PROJECT REPORT

An analytical study of personal product industry of India and its marketing strategies in AGRA with special reference to Proctor and Gamble, Unilever

Submitted
For partial fulfillment of the requirement of B.Com-III (vocational) Advertising, Sales promotions and Salesmanship course of Dr. B. R. Ambedkar University, Agra.

Project Guide: Dr. V. J. Massey

Submitted By: Sakshi Agarwal B.Com Part III Vocational Sales Enrollment No: 0861699 Roll No:

St. Johns College, Agra 2011

CERTIFICATE
This is to certify Sakshi Agarwal has completed the project - An analytical study of personal product industry of India and its marketing strategies in AGRA with special reference to Proctor and Gamble, Unilever in partial fulfillment of the requirement of the degree of B.com (vocational)-III (Advertising, Sales Promotion and Salesmanship) under my supervision.

To the best of my knowledge and belief, this is the original work of the candidate and same has not been submitted anywhere else for the award of any degree or diploma.

Project Guide Dr. V. J. Massey (Department of Business Administration)

ACKNOWLEDGEMENT

I wish to express my deepest sense of gratitude to my respected Sir & guide Dr. V. J. Massey who gives me the privilege of caring out this institution and in the field of communication and advertising and sales promotions and salesmanship. Dr. V. J. Massey a constant guiding factor and continuously encouraging me in my humble endeavor. His keen eyes for details, his immaculate method of working has been a constant source of inspection for me all along. It has been a matter of great pleasure, honour and satisfaction to be associated with him as his under graduate student. I especially thanks to all my teachers, friends and college fellows for helping me throughout from time to time, even at the cost of their personal convenience. I am highly indebted to my parents for their support and on being on my side during the moment despair.

Before concluding I remember the Almighty who gave me the power, energy and enthusiasm to accomplish the work.

CHAPTER SCHEME

Chapter 1 Introduction Personal product industry an overview Major competitors Introduction of Hindustan Unilever Limited Introduction of Proctor and Gamble Chapter 2 Research methodology Research Design Objective of the Study Limitations of the Study Chapter 3 Industry outlook Trends and Industry Outlook Industry Conclusions History Of Expansion Proctor and Gamble Hindustan Unilever Limited Chapter 4 Competitor Analysis Proctor and Gamble Hindustan Unilever Limited Chapter 5 Strategy Analysis- Proctor & Gamble Business level Strategy Global Strategy E-Business Strategy Corporate Strategy

Chapter 6 Strategy Analysis- Unilever Business level Strategy Global Strategy

 E-Business Strategy Corporate Strategy Chapter 7 Swot Analysis Proctor and Gamble Hindustan Unilever Limited Chapter 8 - Data Analysis Chapter 9 Findings, suggestion and Conclusion Appendices Referencing and Bibliography

Chapter 1 Introduction
Personal product industry An Overview

The industry segment chosen for this analysis are the industries of Perfumes, Cosmetics and other Toilet Preparations. Companies within this industry have referred to this market segment as the Personal Products Industry. The SIC 2844 category, when converted to the new North American Industry Classification System (NAICS) was further divided into 2 categories, 325620 (Toilet Preparation Manufacturing) and 325611 (Soap and Other Detergent Manufacturing). The global personal products market encompasses fragrances, hair care, make-up, oral hygiene, personal hygiene, and skincare products. This highly competitive industry will derive its future performance relative to global consumer spending patterns and raw material prices.1 In 2005, the leading revenue source in this market was hair care, accounting for 25.5 percent of the global value. This industry has recently been affected by rising commodity costs which, coupled with increased marketing spending, put significant pressure on operating margins and earnings in 2005. Earnings per share (EPS) were expected to improve by 2006, as commodity costs began to stabilize. For an analysis of the Industry Structure, Porter's 5 Forces Model4 has been used and provided in Appendix C. The result of this analysis reveals strong barriers to entry, moderate bargaining power of P&G and Unilever 2 buyers and suppliers, considerable threat of substitutes, and substantial rivalry among existing companies.

Major competitors
Fortune Magazine and Reuters group personal products together with household products when analyzing industries. As of April 2005, Procter & Gamble (P&G) was the leading company in terms of revenues and profits in the Household and Personal Products Industry, followed by Kimberly-Clark, Colgate-Palmolive, Gillette and Avon Products. The October 2005 acquisition of Gillette by P&G10 solidifies P&Gs number one position on this list. Competitor ranking of the personal products industry (not combined with household products) as measured by market share is led by LOreal (8.8%), followed by Procter & Gamble (8.5%) When competitors in the Personal Care Industry are ranked by revenues however, the top three were P&G, (2) LOreal and (3) Unilever. Competitive advantage in mature industries often manifests itself in cost advantage from economies of scale or experience and differentiation advantage through brand loyalty12 all of which are characteristic of the personal products industry. Companies have instituted cost reduction programs (including the creation of manufacturing efficiencies, renegotiated supply contracts, and employee and plant layoffs) to improve margins during the last few years. Facing stiff competition from private labels, personal products companies rely on a high turnover of products in order to improve performance, thus requiring the investment of significant resources into R&D. Additionally, many firms view emerging markets (such as China and India, where consumption of household products is low) as an opportunity to expand revenues For fastest growing markets in cosmetics and toiletries.

Introduction of Hindustan Unilever limited

Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods Company, touching the lives of two out of three Indians with over 20 distinct categories in Home & Personal Care Products and Foods & Beverages. The companys Turnover is Rs. 17,523 crores (for the financial year 2009 - 2010) HUL is a subsidiary of Unilever, one of the worlds leading suppliers of fast moving consumer goods with strong local roots in more than 100 countries across the globe with annual sales of about 40 billion in 2009 Unilever has about 52% shareholding in HUL. Hindustan Unilever was recently rated among the top four companies globally in the list of Global Top Companies for Leaders by a study sponsored by Hewitt Associates, in partnership with Fortune magazine and the RBL Group. The company was ranked number one in the AsiaPacific region and in India. The mission that inspires HUL's more than 15,000 employees, including over 1,400 managers, is to help people feel good, look good and get more out of life with brands and services that are good for them and good for others. It is a mission HUL shares with its parent company, Unilever, which holds about 52 % of the equity.

