Unilever in India: Managing Brand Extensions

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Introduction

In 2005, Hindustan Lever Limited (HLL), the Indian subsidiary of Unilever, was the country's largest fast moving consumer goods (FMCG) company. HLL's portfolio of brands included Lux, Lifebuoy, Liril, Surf, Ponds Vaseline, Vim, Clinic All Clear and Axe. Most of these brands had been market leaders for several years in their respective product categories. Over the years, HLL had extended many of its popular brands with varying degree of success. Some extensions like Clinic All Clear anti-dandruff shampoo to hair oil category had been successful, while others like Ponds Toothpaste had been a dismal failure.

M S Banga (Banga), Chairman HLL explained: "I believe that each extension must strengthen the core and the core must remain unchanged. When the core of the equity is in one direction and the product extension is in another and you graft the two, you are unlikely to succeed. The set of peripheral or extended values can be changed over time.”1 In the early 2000s, as HLL struggled to generate growth, brand extension became an important strategic option. HLL extended its popular brands into the premium segment to increase its profits. By early 2003, HLL had launched a number of brand extensions with varying degrees of success.

In 2003, in what seemed to be in response to intensifying competition in several segments, HLL decided to strengthen its already overwhelming presence in the talcum powder category where its brand, Ponds Dreamflower, was already the market leader. HLL also extended Lifebuoy, Vaseline and Fair& Lovely to Talc category. Senior HLL executives wondered if these brand extensions would yield the benefits they promised. Was HLL better off launching new brands?

Background Note

HLL, a 51% subsidiary of the Anglo-Dutch conglomerate, Unilever, had acquired a tremendous reputation as one of India's best-managed companies. Despite being the subsidiary of an MNC, HLL was perceived to be more Indian than foreign, in the way it managed its operations. HLL operated with considerably more autonomy than other subsidiaries in the Unilever system. HLL's origin went back to 1885 when the Lever Brothers set up 'William Hesketh Lever', in England. In 1888, Lever Brothers entered India by exporting 'Sunlight', its laundry soap.

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1] www.geocities.com/vedbsen/pw-brand-extension.htm

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