so that we can leverage upon any new opportunities, and missed opportunities. It is all about what level of associations should we have. For example, if Toyota decides to endorse the brand Lexus, what should it say: Toyota Lexus, or Lexus by Toyota. Could you see the difference in the level of association in both the cases with the corporate brand. Toyota Lexus has a higher level of support from Toyota than saying Lexus by Toyota.
Now, consider that your company has acquired another brand. Now, every brand has a a different identity and position in the market. Though, you must have considered all that in your strategic acquisition, it is all a different ball game of how you will integrate that brand in your company, and what level of association will you choose. It all depends on your corporate, marketing, and branding strategies.
Let us see one of the most often used brand-relationship models in Marketing – The Aaker Model of Brand Relationship. The Aaker Model of Brand Relationship has categorized brand relationships into four buckets:
The Aaker Model of Brand Relationship has categorized brand relationships into four buckets:
1. House of Brands
- Not Connected
- Shadow Endorser – Tide (P&G)
2. Endorsed Brands
- Token Endorsement – Grape Nuts from Post, Universal Pictures, A Sony Company, Docker’s, LS & Co
- Linked name – McVeggie, McMuffin, Nestea,
- Strong Endorsement – Courtyard by Marriot, Friends and Family by MCI, Obsession by Calvin klein
- Co-Drivers – Gillette Mach3, Sony Trinitron, DuPont StainMaster (subbrand and master brand both are very strong)
- MasterBrand as Driver – HP DeskJet, Dell Dimension (when subbrand is not very strong and masterbrand drives more)
4. Branded House
- Different Identity – GE Capital, GE Appliance
- Same Identity – Virgin, BMW
Developing markets such as India are an important source of growth for Unilever. The company is adopting unique marketing approaches to increase consumption of its products in these regions, positioning itself as an ethical brand that benefits wider society.
Unilever’s Lifebuoy ‘Swasthya Chetna’ (‘Health Awakening’) campaign is one example. This educates people on the importance of health and hygiene in preventing diarrhoea and encourages them to adopt a simple hand-washing regime using soap. Swasthya Chetna is India’s largest ever rural health and hygiene education program.
Diarrhoea is the world’s leading preventable cause of death, killing 2.2 million people every year including 600,000 Indian children under the age of five. According to a study by the London School of Tropical Hygiene, washing hands with soap and water can reduce instances of diarrhoea by 47%.
Many potential Lifebuoy customers live in remote, rural areas which can be hard to reach through conventional media. Ogilvy worked with Lifebuoy to create a direct communication campaign specially designed to raise awareness among India’s largely rural and often illiterate population.
Lifebuoy health officers visited 43,000 Indian villages and schools over five years where they used product demonstrations, interactive visuals, competitions and drama workshops to spread the health and hygiene message.
The program is based on the simple insight that ‘visible clean is not actual clean’ which was brought alive through a special ‘Glowgerm’ UV demo. When held under ultra-violet lamps, glowgerm powder glows on hands washed only with water, symbolising germs on those hands, and does not glow on hands washed with soap.
The program has reached 110 million rural Indians since it began in 2002. Awareness of germs has increased by 30% and soap use has increased among 79% of parents and among 93% of children in the areas targeted. Soap consumption has increased by 15%.
The campaign received recognition for its innovation and effectiveness, winning Silver in the Rural Marketing Advertisers Association of India awards in 2006, and the grand prize at the Asian CSR awards 2007. It was also recognized by the Indian government who created a special edition postal cover dedicated to the campaign.
Clinic Plus is the second most sold brand of shampoo in the rural markets after Cavin Kare’s Chik shampoo. The following Clinic Plus advertisement is designed for the Indian Rural Markets. There is an animated character called Chulbuli. The advertisement is partly based on the small girl of the original urban advertisement. We see both the advertisements below
The actual advertisement for the Urban markets having the girl is:
Fair & Lovely is a fairness cream of Hindustan Unilever. It is a 1,100 crore brand from the FMCG giant and is one of the largest selling brands in the world. So, what is the big deal about it? The big deal is: Fair & Lovely is going to change its position in the market from fairness cream to clear & flawless complexion.
The new tagline is gorepan sa kahi zyaada, saaf gorapan. Says an HULspokesperson, “Brand innovation and renovation is core to our business. Brand renovation is aimed at constantly renewing the product equity with the consumer by making it current and contemporary. We have attempted to do that with Fair & Lovely.” In my view, the renovation was required as the competition seems to get heated with CavinKare and Garnier. Garnier always positioned itself with both fairness and clear complexion, whereas Fair & Lovely positioned as a fairness cream alone.
It seems that research done by HUL suggested that women need more than just fairness. They need clear complexion along with fair skin and the renovation strategy is to meet the needs of this segment. It is true that the products should evolve in their life cycle meeting the changing needs of your target segment and acquiring new segments. Fair & Lovely is the market leader in this segment with competition from CavinKare’s Fairever and Garnier products. But it looks like HUL is considering renovating its personal care segment as Sunsilk, and Dove, two other big brands from HUL, also went through some heavy marketing and renovation.
So, lets see how well Fair & Lovely performs in meeting the new needs of fair complexion.
Hindustan Lever Limited (HLL) is the largest detergent manufacturer in India. HLL is one of the few companies that targeted and delivered to the bottom-of-the-pyramid (BOP) markets very effectively. One of the key strengths of HLL is their distribution and marketing penetration in the BOP markets. HLL products are manufactured at around 100 locations around India and distributed via depots to almost 7500 distribution centers. HLL has the reach to all villages with atleast 2000 people.
Pricing for the BOP markets
HLL is known as the company that comes up with innovative products for which the poor are willing to pay for. In fact they base their product on peoples’ willingness to pay for the product. For example, let us consider the case of Lifebuoy. HLL does some initial market research and comes up with the requirement that the Indian rural population need germ kill soap. Now, HLL experts immediately don’t go to the laboratory and come up with the most sophisticated germ kill soap. Rather, they have a bottom-up approach which works well for the mass markets. HLL does market research to understand how much are people willing to pay for a benefit like germ killer. Considering the price to be the retail price, it evaluates its target margins it gives a challenge cost. Then it comes up with a business model which delivers that challenge cost.
Marketing and Communications Strategies
Everything seems good on paper, but how does HLL manage its competitors. The key strengths of HLL is its distribution channels available to deliver Lifebuoy at the price the market dictated. The sales and marketing strategies of HLL are based upon microfinance institutions, micro-credit lending, and rural entrepreneurship. One such project is the Project Shakti which started in Andhra Pradesh and expanded to 12 states in India.
HLL tied up with the Self-Help Groups (SHGs) and offered them products which are relevant to the rural population. A member of an SHG is selected as a Shakti entrepreneur, also called ‘Shakti Amma’ will receive stocks from HLL rural distributor. With some training from HLL, the Shakti entrepreneur sold those goods directly to the local village population. HLL witnessed 15% increase in sales from the villages of AP, which accounted for 50% of total sales of HLL products in AP.
An important reason for the success of this integrated marketing strategy for rural India is the consistencies of goals between HLL, the government units, and the NGOs. As Lifebuoy is targeted for socially desirable improved health goal, the other parties are happy to cooperate with HLL. This kind of integrated positioning, targeting, sales, marketing, and distribution strategy has given HLL a real edge over its competitors.