Introduction of Proctor and Gamble

P&G Home Products Limited is one of India's fastest growing Fast Moving Consumer Goods Companies that has in its portfolio P&G's global brands such as Ariel and Tide in the Fabric Care segment, and in the Hair Care segment: Head & Shoulders - world's largest selling anti-dandruff shampoo; Pantene - world's No. 1 beauty shampoo; and Rejoice - Asia's No. 1 shampoo. P&G Home Products Limited is a 100% subsidiary of The Procter & Gamble Company, USA, that in India, has carved a reputation for delivering superior quality, value-added products to meet the needs of consumers. William Procter, a candle maker, and James Gamble, a soap maker, immigrants from England and Ireland, respectively, who had settled earlier in Cincinnati, who met as they married sisters, Olivia and Elizabeth Norris,[6] formed the company initially. Alexander Norris, their father-in law, called a meeting in which he persuaded his new sons-in-law to become business partners. On October 31, 1837, as a result of the suggestion, Procter & Gamble was born.

Chapter 2 Research Methodology

Introduction
After the problem has been defined, the question arises how to carry out the research. The research plan is the main part of a grant application describing a principal investigators proposed research stating its importance and how it will be conducted. The research plan should be written to address the following questions: What do you intended to do? Why is the work important? What has already been done? How are you going to do the work? Researcher should know the background and significance of the research problem including the proposed rationale, current state of knowledge and potential contributions and significance of the research to the field. Literature review is very significant. Critically evaluates existing knowledge including background literature and relevant data. References should reflect update knowledge of the field. Specify existing gaps that the project is intended to fill. The preliminary results are important to establish the experience and competence of the applicant to pursue the proposed research project and to provide support for the study hypotheses and research design. The progress report should include a summary of the previous applications specific aims and importance of the findings. Discuss how previous work leads to the current proposal. Emphasize how the previous work demonstrates feasibility of proposed methods. Accuracy and overall presentation are important in figures, tables and graphs.

Research Design
There are many definitions of research design, but no single definition imparts the full range of important aspects.

Research design contributes the blueprint for the collection, measurement, and analysis of data Research design aids the researcher in the allocation of limited resources by posing crucial choices in methodology Research design is the plan and structure of investigation so conceived as to obtain answers to research questions. The plan is the overall scheme or program of the research. it includes an outline of what the investigator will do from writing hypotheses and their operational implications to the final analysis of data. Research design express both the structure of the research problem- the framework, organization, a configuration of the relationships among variables of the study- and the plan of investigation used to obtain empirical on those relationships.

These definitions differ in detail, but together they give the essentials of research design: An activity and time based plan. A plan always based on the research question. A guide for selecting sources and types of information. A framework for specifying the relationships among the studys variable. A procedural outline for every research activity.

Flow chart which show how data is collected

Data source

Primary Source

Secondary Source

Questionnaire Surveys Observations Experiments

External Source

Internal Source

Internet Published Data Standardized Sources

Sales records Marketing Activities Cost Information Distribution Reports Feed back

Electronic

Printed

Objective of the study:

The objective of this report is to provide an overview and examination of the Personal Products Industry covering industry structure, competitors, past and future performance trends, and conclusions about attractiveness for incumbents.

Government Trade Associations Periodical Newspapers Books Annual Reports Annual Reports Private Studies

Store audits Warehouse withdrawal Services Consumer Purchase Panels Single source data Multimedia services

 Additional objectives include a competitor analysis, comparing Procter & Gamble and Unilever, an examination of their strategies, and recommendations for future growth and sustainability. Our analysis includes global operations, financial results, market share and Current initiatives. Information for these analyses was derived from library databases, Internet searches and company websites

Limitations of the study:

Chapter 3 Industry Outlook

Trends and Industry Outlook

The household products and personal care segments are expected to be the stronger within the US Consumer products industry entering 2006 with a strong financial profile. These segments are Characterized as having well-supported, strong brands and superior product development, commanding Premium pricing in sectors that are less cyclical. Two events that dominated the landscape in 2005 for consumer product companies will also have an Impact on future performance the continuation of raw material cost escalations, which in turn prompted P&G and Unilever price increase announcements, and significant mergers or pending mergers - among them, P&Gs acquisition of Gillette. Many companies instituted cost reduction programs, but in the end, few companies were able to fully offset raw materials cost escalation. In addition, industry competition in the form of advertising has ratcheted upward, largely due to the strong influence of P&G in 2005. Changes affecting the demographics and demands of the consumer, such as the aging baby boomers Causing an increase in the demand for age-defying skin care and hair color, or animal rights activists Protesting animal testing, directly affect the industry. The growing need for compliance with more Stringent environmental regulations, and the consumer demand for natural and organic products, have also Changed how products are produced, requiring additional investment and expanded product lines. Keeping up with changing wants and needs of the consumer in order to remain competitive in this Industry increases the need for investment in research and development. Globalization and the growing Ethnic population in the US will also continue to broaden the industry and create new market segments. Not only the US economy, but also the global economy, will affect sales for items not considered a Necessity, such as some cosmetics, perfumes, and household items. The consumer will continue to be Influenced by price and convenience for most products. There is a close correlation between a countrys consumption of soaps and detergents and its standard of living. Trends in how consumers shop also affect the industry. Beginning in the 1990s into the 2000s, consumers began purchasing these types of products at mass discount centers, such as Costco and Sams Club, rather than at upscale department stores.17 These macro-level factors environmental regulations (government), the global economy, the cost of raw materials, global competition, innovations in research, consumer demographics, and the ever changing wants and needs of the consumer will continue to impact the performance of companies in this industry. Companies expected to fare well in the future are those with strong momentum from earlier and successful restructuring actions whose cost savings are ramping up quickly, with less exposure to specific raw materials, and with balance sheet flexibility.

