Hindustan Lever's Foray into Network Marketing

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Case Details:

Case Code : MKTG093
Case Length : 30 Pages
Period : 1996-2004
Pub Date : 2004
Teaching Note :Not Available
Organization : Hindustan Lever India Ltd. (HLL)
Retail
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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HLL Joins the Direct Marketing Bandwagon Contd...

The innovative distribution channels⁶ created by HLL to access the Indian market have spelled success for the company for over five decades. HLL's formula has been successfully replicated by many competing brands and small players in the FMCG segment.

The wide range of products offered by HLL to tap every conceivable price point, tapped the unexplored Indian market optimally, and HLL became the jewel in Unilever's crown, contributing to revenue growth even when the parent company was struggling.

But in the late 1990s and early 2000s, an influx of foreign players and myriad low-price local rivals started eroding HLL's dominant's position.

The company zeroed in on the idea of meeting the growing needs of the time-starved Indian middle class population through direct marketing via HLN.

Marketing Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

The direct marketing industry was estimated to be worth more than Rs.15 billion as of early 2003, and was growing at the rate of approximately 25% year on year.

Through value added services like expert advice and home delivery, and a range of world class products which mirrored the aspirations of its target consumer, HLN aimed to be the most preferred network marketing company in the country.

It envisioned partnering with its consultants (salespersons) and providing them with a business and self-development opportunity that was truly rewarding. In the words of Dalip Sehgal, Executive Director - New Ventures and Marketing Services, HLL, "We need to be present in all channels. And we see network marketing as a bigger opportunity than a threat."⁷

Network Marketing Industry in India

Indian Direct Selling Association (IDSA) defined direct selling as the act of marketing of consumer goods and services through personal contact, away from a fixed location or a shop. In the words of Kalyan Ranjan, Manager, Corporate Communications, Amway India Ltd, ''The direct selling system adopts methods of door-to-door selling, group meetings, and networking marketing."⁸...

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6] In the late 1990s and the early 2000s, HLL had a million retail points, 7,500 distributors and a wide range of products focussed on every possible price points to virtually straddle every income and geographical segment in the country.

7] "HLL Plans to Enter Network Marketing", www.blonnet.com, January 2003.

8] Manoj Kumar, "Multilevel Marketing Writes New Rules in India", Tribune News Service, November 2002.