Realities of Emerging Markets: Some Lessons from Unilever's Strategy for Lifebuoy & Sunsilk in India
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Case Code: BSTR295 Case Length: 16 Pages Period: 2001-2008 Pub Date: 2008 Teaching Note: Available |
Price: Rs.300 Organization: Hindustan Lever Limited, Unilever Industry: FMCG Countries: India Themes: International Business, Globalization, Emerging Markets |
Abstract Case Intro 1 Case Intro 2 Excerpts
"Hindustan Unilever is one of the jewels in the company's emerging-market operations. It is India's biggest consumer-goods company and biggest advertiser. One of its strengths is its ability to cater to all segments of the population by adapting products and prices."
- The Economist, in 2008.
Introduction
With the growth in the developed markets in North America and Western Europe approaching saturation, consumer packaged goods (CPG) companies turned their eyes toward developing and emerging markets to spur future growth. These markets accounted for 84% of the global population and were estimated to spend US$ 23 trillion dollars on consumer goods. However, the efforts of multinational companies (MNCs) from different industries to tap these markets had, by and large, resulted in failure. Analysts felt that this was because these MNCs had failed to understand the realities of operating in these markets.
Global CGP major Unilever Plc. (Unilever) was one of the companies that had had a headstart in many of these markets - Africa, China, India, and Latin America. For instance, the company had been operating in India since the early 1930s. Its Indian subsidiary, Hindustan Unilever Ltd (HUL, earlier known as Hindustan Lever Ltd.), held a dominant position in the Indian CPG market with many big brands cutting across categories. It accounted for around 10% of Unilever's worldwide revenue.
Analysts felt that HUL's success in India was largely due to the fact that, over the years, it had developed a very good understanding of the Indian market. It had developed the ability to cater to all segments by adapting its products, prices, and promotions to each of them. In the 2000s HUL increased the sales of its mature brands such as Lifebuoy (bath soap) and Sunsilk (shampoo) by targeting new segments in innovative ways and this attracted the attention of experts as well as competitors.
In 2002, the company started a marketing program, Lifebuoy 'Swasthya Chetna'('Health Awakening'), targeting the bottom of the pyramid (BoP) segment in India with the dual objective of increasing awareness about health and hygiene among the rural and urban poor and increasing the sales of Lifebuoy by increasing the number of people who used soap. In 2006, it launched a pioneering brand portal for Sunsilk, Sunsilk Gang of Girls (GoG), targeting the increasing number of Internet-savvy girls, where consumers could bond with each other and also with the brand. Industry experts were appreciative of both initiatives, which they felt, were in sync with the needs and aspirations of the target group (TG) and the ground realities in India. With India being viewed as a test market for emerging markets strategies, analysts felt that the learning from these initiatives would help Unilever to develop a strong presence in other emerging markets as well...
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