Industry Conclusions
The attractiveness of the Personal Products industry includes such elements as steady growth in

consumer demand and repeat purchase of the products, since most are consumables. Some larger current producers are achieving economies of scale, brand loyalty, and first mover advantage. Other smaller producers have developed a market niche for a specific consumer need and have been successful. The challenges in this industry include taking advantage of economies of scale in order to compete on price with current companies, keeping up with changes in customer preferences and government regulations (e.g., labeling, chemical handling, and environmental impact), and the investment in R&D required to stay ahead of the competition with new product innovation.

History of Expansion: Proctor and Gamble

William Procter, a candlemaker, and James Gamble, a soapmaker, immigrants from England and Ireland, respectively, who had settled earlier in Cincinnati, who met as they married sisters, Olivia and Elizabeth Norris, formed the company initially. Alexander Norris, their father-in law, called a meeting in which he persuaded his new sons-in-law to become business partners. On October 31, 1837, as a result of the suggestion, Procter & Gamble was born. In 1858-1859, sales reached $1 million. By this point, approximately 80 employees worked for Procter & Gamble. During the American Civil War, the company won contracts to supply the Union Army with soap and candles. In addition to the increased profits experienced during the war, the military contracts introduced soldiers from all over the country to Procter & Gamble's products. In the 1880s, Procter & Gamble began to market a new product, an inexpensive soap that floats in water. The company called the soap Ivory. William Arnett Procter, William Procter's grandson, began a profit-sharing program for the company's workforce in 1887. By giving the workers a stake in the company, he correctly assumed that they would be less likely to go on strike. The company began to build factories in other locations in the United States because the demand for products had outgrown the capacity of the Cincinnati facilities. The company's leaders began to diversify its products as well and, in 1911, began producing Crisco, a shortening made of vegetable oils rather than animal fats. As radio became more popular in the 1920s and 1930s, the company sponsored a number of radio programs. As a result, these shows often became commonly known as "soap operas".

The company moved into other countries, both in terms of manufacturing and product sales, becoming an international corporation with its 1930 acquisition of the Thomas Hedley Co., based in Newcastle upon Tyne, England. Procter & Gamble maintained a strong link to the North East of England after this acquisition. Numerous new products and brand names were introduced over time, and Procter & Gamble began branching out into new areas. The company introduced "Tide" laundry detergent in 1946 and "Prell" shampoo in 1947. In 1955, Procter & Gamble began selling the first toothpaste to contain fluoride, known as "Crest". Branching out once again in 1957, the company purchased Charmin Paper Mills and began manufacturing toilet paper and other paper products. Once again focusing on laundry, Procter & Gamble began making "Downy" fabric softener in 1960 and "Bounce" fabric softener sheets in 1972. One of the most revolutionary products to come out on the market was the company's "Pampers", first test-marketed in 1961. Prior to this point disposable diapers were not popular, although Johnson & Johnson had developed a product called "Chux". Babies always wore cloth diapers, which were leaky and labor intensive to wash. Pampers provided a convenient alternative, albeit at the environmental cost of more waste requiring landfilling. Procter & Gamble acquired a number of other companies that diversified its product line and significantly increased profits. These acquisitions included Folgers Coffee, Norwich Eaton Pharmaceuticals (the makers of Pepto-Bismol), Richardson-Vicks, Noxell (Noxzema), Shulton's Old Spice, Max Factor, and the Iams Company, among others. In 1994, the company made headlines for big losses resulting from leveraged positions in interest rate derivatives, and subsequently sued Bankers Trust for fraud; this placed their management in the unusual position of testifying in court that they had entered into transactions that they were not capable of understanding. In 1996, Procter & Gamble again made headlines when the Food and Drug Administration approved a new product developed by the company, Olestra. Also known by its brand name Olean, Olestra is a lower-calorie substitute for fat in cooking potato chips and other snacks that during its development stages is known to have caused anal leakage and gastrointestinal difficulties in humans. Procter & Gamble has dramatically expanded throughout its history, but its headquarters still remains in Cincinnati. In January 2005 P&G announced an acquisition of Gillette, forming the largest consumer goods company and placing Unilever into second place. This added brands such as Gillette razors, Duracell, Braun, and Oral-B to their stable. The acquisition was approved by the European Union and the Federal Trade Commission, with conditions to a spinoff of certain overlapping brands. P&G agreed to sell its SpinBrush battery-operated electric toothbrush business to Church & Dwight. It also divested Gillette's oral-care toothpaste line, Rembrandt. The deodorant brands Right Guard, Soft & Dri, and Dry Idea were sold to Dial Corporation. The companies officially merged on October 1, 2005. Liquid Paper, and Gillette's stationery division, Paper Mate were sold to Newell Rubbermaid. In 2008, P&G branched into the record business with its sponsorship of Tag Records, as an endorsement for TAG Body Spray.

P&G's dominance in many categories of consumer products makes its brand management decisions worthy of study.[9] For example, P&G's corporate strategists must account for the likelihood of one of their products cannibalizing the sales of another. On August 24, 2009, the Irish-based pharmaceutical company Warner Chilcott announced they had bought P&G's prescription-drug business for $3.1 billion.

Hindustan Unilever Limited:

Unilever was created in 1930 by the amalgamation of the operations of British soapmaker Lever Brothers and Dutch margarine producer Margarine Unie, a merger as palm oil was a major raw material for both margarines and soaps and could be imported more efficiently in larger quantities. In the 1930s the Unilever business grew and new ventures were launched in Latin America. In 1972 Unilever purchased A&W Restaurants' Canadian division but sold its shares through a management buyout to former A&W Food Services of Canada CEO Jefferson J. Mooney in July 1996. By 1980 soap and edible fats contributed just 40% of profits, compared with an original 90%. In 1984 the company bought the brand Brooke Bond (maker of PG Tips tea). In 1987 Unilever strengthened its position in the world skin care market by acquiring Chesebrough-Ponds, the maker of Ragu , Ponds Aqua-Net, Cutex Nail Polish, and Vaseline. In 1989 Unilever bought Calvin Klein Cosmetics, Faberg, and Elizabeth Arden, but the latter was later sold (in 2000) to FFI Fragrances. In 1996 Unilever purchased Helene Curtis Industries, giving the company "a powerful new presence in the United States shampoo and deodorant market". The purchase brought Unilever the Suave and Finesse hair-care product brands and Degree deodorant brand. In 2000 the company absorbed the American business Best Foods, strengthening its presence in North America and extending its portfolio of foods brands. In April 2000 it bought both Ben & Jerry's and Slim Fast. The company is multinational with operating companies and factories on every continent (except Antarctica) and research laboratories at Colworth and Port Sunlight in England; Vlaardingen in the Netherlands; Trumbull, Connecticut, and Englewood Cliffs, New Jersey in the United States; Bangalore in India (see also Hindustan Unilever Limited); and Shanghai in China.

The US division carried the Lever Brothers name until the 1990s, when it adopted that of the parent company. The American unit has headquarters in New Jersey, and no longer maintains a presence at Lever House, the iconic skyscraper on Park Avenue in New York City.

The company is said to promote sustainability and started a sustainable agriculture programme in 1998. In May 2007 it became the first tea company to commit to sourcing all its tea in a sustainable manner employing the Rainforest Alliance, an international environmental NGO, to certify its tea estates in East Africa, as well as third-party suppliers in Africa and other parts of the world. It declared its aim to have all Lipton Yellow Label and PG Tips tea bags sold in Western Europe certified by 2010, followed by all Lipton tea bags globally by 2015. Covalence, an ethical reputation ranking agency, placed Unilever at the top of its ranking based on positive versus negative news coverage for 2007. In 2008 Unilever was honored at the 59th Annual Technology & Engineering Emmy Awards for "Outstanding Achievement in Advanced Media Technology for Creation and Distribution of Interactive Commercial Advertising Delivered Through Digital Set Top Boxes" for its program Axe: Boost Your ESP. On September 25, 2009, Unilever to acquire the personal care business of Sara Lee. Leading brands such as Radox, Badedas and Duschdas strengthen category leadership in Skin Cleansing and Deodorants On August 9, 2010, Unilever signed an asset purchase agreement with the Norwegian dairy group TINE, to acquire the activities of Diplom-Is in Denmark, as of 30 September 2010. On September 24, 2010, Unilever announced that it has entered into a definitive agreement to sell its consumer tomato products business in Brazil to Cargill On September 27, 2010, Unilever purchased Alberto-Culver, the maker of personal care and household products such as VO5, Nexxus, TRESemm, and Mrs. Dash for $US3.7 billion. On September 28, 2010, Unilever and EVGA announced that they have signed an agreement under which Unilever will acquire EVGAs ice cream brands (amongst others, Scandal, Variete and Karabola) and distribution network in Greece, for an undisclosed amount.

Chapter 4 Competitor Analysis

Proctor and Gamble

William Procter (a candle maker from England) and James Gamble (a soap maker from Ireland) founded Procter & Gamble Company when, through a series of events, the two strangers traveled to the United States, met and married sisters. At their father-in-laws urging, Procter and Gamble pledged $3,596.47 each, and formed the Procter and Gamble Company in 1837.23 The Company, headquartered in Cincinnati, Ohio, has reported revenues of $56.8 billion for the fiscal year ended June 2005. This revenue comes from sales in over 160 countries, balanced worldwide with one half from the domestic market and one half from the international market. Today, P&G markets more than 300 brands, of which 22 are $1B sales producers, and has Market Development Organizations in 80 countries, leading teams to build brands organized in seven geographies: "North America, Western Europe, Northeast Asia, Latin America, Central and Eastern Europe/Middle East/Africa, Greater China and ASEAN/Australasia/India". Their products are sold primarily in grocery stores, discount stores, through mass merchandisers, membership club stores, and high frequency stores (neighborhood stores in developing countries).28 The Company and its 110,000 employees are organized into three global business units, P&G Household Care (33% net earnings), P&G Family Health (30% net earnings), and P&G Beauty (37% net earnings).29 These global business units are distributed into five segments, Health Care, Baby and Family Care, Snacks and Coffee, Fabric Care, Home Care, and P&G Beauty. The business segment being examined in this report, P&G Beauty; encompasses personal cleansing, antiperspirants or deodorants, cosmetics, colognes, hair care, feminine P&G and Unilever protection, hair color, and skin care, includes five $1Billion brands, and achieved double digit growth for 2005, with a net profit margin of 13%, ROI of 12%, and ROE of 42% on 7.257M Sales31,32 P&Gs competitive advantages arise from several key factors, one of which is innovation. Spending $2B annually on R&D and deploying approximately 7,500 researchers in technical centers around the world, P&G is a leader in innovation.33 They have 29,000 patents, and over the past eight years, have introduced the #1 or #2 new non-food products in the US.34 Key to their success is knowledge sharing and cross-borders replication of innovations, reducing costs and quickly expanding the company knowledge and line offerings.35 Another factor contributing to their competitive advantage is their largescale operations and go-to-market capabilities that provide first mover advantage and limit the ability of competitors to copy ideas and replicate them.36 Additionally, economies of scale and scope in Purchasing, distribution, business services and merchandising provide financial and trade advantages. Lastly, P&G is well known for its brand management and brand leadership capabilities, which are significant advantages for customer loyalty and market penetration. Supplementing their innovations, facilitating their rapid go-to-market capabilities, as well as their customer and partner management is P&G's significant use of IT and tracking systems, including CRM, EDI, and RFID, that improve R&D speed and capabilities, communications, information tracking and sharing, and inventory management37 (See Appendix O, Value Chain Analysis, for an overview of P&G supporting technologies and awards for excellence).

In order to sustain their competitive advantage, P&G must continue to utilize their acknowledged strengths, as well as continue to exploit international growth, especially in emerging markets, as P&G is currently overexposed in the US and Western Europe.38 Additionally, the company is moving away from the commoditized household products and food businesses and should continue its focus on personal care health and strong household businesses that provide for more profitable growth.39 P&G has also been Successful with its mergers and acquisitions strategy, such as the recent acquisitions of Clairol in 2001, Wella in 2003, and Gillette in 2005, and should continue this strategy.40 Active portfolio management, P&G and Unilever using divestiture and acquisition strategies, has been shown to increase stakeholder value; P&G needs to review longer held businesses and lower earners for their continued value to the organization, divesting if needed. P&G has been diligently participating in activities that should ensure a good future of sustainability. Their R&D has enabled ongoing introduction of new lines, as well as expansions and adaptations of current lines to meet local needs. Their Corporate Standards System application provides for innovative R&D methods to reduce costs while increasing quality and enhancing go-to-market capabilities. Theyneed to successfully fold in Gillette, and have recognized $1B in cost synergies as this integration occurs.43 Additionally, a strong focus on expansion in developing countries is being undertaken and should provide significant growth opportunities, in conjunction with their maintenance of market share and line extensions in developed countries. P&G needs to look at their businesses, however, and ensure good fit and value-added, and continue activities that have been driving organic growth and increasing EPS (2.831 basic normalized EPS; 2.662 diluted normalized EPS 2005), as well as increase free cash flow, ROI, and profits, which their activities are focused on to accomplish.

Hindustan Unilever Limited

Unilever was officially formed in 1930, through the merger of Lever Brothers, a British soap manufacturer and Margarine Unie, a Dutch margarine manufacturer.44 It has since become one of the largest direct investors in the United States.45 Unilever is unique in that it has maintained a dual ownership structure since its inception, governed by an equalization agreement.46 Although the company has two legal entities as its parents, one Dutch (Unilever NV), and one British (Unilever plc), it has only one board of directors47 and reports one set of financial statements.48 Today Unilever is present in 150 countries, employs over 223,000 people, and has numerous wellknown brands, 12 of which each have worldwide sales exceeding 1 billion.49 Unilever has products for three markets, home, food, and personal care,50 which fall into 6 primary categories: home care (17%), spreads (12%), savory & dressings (21%), beverages (8%), ice cream & frozen foods (16%), and personal care (26%). In the area of personal care, one of the segments where Unilever competes directly with P&G, Women's Wear Daily ranked Unilever ($9.3 billion) the third largest cosmetics company behind L'Oreal ($17.7 billion) and P&G ($16.5 billion).52 Company-wide, P&G's sales are around $70 billion and Unilever's are around $50 billion.53 P&G's sales are nearly 40% greater than Unilever's, with approximately 40% of Unilever's employee headcount.54 Clearly there are fundamental operational

differences between Unilever and P&G. Unilever's competitive advantages arise from strong brand recognition, such as Dove and Bird's Eye, strong R&D initiatives for line expansion, and leading brands in personal care, deodorant and personal wash.55 Their renewed focus on strong line expansion (especially after reducing their number of brands from 1600 products to approximately 400 in 2003),56 and alliances with strong corporate partners such as Pepsi are also advantages. In order to sustain their competitive advantage, Unilever has several issues to resolve (See Appendix Q for RBV Analysis). First, it has been a complex company, with two CEO's, separate organizational structures (PLC and NV), and earnings reported in two venues, Euro and Dollars.57 This complexity increased costs, and impacted opportunities for efficiency economies of scale and scope, not to mention the potential concern in transparency in reporting.58 The 2004 figures reflected a net profit of 5%, ROI of 6%, ROE of 37%, sales of 48,204M and net income of 2468.5M. Sales were flat in 2004, and Unilever began a major push for elimination of non-productive lines, cost elimination, share buybacks, focus on core products and regional activities with increased spending on R&D, marketing, and advertising, resulting in increased sales growth in many regions.59 In 2005, Unilever initiated consolidation efforts (One Unilever) including development of one executive group (from three), a decrease in the number of executive managers by one-third, a flattening of the organization, and a restructuring that created global groups, such as a global brand strategy group.60 One such effort at consolidation is the 2005 sale of Unilever Cosmetics International unit to Coty for P&G and Unilever 1 0 approximately $800 million.61 For future sustainability, Unilever needs to continue their operational enhancements, including additional outsourcing when needed (as was done in business support services), add line extensions with core brands while guarding against negative impacts should an extension fail, look to mergers and acquisitions to support their growth and development, protect against exchange rate fluctuations, and continue to expand globally, especially in India and China, the identified locations for substantial growth.

Chapter 5 Strategy Analysis Proctor and Gamble

Business level Strategy

P&G, with the largest product portfolio in the consumer products industry, faces significant challenges maintaining cost efficiency and scale economies while creating innovation and differentiation. With their recent acquisition of Gillette, P&G now has 22 brands that each exceed $1B in annual sales, with a balance of ten- $1B brands in Beauty and Health, and twelve$1B brands in Baby, Family and Household lines.64 The company is divided into four pillars: Global Business Units, Market Development Organizations, Global Business Services and Corporate Functions, each working separately and together to bring competitive advantage to P&G. As competition from other major global and small local companies are vying for market share, a sound business strategy, with a focus on flexibility and responsiveness, is required to maintain and grow their leadership position. P&G's business strategy focuses on large-scale operations, strong product branding, and product innovation to develop competitive advantage.67 P&G is the global leader in its four core categories, Baby Care, Feminine Care (35%), Fabric Care (approximately 30%), and Hair Care (greater than 20%). To achieve sustainability and continued growth, P&G's strategy is to continue to innovate and sell products that appeal to retail trade customers and consumers, providing pricing and product that adds value for the customer, while improving efficiencies in sales and operations with their ongoing restructuring and technology enhancements, and quickly responding to competitive advancements. Their comprehensive research network and $2B of research spending annually support their innovative focus, and they have received awards for supply chain management (#1 in 2004), are leaders in inbound logistics, and are technology innovators for improving efficiencies and reducing costs, such as with bar coding and wireless technologies.70 With their market knowledge and focus on efficiencies, they excel at "demand chain planning," identifying their "target market's requirements and designing the supply chaining backward from that point. Additionally, P&G uses business development structures combining sales, logistics, finance, marketing, and IT to work with trade customers for ways to add value to the consumer, including Market Development Organizations in 80 countries, to provide focus and management for increasing customer concentration at the retailer and country levels, growing volume in developed and developing markets, and focusing on higher profitability lines for growth; Beauty and Health Care. P&G has been awarded #1 best category management and consumer marketing, another competitive advantage, and continues to concentrate on relationship management with customers and suppliers. Use of the Siebel CRM solutions has improved efficiencies and reduced costs, and needs to be further implemented beyond the US and Western Europe. With ongoing improvements in resource management, planned divesture and ongoing acquisition strategies, and continued maximization of theirproduct innovations, marketing, and rapid go-to-market strategies, P&G should continue to meet (and exceed) its business goals.

Global Strategy

P&G has made substantial investments globally, and used acquisitions, joint ventures, and alliances to expand their market understanding and reach. Key to expansion are three competencies P&G has developed: 1) understanding of the foreign marketplace, 2) ability to manage people in foreign markets, and 3) skills at managing foreign subsidiaries.76 Their global strategy includes innovation, increasing market share on base business while focusing on each business as well as on each industry, and investing in the developing marketplace.77 P&G has gained substantial market knowledge, has innovative databases including over 100 million consumers across 30 countries, utilizes a blend of local and expatriate managers, and provides training, global resource centers, and partnerships and alliances for managing foreign subsidiaries, all successful activities that promote local acceptance and a climate enabling knowledge transfer.78 Their flattened structure and focus on relationship management with stakeholders provides for efficient and rapid communications throughout the value chain.79 These capabilities have afforded P&G the opportunity to leverage insights from the local shopper, consumer, and retailer to generate cross-business unit plans and create efficiencies across the breadth of P&G lines. 80 With their marketplace knowledge and research centers strategically located throughout nine countries, P&G focuses on 360-degree innovation, identifying significant opportunities and acting on them quickly. For example, P&G modified products in their upper tier and launched middle tier level products in Russia, driven by their identification of the beauty-conscious orientation of women in that marketplace.82 Other examples of their approach to learning, knowledge transfer, and rollout based on market understanding is the learning from SK-11 store counters in Asia. Knowledge from that rollout was then integrated into the Olay launch in Spain,83 demonstrating a reduced risk method of global expansion, where launches are first piloted on a limited basis, then expanded upon. Overall, P&G has a well-developed knowledge base and global mindset, and with innovation a key component of their global strategy, they have created the ability to implement distribution systems that can move innovations across borders.85 P&G has been an early adopter and substantial user of information technologies, and has been recognized by CIO Magazine for its Corporate Standards System application that revolutionizes the way their employees and partners collaborate, reducing costs, improving product quality, and getting products quickly to the marketplace. P&G has had success expanding globally with its strategies of acquisition, strategic partnering, innovation, and rapid go-to-market strategy (See Appendix V for the History of Global Expansion P&G).87 P&G has coordinated activities to provide a global network with all activities, structure and coordination driving for a global competitive advantage. However, P&G is at risk due to overexposure in the US and Western Europe, and needs to continue growing globally.88 It is estimated that 90% of the world's population will be in developing countries by 2010.89 P&G has been working to expand rapidly in these markets, and in fact, their presence in high frequency stores has grown 50% in 4 years, and in China alone, P&G serves 2000 cities and 11,000 towns

E-Business Strategy
P&Gs CEO wants P&G to be known as the company that collaborates inside and out better than any other company in the world91 P&Gs strategy and e-business focus is three-fold: one-to-one communications, real-time and predictive business intelligence, and virtualization

of business processes.92 Sales and distribution is through retail partners drug stores, grocery stores, and wholesale clubs (such as Costco). P&G does not have direct selling of its products through the internet, however, P&G does utilize the internet as a valuable resource tool for its domestic and global operations to improve the efficiency and effectiveness of managing its supply chain, internally share R&D information, logistics for retail partners, transportation, billing and payment, and for video conferencing and customer information and feedback. These resources all interact electronically to provide real-time access to information to those who need it, creating a competitive advantage. Such a system can provide real-time information regarding costs and other metrics in order to more quickly identify problems or issues and implement a resolution (See Appendix X For network details). P&G has also created such centralized ebusiness sites for the business-to-business (B2B) side. P&Gs website PGEDI.com provides an electronic exchange of information between P&G and its trading partners, suppliers, current and prospective retail partners, financial institutions, and transportation carriers. P&G fully utilized its Electronic Data Interchange (EDI) as a hub of doing business. The Web Order Management System and Customer Portal assist partners in purchasing, managing and promoting products by providing critical data, product information, order status and invoices 24 hours a day, every day. There are also links to track shipments, make payments, receive invoices, and share data. P&G has invested in Yet2.com Inc., an Internet company that has launched a web site that allows companies to post their technologies for license or sale.93 P&G has taken a use it or lose it approach since many of its patents are not being used. P&G has also invested in a marketing collaborative software development company called Imperative, formed in February 2001, which provides a way of sharing significant information share data; working simultaneously on the same files; even pulling up research collected by colleagues in other countries for various brands and re-applying it to other product developments.94 Creating this central library for accessing information allows for faster turnover and more efficient use of time and information. P&G also sells basic marketing and management techniques on the web site. Initiatives and investments such as these, in accordance with the Dynamic Resourcebased Model of Competitive Advantage,95 are valuable resources that enable P&G to increase its efficiency and effectiveness, and if complex enough, are difficult for the competition to easily imitate. Such early involvement and sizable investment in e-business as a tool reinforces P&G's position as a leader in the industry. From an end-user standpoint, customers can visit PG.com and sign up for P&Gs monthly emailed publication, Everyday Solutions, which offers tips, promotions, and free samples, or seek expert advice about personal care, household, health & wellness, baby & family, or pet care. P&G also has numerous internet sites for specific brands and products where customers can obtain information, coupons, and samples, as well as provide feedback, such as pampers.com, charmin.com, iams.com, tide.com and many others.

Corporate Strategy
P&G markets over 300 products in 160 different countries. P&G groups its business into two categories, foundation business and higher growth business. Foundation Business includes Fabric, Home, Baby, Family care, and snacks and coffee. P&G also has a Market Development

Organization organized in seven97 geographical areas, and among others, a commercial product segment, P&G Chemicals, Health Sciences, and P&G Europe98 (See Appendix CC for list of businesses and product group descriptions). P&Gs portfolio includes other ventures related to its core products, i.e., P&G Chemicals, Inc. which vertically integrates ingredients for some of its products and P&G Health Science which is a research lab for product development. P&G divested its juice business in August 2004, acquired Wella in 2003, and most recently, acquired Gillette. Internationally; in 2005 P&G acquired a Pharmaceuticals business in Spain, a Fabric care business in Europe and Latin America, and increased ownership in its Glad venture with the Clorox Company. P&G continues to both look for acquisition opportunities that are related to its core business and develop new products and they do it well. In a rapidly globalizing world, focusing on core expertise and collaborating with partners in innovative ways are the keys to growth100 which is exactly what P&G is doing. P&G is aware of their core products and business foundation, but also understands that the development of new products through innovation, research and development is the key to maintaining its competitive advantage. P&G should continue its current successful strategy.

Chapter 6

Strategy Analysis Hindustan Unilever Limited

Business Level Strategy
Most companies that hold a market leadership position do so by achieving the right balance between differentiation and low cost.101 In the consumer products industry, consumers have many choice regarding which brand they select. With twelve brands that each exceeds 1 billion in annual sales, Unilever's market leadership cannot be sustained if costs are significantly higher than a competitor's products. Similarly, without adequate differentiation, brand loyalty could be difficult to maintain. For Unilever, the current business-level strategy would be characterized as a differentiation strategy, where the emphasis is on branding, advertising quality and new product development. Unilever holds the world number one position in five of six food segments, and two of six segments in Home & Personal Care (skin and deodorants).103 Unilever holds the (world) number two position in two of the six Home and Personal Care segments (Laundry and Daily Hair Care) and is number three or less in Household Care and Oral Care.104 Company resources have been divided into two primary functions, one responsible for brand development, innovation, and brand strategy ("Categories"), and the other for managing the business, effective deployment of brands and innovations, and winning with customers ("Regions").105 Their commitment to R&D and innovation is clearly stated through their mission statement ("Add vitality to life") and their corporate purpose ("Vitality Innovation"). The alignment of company resources with its strategy is an important component for sustaining a competitive advantage. With its resources aligned and a commitment to funding its significant R&D spending, Unilever should be well positioned to sustain and improve their current standings. Perhaps the greatest risk to sustaining their competitive advantage is the high SG&A costs of Unilever's current organizational structure.

Global Strategy
Unilevers global presence has deep roots, beginning with the founding companies. At various stages throughout the course of Unilevers history, there is evidence that the firm was driven by nearly all five global expansion imperatives the growth imperative, the efficiency imperative, the knowledge imperative, the globalization of customers, and the globalization of competitors - in its efforts to globalize. However, Unilevers progress in exploiting global presence may in fact be hampered by the lack of an overarching global strategy. With 223,000 employees in over 150 countries, Unilever is proud of its deep roots in local cultures and markets worldwide, which enables it to bring its wealth of knowledge and international expertise to local consumers. In

doing so, Unilever labels itself as a multi-local multinational and truly believes that it is creating value through global expansion by adapting to local market differences and tapping the most optimal locations for activities, resources and product launches. In an effort to win Latin America, Unilever embarked on a number of transformational initiatives, with the goal of One ULA (Unilever Latin America) and a regional approach based on four cornerstones -- strategic leadership; innovation, market share and brand health; excellence in reaching consumers and customers; and implementing common processes, systems and shared services. In three countries in this region, Unilever is the market leader for four out of six primary HPC categories With 44 operating companies in the Asia/Africa region, and brands sold in 98 countries, Unilever is the market leader in most priority categories in countries where it has a presence (key markets include India, South Africa, Indonesia, Thailand, Vietnam and the Philippines). In this region, Unilever places emphasis on: serving and delighting consumers; deepening partnership with customers; and building Relationships with local communities. Unilevers current expansion plans call for a focus on the developing and emerging markets, where the company enjoys a long-established presence, has established consumer intimacy, and prides itself on affordability. Thirty-five percent of Unilevers turnover is in developing and emerging markets, products are tailored to different income levels, and Unilevers distributions systems reach deep into these areas. Unilever is aiming for seamless global development,114 with system-wide automation and data Synchronization, among other things, to make this possible. Further, in at least one of its brands, it has opted to consolidate its advertising accounts into one global agency network -- an example of centralizing key business functions -- which, though cost effective, runs counter to being sensitive to local markets, and global box-ticking cant match intuitive knowledge of local markets.115 However, despite all the references that Unilever has made to global strategy and its acknowledged global presence, the company has not articulated an overarching global strategy that clearly outlines the alignment of all functions in the value chain to that strategy. While it has taken steps to adapt to local markets, and capture economies of global scale and global scope, as Trevor Gorin, press officer for Unilever has stated, Unilever needs to counter threats in specific markets and transplant learning's from one place to another.116 Unilever needs to take the next steps in ensuring global competitive advantage, by evaluating the optimality of its global network for each activity in its value chain,117 along each of three dimensions: activity architecture, locational competencies and global coordination.

E-Business Strategy
Unilevers e-business strategy continues to evolve, from its early membership in a B2B marketplace, to participation in the GDSN, the implementation of RFID technologies,119 and the creation of an online buying system for making certain types of purchases from suppliers.120 The firms e-business strategy focuses primarily on the use of the internet and information technologies (IT) to achieve operational efficiencies in dealing with suppliers and in utilizing its distribution network. The firms e-business strategy is progressing, but its IT initiatives are not unique or rare within this industry, nor are they inimitable. Unilever has made significant advances most notably its alliance with Safeway, however, according to the Dynamic

Resource-based Model of Competitive Advantage (DRMCA, Unilever will need to continue to add new and industry-leading IT resources to build and sustain a Resource-based advantage. Many of the products in the personal products industry fall under the category of experience goods that is, the qualities and characteristics of those products are only recognized after consumption. As such, those products by and large do not lend themselves well to e-commerce purchases by consumers via the internet. However, as early as February 2000, Unilever was making plans to invest heavily in electronic commerce, in an effort to slash costs, radically change its supply chain, and reach out to consumers. The company recognized that it could achieve significant savings by using the internet to buy everything from raw materials to cardboard.123 Unilever also began using the internet to target consumers of its products by advertising selected products on websites catering to specific consumer markets Unilever and P&G are members of Transora, a B2B marketplace consisting of 49 companies. Transora merged with UCCnet to form 1SYNC, which offers a cost-effective data pool with solutions and services that support user needs, and helps the industry maximize the value of data synchronization.127 Unilever, as a member of Transora, was part of an enterprisewide effort in 2004 to test the GDSN an internet-based supply chain initiative launched to streamline communication of product information128 Furthermore, in June 2004, Safeway and Unilever heralded the success of their joint Global Data Synchronization initiative; the first time that product information had been synchronized between the leading supply side and demand side data pools. Other examples of Unilevers forays into e-commerce and information technologies include: the implementation of radio frequency identification (RFID) tags, the Unilever Private Exchange (which provides secure links between operating companies and suppliers and customers systems and to external electronic marketplaces),131 Ariba, Unilevers online buying system (which enables purchases of non-production items to be made at volumenegotiated prices from selected suppliers)132 and ISIS, Unilevers supply management information system (which helps local, regional and global supply managers to gather and analyze information quickly, and make appropriate sourcing decisions.

Corporate Strategy
Corporate strategy addresses the scope of the firm's activities, including the portfolio of businesses that a firm chooses to engage in, the locations or geography it will cover, and the amount of vertical integration it employs. Unilever's strategy is to have strong customer relationships at the local level, everywhere they do business, and to be seen as "a truly multilocal multinational". Unilever's activities are spread across six primary business categories, including home care, spreads, savory & dressings, beverages, ice cream & frozen foods, and personal care, and are sold in 150 different countries. dAs previously mentioned, Unilever is number one or two in all but three segments in which they compete. In the segments where they are not number one or two, they face intense competition and weak consumer spending, particularly in Europe. Further, the business is in an area that is relatively mature and Segmented. It is in cases like this where companies might benefit from a divestiture of lowgrowth, under-performing business units in order to free up resources to focus on higher growth, higher profit opportunities. (For additional details see Appendix U: Unilever SWOT

Summary). A decision to divest the brands that are under-performing would not be foreign to Unilever; over the last several years the brand count has been reduced from over 1,200 to around 400 as part of an overall restructuring campaign. With a stated focus on developing and emerging markets, particularly in the area of personal care, divesting the European frozen foods units would free up resources, provide cash for additional debt reduction, and help reduce their high SG&A costs. Such a move would better position Unilever for sustained profitability, however, should Unilever wait too long before executing this divestiture, they risk a reduction in the value of the business due to further brand depreciation. Another option for the cash that would be generated through the divestiture of low-growth businesses would be to seek out potential acquisitions that offer growth or complimentary products, and would help consolidate a market. Consolidating markets can help provide sustained competitive advantage by reducing the overall level of competition.

Chapter 7 SWOT Analysis

Swot Analysis of Proctor And Gamble

Strengths
Significant scales of scope and economies in their operations Excellent brand recognition and brand management Good product innovations Good overall performance Supply Chain excellence

Weaknesses
Reductions in cash flow levels Mature Markets High customer concentrations High SG&A costs Low R&D expenditures

Opportunities
Good growth potential in the Health and Beauty segment Growth opportunities in developing countries and markets Growth potential of domestic retailers

Threats
High levels of competition Raw material and energy price increases Potential Gillette integration issues

Swot Analysis of Hindustan Unilever Limited

Strengths
Strong brands and brand management Significant economies of scope and scale Abundant resources

Weaknesses
Very high SG&A costs Complex organizational structure Decreasing sales/revenues

Opportunities
Product portfolio simplification Developing markets in developing countries Significant debt reduction internal growth initiative

Threats
Foreign currency exchange fluctuations Competitors growing through acquisition Potential failure of internal growth initiative

Chapter 7 Data Analysis

Questionnaire
An analytical study of personal product Industry of India and its marketing Strategies in Agra with special reference to Proctor and Gamble, Unilevers

A. Personal details 1. Name________________________________________________

2. Gender a. Male b. Female 3. Address_______________________________________________

4. Phone No:- Mobile:_____________________________________ Landline:____________________________________ 5. E-mail address__________________________________________

6. What is your current Occupation? a. Student b. Businessman c. Service d. Housewife

7. Age Group: a. Below 18 years b. 18-25 years

c. 25-50 years d. Above 50 years

Q1. Do you know proctor and Gamble and Unilever? a. Yes b. No

Q2. Do you use the product of these Companies? a. Yes b. No

Q3. Which Company you prefer to buy your household products? a. Proctor and Gamble b. Unilever

Q4.What product you use a. Washing powder b. Detergents Soap c. Toothpaste d. Soaps e. Fairness Creams f. Face Wash

Q6. S. Question Strongly Disagree No Agree Strongly

No 1 Are you got these products easily in the market? 2 Are you satisfied with the results of your brand? 3 Are you satisfied with the rates of your Product? 4 Are you satisfied with the Quality of your Brand? 5. Are you thinking that Company should improve the quality of its Product? 6. We should also try some other companys product?

disagree

option

agree

Any experience or suggestion do you want to share with us regarding these products. _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________

Appendices

Global Personal Products, Market segmentation

Segmentation % share by value,2010

Fragrances Make-up oral hygiene personal care Personal Hygiene Skincare

16% 18% 25% 13% 13% 12%

Global Personal Products Market Segmentation: % Share, by Value, 2010

12% 26% 13% Skincare Personal Hygiene personal care Fragrances 19% 17% 14% Make-up oral hygiene

The leading revenue source in the personal products market is hair care, which accounts for 26% of the global value.

Global Personal Products Industry, Market Share - % Share by Value, 2010

company LOreal unilever proctor and gamble Colgate and Palmolive others %share 8.80% 7.80% 8.50% 3.60% 71.20%

Global Personal Products Market Share: % Share, by value, 2010

8.80% 7.80% 8.50% 3.60% 71.20% l'oreal unilever proctor and gamble colgate and pamolive othres

The leading player in the personal products market is LOreal, which accounts for 8.8% of the global value.

BIBLIOGRAPHY
WEBSITSES NAME: 1. http://www.osha.gov/pls/imis/sic_manual.display?id=614&tab=description